The Employers Consultative Association of Malawi (Ecam) is demanding speedy payment of Value Added Tax (VAT) arrears from the Malawi Revenue Authority (MRA) to solve liquidity challenges employers are currently facing in the wake of the Covid-19 pandemic.
The employers’ umbrella body is also demanding quick payment of arrears in excess of K3 billion from Treasury after rendering goods and services to government without being paid over a period of time.
Ecam executive director George Khaki said in an interview on Tuesday that with a significant slowdown in business, employers are facing liquidity challenges hard to keep up with employees’ monthly salaries.
Khaki said the pressure is mounting on employers such that some of them are resorting to retrenching workers because they cannot sustain the wage bill.
He said the law does not provide for unpaid leave saying if such provision existed in the Labour Act, employers could send them on unpaid leave to keep their positions until the situation normalises but they have no alternatives.
He said: “Our demand is that MRA should quickly pay VAT arrears it owes employers because the Covid-19 pandemic has constrained our liquidity levels to sustain operations and workers.
“Government also owes us a lot of money from goods and services that were already provided in excess of K3 billion. If this amount can be paid quickly, it would help us in solving liquidity issues as employers”.
Khaki also said employers could also be relieved if government extended the recently announced K35 000 per household to lowly paid workers who are falling within the government set minimum wage until Covid-19 situation eases.
MRA head of corporate affairs Steven Kapoloma said in an interview that the law bars the institution from discussing taxation issues for specific tax payers.
He said MRA sorts out taxation issues on a case-by-case basis with individual tax payers but not disclosing details in public.
Said Kapoloma: “I can assure you that with Covid-19 challenges, we are paying VAT arrears quickly but following the law. The law provides that we pay within or after three months period. However, when we suspect that there are issues, we engage tax payers and request tax audits to ascertain payments”.
Treasury spokesperson Williams Banda asked for more time to react on the matter.
Malawi Congress of Trade Unions MCTU secretary general Denis Kalekeni also backed Ecam suggestions by urging the government to support key employers in the economy with Covid-19 stimulus packages to ensure sustainability of their operations to mitigate further looming retrenchments.
Kalekeni observed that most employers are scaling down operations that is resulting in firing workers or forcing them to go on forced leave or early retirement.
To this effect, Kalekeni expressed worry that the number of unemployed people will sharply increase and contribute to the suffering of many workers.
Tax expert Emmanuel Kaluluma said on Tuesday that the challenge to speed up payments is break away from tradition where authorities require to verify the claims due to mistrust that is always there between tax authorities and taxpayers.
He said: “This challenge is made worse because of low levels of tax compliance. However fortunately for taxpayers in Malawi the law allows them to reduce the tax liability by the amount that could be an outstanding amount of tax refundable.”