Tax experts have cautioned Treasury on the proposed tax amendments, saying they need to serve the intended objectives.
The tax amendments, among others, include introduction of a requirement for the registration of salaried employees and issuance of taxpayer identification number (Tpin) by Malawi Revenue Authority (MRA) and a K5 million cap on the allowable deductions for the individual donations made to charitable organisations and non-profit institutions under this provision.
In interviews this week, tax experts said the amendments have both positive and negative implications on government’s objective.
Senior tax consultant at EK Tax Consultants Emmanuel Kaluluma, said if the amendments are properly managed and implemented, Treasury will boost tax revenue.
He said: “The idea of introducing registration of the salaried employees and issuance of taxpayer identification number will certainly boost tax collection.
“However, the introduction of a K5 million cap on the allowable deductions for the individual donations made to the charitable organisations and non-profit institutions should have been considered,” he said.
Another tax expert, Lekani Katundula, said the introduction of a K5 million cap on donations for charitable organisations will discourage people from making donations.
“Government has considered bringing fairness on interest on foreign and domestic contracted loans. On the other hand, it makes sense for government to take in measures to tax those with extra income for this will certainly help widen the tax base,” he said.
Misheck Msiska, a partner at EY Malawi, said using value added tax (VAT) withholding agents, which is aimed at curbing the malpractices by some VAT operators who charge and collect VAT from customers and fail to remit same to MRA, is a drawback.
“With this system, the supplier would be sitting with a lot of input VAT,” he said. n