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Icam eyes K100 000 tax free band

 

The Institute of Charted Accountants in Malawi (Icam) has urged government to consider increasing further the tax- free bracket for employees from the current K30 000 to K50 000.

Speaking during the 2018/19 pre-budget consultation meeting in Blantyre on Tuesday organised by Ministry of Finance, Economic Planning and Development, Icam economic and taxation committee chairperson Andrew Chioko said considering the high cost of living, K100 000 would have been ideal.

He said the zero percent threshhold needs to be widened to help lower income earners move out of poverty amid the rising cost of living.

Chioko: Increase the tax free band

 

Said Chioko: “The cost of living is still high. Preferably we would want K100,000 but we know it would not be possible. So, we would like if government would consider it to be K50 000 this year.”

In nearby countries, in approximate kwacha values are; the threshold is still higher than in Malawi. For instance, in Zimbabwe, it is K130 000 ($953 per capita GDP), Zambia K200 000 ($1 844 per capita GDP), Botswana K240 000 ($7 315 per capita GDP) and South Africa K500 000 ($6 617 per capita GDP).

However, Secretary to Treasury Ben Botolo said tax issues are very sensitive.

Government last revised the tax-free band in the 2017/18 budget, from K20 000 to K30 000 following another revision in the 2013/14 fiscal year.

Taxation expert Misheck Msiska said the adjustment in the Pay as You Earn (Paye) threshhold to K50 000 would favour those taxpayers who are earning less and help them to survive in these economic hardships.

“This might be difficult on the part of government considering that most of the compliant taxpayers fall in the K20 000 to K50 000 range. However, expanding the tax net would be ideal in this scenario,” he said.

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