MCCCI calls for tax reduction

The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has asked Treasury to consider reducing and rationising taxes to boost businesses’ productive capacity.

Speaking yesterday in Blantyre at the start of the 2018/19 pre-budget consultation meetings presided over by Secretary to theTreasury Ben Botolo, MCCCI private-public partnership manager Hope Chavula said the move could help to grow the industry, which has stagnated in the recent past despite improved macroeconomic environment.

Said Chavula: “Neighbouring countries are discussing reducing taxes such as corporate taxes to attract investments in their countries. Even developed countries such as United States of America (USA) have reduced their corporate income taxes from 35 percent to 21 percent. There is also need to rationalise taxes so that there is a level playing field.

“This could make local production attractive than importation of final products. For instance, inputs that attract input taxes where final imported products are free. Where inputs are subjected to value added tax [VAT] refunds, resources are not available.”

Among MCCCI’s tax proposals include income tax rates which the private sector lobby group said should not have differences on personal or corporates, calling for the removal of 35 percent tax bracket on salaried income in excess of K3 million per month.

The chamber also made proposals to have the 20 percent withholding tax on gross insurance broking commission received from insurance companies reduced, saying this does not equate to corporate tax assessed at the end of the period.

On the insurance sector, the chamber proposed that the stamp duty at 80 tambala per K200 of cover be reduced and have a flat rate introduced, which could also improve insurance penetration.

“We would like government to maintain excise tax on tobacco at current $15 [K10 900] per mile and not discriminatory for a minimum of three-year predictable regulatory environment.

“This will mitigate issues of illicit trade in tobacco products as well as improve on inconsistent application of excise tax in the non-alcoholic beverage category,” he said.

Institute of Chartered Accountants in Malawi (Icam) chairperson of economic and taxation committee Andrew Chioko said widening tax base by re-introducing tax compliance could help increase the tax base and also urged Treasury to re-think on tax penalties, which are a hindrance to investments.

Government has in recent years been relying on domestic revenues for the implementation of the national budget due to dwindling donor support.

For instance, in the current fiinancial year, government has projected it will collect K980.3 billion in domestic revenue, which is 19.7 percent of the gross domestic product (GDP).

In his remarks, Botolo said taxation issues are sensitive.

“It is possible that we can decrease our corporate tax but you will find that we are not collecting as much as we can so we need to balance. The whole idea is we want the investors to benefit while at the same time the public service not to suffer but to continue,” he said. n