Malawi Revenue Authority (MRA) is yet to refund K500 million to tobacco growers, putting livelihoods of over 45 000 growers from about 3 000 clubs in jeopardy.
The money, which dates back to 2011, is withholding tax refunds.
Withholding tax is an advance payment of income tax deducted from specified payments, and in the tobacco sector, the rate is at three percent.
For example, if a farmer sells tobacco at the auction floors at a cost of K500 000, he will be paid K485 000, which is three percent less in line with payment for tobacco sales.
The group has since petitioned MRA to have their money repaid as it is affecting their cash flow.
In an interview on Tuesday, chairperson of the concerned clubs Willard Mawindo said although some of the farmers received notices of assessment from MRA on withholding tax refunds, they are yet to start receiving payment on the same, a development he said is affecting their farming business.
“We feel we have waited for quite a long time because we have always been told that there are irregularities with membership as either names were allegedly in large numbers or fell short.
“This has impacted us negatively because apart from uplifting our livelihoods, this money is used to buying inputs such as fertiliser, pesticides and other materials for tobacco production and this has resulted in clubs getting loans from banks at a high interest rate,” he said.
In a separate interview, Tobacco Association of Malawi (Tama) chief executive officer Mathews Zulu while acknowledging the concerns of tobacco farmers, said claiming of tax is done on individual basis.
“Individual farmers claim the withholding tax refunds on individual basis if they justify themselves on the need to do so and with supporting documents on the same,” said Zulu.
MRA head of corporate affairs Steven Kapoloma said the public tax collector has started dealing with individuals returns of the farmers.
“There were day-to-day meetings with farmers and was well addressed. We explained to them and we are dealing with individuals returns of the farmers,” he said, adding that each club has different amounts. n