Nyasa Manufacturing Company (NMC), a Blantyre-based local cigarette manufacturing firm, has expressed concern over unfair trading practices on the market, which could threaten the firm to close the factory.
NMC managing director Konrad Buckle told journalists in Blantyre on Wednesday there is one company that is selling cigarettes at much more reduced price because it is not paying taxes to Malawi Revenue Authority (MRA).
He said: “We are not afraid of competition. In fact, we love competition, but the problem is that this company sells cigarette with no tax stamps.
“We thought the cigarettes were being smuggled into the country, but after careful examination we found out that the cigarettes are being made by a Chinese company based in Lilongwe.”
Buckle said for every packet of cigarette they sell, K225 (about $0.3) goes to MRA as tax, stressing that it is unfair for any company to operate on the market without paying taxes.
He said because of this, their sales have gone down by about 50 percent over the past year, stressing that if this continues, the company could be forced to stop production, which would render thousands of Malawians jobless.
The company in question, Vision International Limited based at Kanengo in Lilongwe, started its business in August 2015 after it was given an investment permit by Malawi Investment and Trade Centre (Mitc).
Last week, MRA officials temporarily sealed off the company’s factory in Lilongwe for selling cigarettes without a tax stamp, but the company has since been reopened.
Officials from Vision International Limited refused to comment when called on Thursday.
MRA deputy director of corporate affairs Steve Kapoloma said he could not discuss tax issues of a company in the media.
Ministry of Industry and Trade spokesperson Wiskes Nkombezi said yesterday they noted a number of anomalies when ministry’s officials visited the company’s factory recently.
“We saw that MRA stickers for purposes of tax were doubtful if at all were genuine. We have sought MRA’s intervention to find out if indeed the company is evading tax. The company was also not displaying its investment certificate,” he said.
All cigarettes sold in Malawi are supposed bear an MRA tax stamp to ensure that the tax bull easily calculates duty.
According to MRA tax rates, cigarettes attract a duty of $15 (about K10 800) per 1 000 sticks. n