National Sports

Sponsors pay heavily for their ‘Charity’

Sulom's Innocent Bottomani (L) and TNM's Charls Kamoto put pen to paper
Sulom’s Innocent Bottomani (L) and TNM’s Charls Kamoto put pen to paper

In what is like bruising a Samaritan, government is, in addition to denying football sponsors tax waivers, also subjecting some companies to taxes in relation to revenue it spends on sponsoring football, FAM has complained.

TNM, which sponsors the Super League of Malawi (Sulom), has confirmed it pays K21 million corporate tax annually (specific to telecommunication sector) for the K65 million income it spends on Malawi football, translating to K86 million expenditure on football.

If football sponsors were exempted, TNM head of marketing division Sobhuza Ngwenya yesterday noted, the K21 million could be an added football investment.

“TNM is indeed subjected to sponsorship tax. Sponsorship is not allowable for tax purposes. This means when we are paying corporate taxes on corporate profits, all expenditure on sponsorship is added back to the profits. So, this means that after paying the sponsorship money, we also pay additional 33 percent on top of the sponsorship to government,” said Ngwenya.

He was responding to The Nation’s questionnaire seeking confirmation of FAM president Walter Nyamilandu’s remarks of Tuesday that the sponsorship tax is scaring potential football sponsors, and also hurting existing ones.

“Sponsors such as TNM are complaining bitterly. Their K65 million sponsorship is taxable. The other problem is that there are no tax breaks or tax holiday for sponsors. I have been talking to the ministry that we should form a committee over this with no success. Securing sponsors is a problem,” he explained.

The FAM head was reacting to the Ministry of Youth and Sports Principal Secretary II Justin Saidi’s call of Tuesday for FAM marketing department to generate supplementary income for the Flames.

“Money is not always enough. There is need for them to raise some money and subsidise some of the costs. They should be able to market their services,” Saidi said when asked about funding for the Flames’ trip to Nigeria in September.

But Nyamilandu said they have been to most companies and they “cannot support the Flames as it is viewed as political platform”.

The rest of the private sector is subjected to 30 percent in taxes; hence, other football sponsors such as Carlsberg Malawi Limited and Standard Bank might not be feeling the same pinch as TNM.

On Tuesday, Standard Bank head of marketing, Chimwemwe Matonga, said they view their Standard Bank Trophy sponsorship as part of youth development.

“Our overall sponsorship policy has elements of donations. We get waivers if we are doing any corporate social investment. As Standard Bank, we enjoy generic tax waiver under donations,” Matonga explained.

Sulom general secretary Williams Banda had not yet responded to a questionnaire.

Sports Council executive secretary George Jana said he was formally unaware of the sponsorship tax complaints, but “it has been an issue we have been hearing. Unless they communicate to us, it would be difficult for us to engage government.”

A Malawi Revenue Authority (MRA) official said the issue of corporate tax was policy in nature and can be handled by the Ministry of Finance.

Commenting on the issue on Tuesday, Parliamentary Committee on Social Welfare chairperson Herbert Bimphi said much as his committee has heard from FAM and Sports Council about the need for tax incentives, “it is all about the manner in which they are presented”.

In his recent personal contribution to the drying sponsorship, veteran spots administrator Dean Pinto, noted that sponsorship will remain a challenge as, for example, “K25 million as a direct expense without tax rebate is business suicide.”

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