Tax penalties worry MPs

Proposed penalties for businesses which evade remitting Value Added Tax (VAT) have made members of Parliament (MPs) nervous that Malawians would be punished for ignorance of some of the amendments to the VAT Act.

Minister of Finance, Economic Planning and Development Goodall Gondwe tabled the VAT Amendment Bill on Tuesday which aims to improve efficiency in the administration of VAT and clarify the tax requirement by restricting issuance of tax invoice to an Electronic Fiscal Device (EFD) while adjusting penalties for VAT evaders.

Traders who don’t use the EFD would be penalised to pay K500 000 and then K1 million and imprisonment for two years upon conviction.

But MPs described the punishment of a fine and imprisonment for contravention of VAT laws, as stiff.

MP for Mzimba West (Peoples Party) Harry Mkandawire said if followed to the letter, jails would be full of tax convicts.

But Minister of Justice Samuel Tembenu said the penalties were justified because government was failing to manage its finances since businesses given the responsibility of collecting tax on its behalf were crooked.

Said Tembenu: “The General Intepretations Act was clear that where theres an option for a fine and imprisonment, the judiciary is at liberty to choose one.

“We are here to make laws, not to interpret them. There are others whose job is to do that.”

The Bill was passed with one amendment to Section 46 (E)1. n