Taxes choke ICT sector
Information and Communications Technology Association of Malawi (Ictam) has urged government to review some of the taxes in the ICT sector to achieve universal access.
In a written response on Monday, Ictam president Bram Fudzulani said levies have a huge impact on the utilisation and adoption of ICT services in Malawi.
Figures compiled by the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) show that Internet providers pay annual licence fees, spectrum fees and an annual sales turnover levy of 3.5 percent to Malawi Communications and Regulatory Authority (Macra).
Apart from these, Internet has a 10 percent excise tax and 16.5 percent value added tax and 0.5 percent Malawi Bureau of Standard (MBS) levy for every ICT equipment imported.
The ICT industry is also charged five percent copying levy on media storage devices enforced by the Copyright Society of Malawi.
Fudzulani said in other economies, governments have used Universal Service Fund to subsidise levies and taxes to promote use and adoption of technology.
He said: “We cannot keep pushing the blame only in one direction of the technology operators when government has a role it can play to help with the situation.
“We need government to walk the talk when they say they are committed to promoting the use and adoption of ICT services in the country.”
In an interview yesterday, Consumers Association of Malawi executive director John Kapito said high charges in the ICT sector have hampered its growth.
He said 30 percent of levies and service charges are government taxes, a situation that has resulted in consumers paying more for ICT services.
Said Kapito: “Why should government collect from the consumer 27 percent in duties for a product that is meant to facilitate the growth of key sectors.”
A 2014 survey on Access and Usage of ICT Services in Malawi by Macra indicated that despite the increase in the usage of computers, the rate of growth remains low even below the level for Africa.
A regional ICT watchdog rated Malawi among 10 eastern and southern Africa countries with low ICT penetration at nine percent and mobile penetration at 36 percent.
This is in contrast to Zimbabwe, Tanzania and Zambia whose ICT penetration is at 95 percent, 83 percent and 73 percent respectively and a corresponding Internet penetration rate of 50 percent, 40 percent and 31 percent in that order.
In an interview yesterday, Minister of Information Gospel Kazako said the same companies that are making services exorbitant and unaffordable are offering low prices in other countries with environments similar to that of Malawi.
He said: “After deducting all you have cited, there are mobile phone companies that are making profit after-tax in excess of K20 billion. That smacks of profiteering.
“ICT is a crucial ingredient to the creation of the digital economy we need. Growth in modern economies is achieved via higher levels of digitally motivated participation.”
