Lack of clarity of some taxation laws are leading to misinterpretation of texts of some provisions in the Taxation Act, a tax analyst has observed.
The analyst, Misheck Msiska, said this in view of a public notice issued by Malawi Revenue Authority (MRA) on the tax status of ecclesiastical, charitable and educational institutions where the public tax collector is reminding the institutions that they are not tax exempt on income generated commercially.
On paper, MRA’s directive as contained in the Public Notice of 7 February 2020 with the captioned heading is based on Section 13 of the Taxation Act.
But Msiska said if MRA wishes to levy tax on receipts and accruals of these institutions in relation to their income generating activities, they should first define the term “the carrying on of any business activities” as contained in the Taxation Act since such a definition has eluded the tax authorities since time immemorial.
“The crucial part of this piece of legislation is ‘the term the carrying on of any business’ which should have been defined for the law to be properly implemented. Unfortunately, the Taxation Act does not define the carrying on of any business.
In an earlier interview, MRA head of corporate affairs Steven Kapoloma admitted that most institutions are extending church-related exemptions to their commercial business which is a cost to MRA.