Minister of Finance, Economic Planning and Development Joseph Mwanamvekha has withdrawn the proposed one percent withholding tax on mobile money transactions.
Mwanamvekha announced the withdrawal of the tax in a statement to wind up debate on the 2019/20 budget in Parliament on Monday.
When he presented the budget last month, the minister said the tax was aimed at ensuring that a large number of the citizenry are motivated to contribute toward national building through payment of taxes and ensure that Government has scope to improve service delivery.
He added that the move was in line with developments in neighbouring countries. The introduction of the tax, however, was condemned by various quarters.
Last week, TNM chief executive officer Michiel Buitelaar said the tax would lead to a rise in the cost of mobile money by 25 percent, making it unaffordable to majority of Malawians in the predominantly unbanked rural areas.
He added that the tax would curtail usage of mobile money and lead to reduction in potential growth in revenue collection by government
“This tax will slow down Malawi’s economic development. This proposed tax’s contradiction to the government’s objective – to create financial inclusion – is regrettable,” he said.
Consumers Association of Malawi Executive Director John Kapito also questioned the introduction of the tax saying it was aimed at punishing poor Malawians who are the biggest users of mobile money.