Banks in Malawi and the Malawi Revenue Authority (MRA) have come under fire for failing to explain clearly the services to which the new value-added tax (VAT) will apply.
Malawians have argued that both the banks and the MRA do not understand the law which they are implementing.
Yesterday, Bankers Association of Malawi (BAM) said from 1st November this year, some banking services in the country will now attract a Value Added Tax of 16.5%. BAM, however, kept a tight lid on the services to be affected.
MRA Deputy Commissioner General, Henry Ngutwa then held a press conference where it accused BAM of misleading Malawians. According to MRA, only non-banking services are subject to VAT.
On its Facebook page, MRA listed non-banking services which are charged VAT. These include fee for providing statements, payment orders or transfers and charges for provision of online banking, credit card late payment fee or limit excess fee, charges for withdrawals from any ATM and fixed or variable fees for providing bank drafts/ wire transfers/ foreign currency exchange.
Others are charges for cash handling such as counting, sorting and safe storage, fees for processing credit or debit card payment transactions including gateway fees, interchange fees between banks, interchange fees between a bank and other financial institution or mobile financial payment service provider, merchant service fee or discount rate fee and point of sale (POS), imprinter or terminal rental charges.
Malawians, however, have argued that these are banking services.
“Yesterday, the Malawi Revenue Authority said withdrawing money from an auto-teller machine (ATM) is a non-banking service, therefore the value-added tax (VAT) will apply. Bankers, teach us. How on earth can withdrawing money from an ATM not be a banking service?” said social commentator Onjezani Kenani.
Law expert, Prof. Danwood Chirwa, said the revenue authority itself doesn’t understand the law.
“The banks to whom the law is addressed have no clue what they’re expected to do with it. I’ve looked the so-called law, I’m not sure the person who drafted it knew what they were putting down on paper. Certainly, the MPs have no clue what they enacted. That’s what happens when you put faith in charlatans,” he said.