MP for Mzimba West (Peoples Party) Harry Mkandawire has expressed fears that Malawi jails would be full of tax convicts if the proposed penalties for businesses which evade remitting Value Added Tax (VAT) are going to be followed to the letter.
Malawians would be punished for ignorance of some of the amendments to the VAT Act, according to VAT Amendment Bill which Minister of Finance, Economic Planning and Development Goodall Gondwe tabled on Tuesday.
The bill 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.
Mkandawire said the punishement was “too harsh” and also said many would be languishing in the already overcrowded jails if the imprisonment for contravention of VAT laws punishment will be followed to the letter.
Salima Central MP Felix Jumbe (Malawi Congress Party-MCP) also argued that most Malawians in rural areas were illiterate and did not realise the implication of accepting goods without a receipt.
“We cannot afford to penalise these Malawians with K500 000. We do not want this, it is a colonialist mentality,” said Jumbe.
Minister of Justice Samuel Tembenu defended s the penalties as justified , saying there is an option for a fine and imprisonment, “ the judiciary is at liberty to choose one.”
The Bill was passed with one amendment to Section 46 (E)1 after a proposal from Dedza North West MP Alekeni Menyani (MCP) to to protect the unsuspecting buyer.
The amendment reads: “A person who, after purchasing goods or services fails to demand and retain a fiscal receipt or fails to report refusal by a user to issue a receipt, would be liable to a penalty of three times the tax payable.”
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