Cooking oil companies threaten job cuts over 16.5 %VAT

The battle between  Edible Cooking Oil Association of Malawi  (ECOAM) and government on the introduction of  16.5% VAT rages on as Ministry of Finance rebuffs the association on their grievances.

ECOAM officials

ECOAM wrote the Ministry of Finance and MRA on the impact of the introduction of 16.5% VAT on cooking oil, however the Ministry of Finance in its letter refused to bow down.

“Kindly note that the VAT cannot be reversed midway through the budget considering that the legal instruments were already passed by Parliament,” reads part of the letter signed by Secretary to the treasury, Chauncy Simwaka.

However, ECOAM chairperson, Jayshree Patel told members of the media on Wednesday during a press conference at Amaryllis Hotel in Blantyre that there are so many implications if government continue shunning their grievances.

For instance, she said this development will force cooking oil companies  to increase prices of cooking oil.

She also warned that the companies will not be left with an option rather than chopping off some workers.

“We beg government to address this issue otherwise member companies of cooking oil will commence retrenchment in the month of March as due to 50% drop in sales. The financial losses are rising and companies cannot afford anymore to hold on, “she said.

Patel also  said the problem is that with the increase of cooking oil it has resulted in an influx of substandard cooking oil on the local market entering into the country illegally due to porous borders.

Another worrisome development is that  the Soya that is purchased from local farmers is VAT free-and that  currently government has imposed a 3% withholding tax which farmers are already refusing to be deducted.

Instead, the association has since predicted that as the 3% withholding tax continues, Malawi farmers will sale their soya to buyers outside the country to fetch better prices denying the local oil industries whose total installed capacity to crush Soya is at 500,000 metric ton per annum.

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Erik P
Erik P
1 month ago

What’s worse than this is that the MRA are taxing solar goods despite the government saying they don’t tax solar goods.. and it’s not the large systems that go in rich people’s houses, it’s the pico solar that people in rural areas purchase.

I’m not against VAT, but the priority should be economic development not government spending. I’ve seen how increasing VAT can collapse an economy. The best way to get more cash is to EXPAND the businesses so tax revenue increases, not to penalise businesses more.

Last edited 1 month ago by Erik P
Phaloni
Phaloni
1 month ago

The problem is that the Amwenyez are always hungry for insane profits and they hate paying taxes. The government should not bow down to their nonsense demand. We are all paying taxes and who do they think they are for them not to pay taxes? Let them retrench whoever they want and the government will use the tax-money for investment and will employ back those who will get retrenched. Amwenye ndiamene akuononga dziko lathuli..

IMRAN PATEL
IMRAN PATEL
1 month ago
Reply to  Phaloni

The problem with you is that you don’t look the type who is educated. The local farmers will suffer and the workers will suffer. A value added tax is tax collected on behalf of customer and remitted to the tax authorities. The so called mwenyes are charging vat to buyers and remitting to the mra. At the end of the day it’s the consumer who is paying the tax not the mwenye manufacture of cooking oil, no sane country charges vat on necessities.

IMRAN PATEL
IMRAN PATEL
1 month ago
Reply to  Phaloni

By the way you didn’t mention the soya bean farmers refusing to pay 3 percent withholding tax . The vat will affect the poor Malawians as it’s a consumer tax .The mwenyes who are oil manufacturers Are simply charging vat to customers and vat collected remitted to MRA . What you fail to grasp is at the end of the day it’s the poor Malawian consumer who is paying vat not the mwenye manufacturer .

Last edited 1 month ago by IMRAN PATEL
mtete
mtete
1 month ago

Ofcource soya bought from farmers should be VAT free because there is no Value Added at the selling stage.
Typical of anzathuwa; always striving to create a panic situation with the uterior motive of subsequently reaping benefits. Raise cooking oil prices if you want because nobody will buy the stuff anyway.

Eddy Banda
1 month ago

I’m wondering if the government had decreased the vat were they going to complain? These are the hard times and every Malawian has to sacrifice. VAT increment will affect all Malawians not only Indians who only think about themselves only. Smuggling goods across the borders has been there for years. The most important thing is to increase the growing of the soya beans to decrease its prices in the marketplace. What ECOAM can do is to get involved in the growing of soya beans, meaning shifting some of its labor forces into agriculture activities to maintain its selling prices cheap.… Read more »

IMRAN PATEL
IMRAN PATEL
1 month ago
Reply to  Eddy Banda

If a company is not selling cooking oil and cannot cover overheads it’s quite obvious that it will try to reduce costs to survive. One of the ways to reduce cost would be to lay off workers . What’s happening is that by govt imposing vat on cooking oil makes it more expensive. People are buying cooking oil smuggled from Mozambique. Our friends in Mozambique do not charge vat in cooking oil as it’s a necessity item. If a Malawian cooking oil manufacturer is not selling cooking oil because consumers are buying Mozambique cooking oil means loss of Malawian jobs… Read more »

Last edited 1 month ago by IMRAN PATEL
Islam
Islam
1 month ago

If governments continue to refuse the reduction of prices other companies would suffer losses and hence unemployment rates would increase so dziko lopanga 1 million jobs ija layamba kupanga 1 million losses we all aware that VAT will some how have no effect on the companies as they can claim on their costs but majority of Malawians are employed in the informal sector and raising prices would reduce how much their real income buys and hence would be reluctant to buy and will opt for cheaper and low quality cooking oil hence reducing the health of the people of malawi……my… Read more »

Charles Juma
Charles Juma
1 month ago

Who is Jayshree Patel? And How come She is involved and Became Chair person of ECOAM as she is NOT involved in Manufacturering of Cooking Oil in Malawi There are only Few Major players Manufacturers who Direct produce Oil or Do the Bottling of Cooking Oil in Malawi These Manufacturers and Bottlers are complaining about VAT Why? Manufacturers Should be Questioned How many Years Malawi was Having VAT on Cooking Oil and despite that Manufacturers use to make Huge profits all these Years Since Two/Three Years Malawi was NOT having VAT on Cooking Oil and Manufacturing Companies had Made Huge… Read more »

Anzanufe
Anzanufe
1 month ago

They implemented a bad policy the doesn’t protect local companies. I wonder where the 1 million jobs will come from. Shooting it’s own foot. Shame!

Kala
Kala
1 month ago

Stupid amwenye let them do job cuts or close shop. VAT is paid by consumers not companies

IMRAN PATEL
IMRAN PATEL
1 month ago
Reply to  Kala

Well then my friend what you do is you provide jobs for people who have been retrenched.

BigMan
BigMan
1 month ago

From the picture one would think this is India. Or perhaps they are waiting for exclusive Astrazenica vaccine.

What a pityful African country we live in.

titu
titu
1 month ago
Reply to  BigMan

These people lobby for everything, they lobby to get an exclusive access to vaccines too.

BornForTheWutsi
BornForTheWutsi
1 month ago
Reply to  BigMan

All I see are Malawian busineess people. Keep that racism to yourself.

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