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 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.