Raging dissatisfaction and anger from new information about taxing pensions has pushed the Malawi Revenue Authority (MRA) out of its cocoon to clarify on the matter.
MRA Head of Corporate Affairs Steven Kapoloma says the tax bull has not introduced any Value Added Tax (VAT) on any industry.
“Tax laws are formulated through policy at the Ministry of Finance and passed in the National Assembly in the country. MRA is only implementing section 16 of the VAT Act which deals with VAT on supply of service.
“Pension administrators charge an administration fee for managing pension schemes. The fee attracts VAT like any other fee charged on taxable services. The public should note that according to the VAT Act, pensions contributions do not attract VAT,” Kapoloma says.
He further clarified that as per the same Act, fees for the administering the pensions contributions do attract VAT.
“The VAT charged on fees is paid by the employer who is the recipient of the pension administration service,” says Kapoloma while encouraging members of the general public to be in touch with his office for any information about MRA on tax matters.
Some experts have argued that while Value Added Tax (VAT) on pension administration fees may not be applied on pension savings, it may be passed on to the populous from pension managers through charges.Follow and Subscribe Nyasa TV :