Members of the public have expressed their incredulity and scepticism of the explanation by Malawi Revenue Authority (MRA) that only non-banking services in the country attract value added tax (VAT) as according to the law.
On Thursday, MRA Deputy Commissioner General, Henry Ngutwa held a press conference that disputed a statement from Bankers Association of Malawi (BAM) that says effective Monday, November 2, 2021 “all fees and charges will be subject to a 16.5% VAT as per VAT amendment Act 2021”.
But Ngutwa says this statement, which customers keep receiving through SMS, is misleading and misinformation that needs to be corrected as only non-banking services are subject to VAT.
According to Ngutwa, VAT Act exempts banking services from VAT but only for “fees, charges and non-banking services at 16.5%” — which include fee for providing statements, payment orders or transfers and charges for provision of online banking.
Others are credit card late payment fee or limit excess fees; charges for withdrawals from any ATM; fixed or variable fees for providing bank drafts, wire transfers and foreign currency exchange.
Also charges for cash handling such as counting, sorting and safe storage; fees for processing credit or debit card payment transactions including gateway fees and interchange fees between banks.
VAT is also on the interchange fees between bank and other financial institution or mobile financial payment service provider as well as merchant service fee or discount rate fee and point of sale (POS).
Commenting on Facebook, Jose Jandalala says the press release from BAM says the amendment of the VAT Act indicates that some services that banks provide will attract VAT.
“[BAM] did not say whether this applies to the so called ‘banking’ or ‘non-banking services’. [So] the question is — what is MRA refuting? What if BAM comes in and say the ‘some’ in their press release qualifies the non-banking services. What will this MRA briefing mean to us?”
Saulosi Kachitsa held the fear that regardless this clarification from MRA, banks will still implement this while Tamandani Mwera said MRA and BAM needs to get their stories straight.
“The press release was ambiguous and non-informative. These two should be on the same page so as to avoid more panic.”
Mwai Kambwiri was of the opinion MRA, as a Malawi Government department, should have been the first to explain how this proposed tax on banking services would be implemented.
“Now BAM has taken advantage and detonated the bomb towards its interest at the expense of the sitting Government and its politburo. At some point there is a cost to this, I mean the votes.
“BAM being an affected party, took advantage and bloated the matter by deliberately making a misleading statement, and they have what they wanted, the public outcry.
Mike Nalikungwi joined in to say last year, when the the VAT Act was amended it included it on cooking oil and that “MRA was busy holding press briefings that this should not affect consumer prices”.
“Their justification, somehow, made sense. It’s a bit technical, and I don’t want to go into that. However, what the ordinary consumer witnessed was an increase in the prices of cooking oil.
“The processors blamed the increase on the VAT. In the end, MRA failed to protect the consumer. As it stands, we can only believe that they were only trying to protect their political masters, who, in turn, failed to protect consumer interest.”
Mallick Nnela was of the opinion that MRA has created the question — “what non-banking services do banks have to offer? BAM will have to hold a press briefing to clarify.
“Possibly, they will create another issue for MRA to clarify. Meanwhile, bank customers will continue to fund the drama.”
Members of BAM are CDH Investment Bank, Ecobank Malawi Limited, First Capital Bank, FDH Bank Plc, Standard Bank Plc, MyBucks Banking Corporation, National Bank of Malawi Plc and NBS Bank.Follow and Subscribe Nyasa TV :