Tobacco growers threatens to invade MRA Headquarters s over withholding tax refunds

Some angry tobacco growers from central and northern have ganged up against Malawi Revenue Authority (MRA), accusing the tax collecting body of failure to refund their withholding tax.

Distressed with the situation, the farmers have threatened to hold a massive vigil at MRA headquarters in Blantyre as a desperate attempt to force MRA to pay them their dues which they claim are in billions of Kwacha, cumulatively, as they date back from the year 2014.

Spokesperson for the aggrieved farmers, Titus Kandinga

Random interviews by Nyasa Times with infuriated tobacco growers from Dowa, Ntchisi and Kasungu and also Mzimba and Rumphi in the northern region indicate that should MRA remit their deservedly withholding tax, the move could see most farmers access fertilizer from the commercial market whose price has exponentially skyrocketed to a record high of K80,000 per bag.

Speaking in a telephone interview from his base in Madisi in Dowa, spokesperson for the aggrieved farmers, Titus Kandinga said despite all their efforts in submitting relevant paperwork at MRA to claim their withholding tax, they are still surprised that MRA is still snubbing and ignoring them.

He said most growers from the north and southern region are frustrated and have now resorted to hold a vigil at MRA Headquarters in multitude.

Kandinga also alleged that some MRA officials are demanding a kickback of 30 percent from a single expected payout from a farmer, stressing that some desperate farmers have already dished out the kickbacks but still to no avail.

“To our surprise, our counterparts from southern region were given their dues but it has been a tall-order since 2014 for us from central region and our friends from the north. It is very unfair,” said Kandinga who is also chairperson for Moyo-uzuza farmers club in Bowe, Madisi in Dowa.

According to him, failure by MRA to refund the said tax dues to the farmers will likely dampen the outlook for tobacco output this year, which he said could exacerbate foreign exchange situation in the short to medium term.

Tobacco growers wants to invade MRA offices.

He added:” Farmers are already squeezed with the shooting of fertilizer on the market and most of them are comprising with manure. If this money is made available to us, then we will be in a position to purchase some fertilizer and boost the quality and output of our crop thereby boosting further economic prospects for the country.”

Tobacco remains Malawi’s number one crop in terms of foreign exchange generation as it wires over 60 percent of the country’s foreign exchange. However, in recent times, the crop has continued to face numerous shocks including the Withhold Release Order (WRO) in the USA as well as anti-smoking campaigns championed by the World Health Organisation (WHO).

A grower from Rumphi who did not want to be named, as he fears reprisals, said his own assessment shows that MRA owes him over K5 million in unclaimed withholding tax and worried that failure to get such a refund will likely force him out of tobacco farming next year citing high cost of farm inputs such as fertilizer.

Previously, tobacco farmers were being deducted a refundable 3 percent withholding tax from auction floors when they sell more than 10 bales or 1, 200kgs quantity of tobacco.

The farmers who did not meet the threshold for paying income tax were required to apply for a tax refund. However, due to several challenges, the process to receive the refund has over the years been delaying and farmers have continued to cry foul.

In the 2022/23 national budget, Finance Minister Sosten Gwengwe has provided a sigh of relief to small-scale tobacco farmers in the country as he reduced such withholding tax from 3 percent to 1 percent final tax.

“To ease the burden of travelling and the amount of tax that tobacco farmers pay, government has decided to reduce the withholding tax rate from 3 percent to 1 percent and make the tax final,” said Gwengwe.

This meant that tobacco farmers will no longer be deducted 3 percent withholding tax as it were but rather they will just be deducted 1 percent final tax from their total sales regardless of quantity of their sales.

Consequently, it also meant that farmers are not expected to travel to MRA offices to claim their refunds.

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