Steven Kapoloma-MRA Corporate Affairs
After our article of 22 August, 2020 of government intentions to introduce VAT on Pensioners Retirement package. This is what Malawi Revenue Authority had to comment through its Director of Corporate Affairs Mr Steven Kapoloma.
The Government of Malawi’s Tax collecting body defends it’s position in regards to the speculated Value Added Tax (V.A.T.) on the pension packages. MRA said this on 22 August, 2020.
Malawi Revenue Authority (MRA) issued a statement clarifying that it has not introduced any Value Added Tax at any industry.
According to MRA, tax laws are based on formule through policy at the Ministry of Finance and passed in the National Assembly.
The statement says the Authority 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 as per the Taxation Act of Malawi.
The public should note that according to the VAT Act, pension contributions do not attract VAT.
However, as per the same “Act” fees for 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.
The Authority is encouraging members of the general public to always seek clarification from MRA on tax matters through the Head of Corporate Affairs when there is information they seem to understand.