Banking to get expensive? New Tax gets mixed reaction s

By Staff Reporter

Malawians accessing banking services will have to part with a little more money, following revelations that commercial banks will peg a 16.5 percent Value Added Tax (VAT) on some services, beginning November 1, 2021.

A picture making rounds on social media, from Bankers Association of Malawi (BAM), indicates that the move is in accordance with amendments in the VAT Act made by Parliament.

An employee at the BAM Secretariat who did not want to be named confirmed the development.

Spokesperson in the Ministry of Finance, Williams Banda, asked for more time to give a clear explanation on the move but was quick to say the consumer tax will not affect consumers.

On social media , several people have attempted to explain the whole thing. Legislator Ezekiel Ching’oma gave his understanding of the whole thing which would help those getting confused.

Ching’oma wrote “

Financial institutions charge their customers fees on various services they offer to the said customers. These services include ATM charges, transfer charges, etc. The Value Added Tax Act has been amended and the said amendment has introduced charges on the services that the banks are already offering and charging their customers.”

“For instance, National Bank of Malawi charges K225 when you withdraw money using their ATM card from another local bank’s ATM. This means the Value Added Tax of 16.5% will be charged on the K225 translating into K37.12 as VAT. Therefore, a customer will be paying K262. 12 for that transaction”

He went on to say “Some quarters have misunderstood the said amendment to mean something else. For instance they’re saying that if you’re withdrawing K100, 000 you will be charged K16, 500. This information is totally wrong.VAT will be paid on charges and/or fees that are already being charged by the banks on their customers”

Renown social commentator Onjezani Kenani seems not keen on the idea , writing “OK, so they say don’t put your money under your bed. You go to the bank, the bank chops off its fee for keeping your money, the government will be chopping off its pound of flesh, then you walk into a shop, where MRA is waiting to skin you alive. Let’s not forget, this is the money from which Pay As You Earn was already deducted. You have nowhere to run.”

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