Castel Malawi risks closure over heavy tax
By Patience Abeck
BLANTYRE-(MaraviPost)-Castel Malawi Limited, formerly Carlsberg Malawi Limited, is in the verge of closing its business due to continued decline in sales volume, turnover and heavy excise tax rate.
This was announced by Castel Malawi Managing Director Herve Milhade in a memo on Monday, June 17 to its members of staff.
Milhade said over the past few years, Castel Malawi has struggled to maintain business profitability due to mostly unfair conditions set by Malawi Revenue Authority (MRA), who have since taken over the company’s accounts.
“In 2013, the Malawi Revenue Authority confirmed calculation of excise tax for alcoholic beverages be based on 90% of production cost,” Milhade said in the memo.
In 2013, the tax collector confirmed the calculation of excise tax based on production cost.
“In September 2018, Malawi Revenue Authority advised the Company to start calculating excise tax based on ex-factory price (production cost + margin). At the rate of 90% this will adversely affect the performance, cash flow and survival of the company.
“As recently as Thursday, 13th June, 2019, I met with top MRA officials, Mr. Tom Gray Malaya, the MRA Commissioner General and Mrs. Nellie Jimmu — Commissioner of Domestic Taxes. However, these efforts have failed and the MRA has issued a final distraint notice against the Company.
“Today, Monday 17th June, 2019, the Malawi Revenue Authority has garnished Castel Malawi Ltd accounts. This action by MRA mean that Castel Malawi Ltd is at risk of closure and the withdrawal of Castel Group from the country due to unrealistic and unaffordable excise calculations.”
However, Milhade assures his employees that together with his management team, he will continue to put every effort to rectify the current situation to sustain operations and their commitment to employees, customers, consumers and the general public.
“I will dedicate my time to turn things around because this fight is not only for Castel Malawi Ltd but for all Malawians,” he said.
However, a source within the company disclosed that its boss indicated at a staff union meeting they had that the owners are considering leaving the country opting for Zambia, citing unfavorable economic environment and unstable political environment.
The source says the government milks the company by demanding payment on top of the excessive taxes it is being charged with.
“There is a crisis meeting in the boardroom Confederation by the management team and staff union to discuss the way forward,” said the source.
According to a document sent to this publication by the company’s Corporate Communications and Digital Manager Titha Mbilizi, the tax MRA is charging is exorbitant to the company.
”These actions by MRA mean that Castel Malawi Ltd is at risk of closure and the withdrawal of Castel Group from the country due to unrealistic and unaffordable excise calculations,” she said.
Mbilidzi adds “The position the Company finds itself in, means the potential end of a beverage legacy for the country and this means a Malawi without brands with such strong national heritage such as SOBO Squash, Malawi Gin, Premier Brandy; A Malawi without Carlsberg Beers, A Malawi without The Coca-Cola Franchise, A Malawi without Castel Beer.”
The company further sponsors football from a grass root level through its Copa Coca-Cola trophy which targets secondary schools and professional football through the Calsberg Cup and employs about one thousand, eight hundred eighty-four workers.
There was no immediate reaction from MRA on Castel Malawi Limited over heavy tax complaint.