BLANTYRE-(MaraviPost) – The recent Malawi Revenue Authority (MRA) imposition of 30 percent tax on churches and faith-based organisations operating business ventures effective October, 2017, has not been well received.
MRA introduced the tax in its drive to widen the tax base for maximum revenue collection.
However, some members of the faith community in Malawi, strongly question the motive behind this drive; they argue that the tax bill is bent on milking religious institutions, that have numerous humanitarian programs.
At a meeting with the clergy in Blantyre this week, MRA Head of Corporate Affairs Steven Kapoloma said the tax will apply on businesses which religious institutions run directly or indirectly to boost their revenue collection.
Kapoloma explained that the new tax is not applicable to offerings and tithes.
He told the clergy to embrace this tax measure, stating that it is aimed at improving the country’s socio-economic development.
Kapoloma added that religious bodies qualify to pay tax because a number of them make payments to various suppliers and service providers.
“The Taxation Act requires taxes to be charged on, levied on, and paid by every ecclesiastical body at the rate of 30 percent as specified in the eleventh schedule to the Taxation Act,” said Kapoloma.
But reacting to the new tax obligation, Pastor Jeston Chiweza, General Secretary of the Living Waters International Church, said they do not understand the whole idea behind the new tax, which is supposed to be principle-based, not law-based as they currently sound.
“There is a continuous revolution in the world that has not spared all sectors of the church, including entertainment, transport, education and health; hence, they should rethink on what is tax-free, because that has potential to defeat our ecclesiastical role as religious bodies,” Pastor Chiweza said.
Muslim Association of Malawi (MAM) Secretary General Twaibu Lawe, also expressed disapproval with the new tax measure, arguing that some mosques are already feeling the effects of ecclesiastical levy.
Among the religious institutions to be subjected to the tax include those running private schools, hospitals, and clinics and other properties, which churches normally hire out for profits.
The new tax structure comprises income tax, pay as you earn (PAYE), withholding tax, value added tax (VAT), and the Tevet levy introduced in 2015.