By Draxon Maloya
Government of Malawi will from 1st September this year start collecting Value Added Tax (VAT) from the Pension Administration Fees.
The development comes in compliance with the enactment of the Pension Act 2010 which is now being operationalised.
In a statement issued on Wednesday signed by Nico Pension Service Limited General Manager, Gerald Chima states that the pension Industry has been engaging Malawi Revenue Authority (MRA) to seek clarity on the implitations of the seperation regarding the application of VAT on Pension Administration Fees.
The press statement also state that the development led to the formation of Nico Pension Service Company Limited in 2017.
“In view of this the industry has recently received communication From the MRA that Value Added Tax will be levied on pension administration fees effective 1st September 2020.
“This means that going forward on the current administration fees paid by organisations, VAT be added at the rate of 16.5% of fees payable,” reads part of the statement.
Government is trying all its efforts to maximize its revenue collection base as a way of bailing itself out from the burdens of financial woes emanating from the catastrophic Covid-19 pandemic, fall army worms and post-election demonstrations which were disrupting business.
In 2020 the budget is projected to grow at the rate of 1.9 percent due to the impact of the novel coronavirus pandemic while the annual average inflation rate is projected at 10.7 percent which represents 1.3 percent point rise from the annual average rate in 2019.