Escom enforces VAT on services
Electricity users in the country should expect to pay more for services provided by the Electricity Supply Corporation of Malawi (Escom) following introduction of value added tax (VAT) to the cost of its services with immediate effect.
Escom said in a statement that the move is in compliance with the VAT Act of June 2006.
Reads the statement in part: “Customers are encouraged to take note of this development and plan accordingly when accessing services provided by Escom.”
Services that are now attracting VAT include capital contribution (gross amount paid by the customer), rechargeable works, reconnection fees, disposals and penalties for levied on customers such as illegal connections and power factor charge, according to the statement.
In an interview on Saturday, Malawi Revenue Authority (MRA) head of corporate affairs Steve Kapoloma confirmed the development, highlighting that the move is not a new tax measure but an enforcement of what the law stipulates on VAT.
He said: “The law has not changed, not today. This is just an enforcement of what was supposed to be happening. The VAT Act is clear that all services incurred in the process of production of electricity should be taxable.”
Escom public relations officer George Mituka was yet to respond to an e-mailed questionnaire on the rationale of the move.
Reacting to the development, consumer rights activist John Kapito described the move as retrogressive to electricity consumers in the country.
He said: “In a country where electricity is not accessible to many and we are trying to ensure that many people have electricity access, putting these unfair charges in the name of taxes does not serve consumers justice.”
Kapito, who is also Consumers Association of Malawi (Cama) executive director, said this will deter people from getting basic services which means the poor will remain poor.
Presently, MRA is conducting a tax compliance campaign among business and individuals named Everyone Must Pay Tax which runs till this month. n
