Excise tax stamp ill-timed—firms

 Businesses have said they will have no choice but to pass on the cost of excise tax stamps to consumers, a development that could result in rising prices of commodities being taxed.

The manufacturers and wholesalers, who voiced their concerns in Blantyre yesterday at a stakeholders meeting organised by Malawi Revenue Authority (MRA), also want the transition period

 to be extended from July 31 to December 31 this year.

The tax stamps excise regime dubbed, Kalondola Project, is being implemented in two phases, with phase one coming into effect on May 1 covering tobacco cigarettes, alcoholic beverages such as beers, wines, spirits, whisky and opaque beer and non-alcoholic beverages.

The second phase targets bottled water, carbonated soft drinks, drinks made from cereals, energy drinks, fermented sweet tea, lotion and glycerine, according to MRA.

In his contribution during the meeting, entrepreneur Dumiso Nyirenda of Ola Magents Club, said the tax measure is ill-timed and coming at a time the economy is tanking largely due to the impact of the 44 percent kwacha devaluation effected in November last year.

He said: “Most businesses will collapse because entrepreneurs are already struggling to cope with the realities after last year’s kwacha devaluation, which raised commodity prices.

“Most businesses cannot absorb this tax without sharing it with consumers.”

HS Beverages and Hospitality general manager Dalington Ndasauka, whose firm produces CapeStars liquor spirits, said tax is beneficial to any economy and while they accept the new tax measure, they want MRA to extend the transition period up to the end of this year to enable players clear their stocks.

Some of the entrepreneurs

 attending the meeting were cross-border traders such as Newton Mwenyekondo, who imports drinks such as Kombucha from Zambia.

He said the tax stamps will be a burden to bonafide cross-border traders who use formal channels when importing goods.

“I use the formal routes when importing the drinks from Zambia and for me to buy this stamp means additional cost,” said Mwenyekondo.

MRA Kalondola Project manager Steve Kuntembwe said the concerns and proposals will be presented to the

authority’s management for the final decision.

“We will start with soft implementation meaning that we will not start with enforcing, but we will be sensitising you to ensure that the process is smooth and not harming you,” he said.

In a separate interview yesterday, MRA head of corporate affairs Steve Kapoloma said the authority will maintain the deadline of July 31 with special cases being considered and treated differently, including providing the remaining stocks with free stamps

 Currently, Democratic Republic of Congo, Kenya, Malawi, Morocco, Sierra Leone, The Gambia, Tanzania, Togo and Uganda are implementing similar digital tax stamps.

According to MRA, Kalondola Project is aimed at protection the public by controlling the consumption of unbranded and counterfeit products, protecting the local economy from illicit trading, thereby promoting competition and enhancing tax compliance by ensuring traceability of the specified excisable products.

MRA granted businesses three months transition period up to July 31 to facilitate the sale and disposal of unstamped products that were locally produced or imported