HRDC pens AG to suspend VAT on banking fees
Human Rights Defenders Coalition (HRDC)has written the Attorney General (AG) to suspend enforcement of some sections of the Value Added Tax (Amendments) Act, 2021.
Bankers Association of Malawi (BAM) on Thursday announced the introduction of 16.5 percent VAT effective November 1 on some banking services following amendment of the VAT Act during the Budget Meeting of Parliament in July this year.
In a letter dated October 29 2021, HRDC through lawyer Wesley Mwafulirwa argue that the amendments will affect actualisation of people’s rights to economic activity, equality and dignity.
The letter adds that the amendments will grossly affect matters of financial inclusion, especially bearing in mind the financial dynamics in the times of the Covid-19 pandemic.
The human rights body has since warned that if their demands are not met and the law comes into force, they will seek a constitutional review of the impugned amendments.
Responding to the grievances, AG Thabo Chakaka Nyirenda said he will engage all stakeholders, including BAM and the Registrar of Financial Institutions to iron out the sticky issues.
Reads the HRDC letter, in part: “The amendments have the potential to further widen the gap between the rich and financially marginalised members of our community.”
And, it adds: “In light of the foregoing, we have received instructions from our client to demand that the above amendments should not be enforced and that your office should start facilitating the process of reviewing the impugned sections of the amended law.”
Among others, HRDC has pointed out that the amended law has added VAT on interchange fees between banks, which is against inclusion of poor masses in the financial industry.
It further says the amended law also seeks to add VAT on interchange fees between a bank and other financial institutions including mobile banking, which has greatly helped with financial inclusion of the vulnerable groups of our communities.
Following BAM’s announcement, Malawi Revenue Authority on Thursday clarified at a press briefing in Blantyre that the amended VAT Act was not a new law as such banks were not expected to hike their service fees.
In an earlier interview, Consumers Association of Malawi executive director John Kapito condemned the new fees and feared they would push more Malawians into financial hardships as they are already burdened with other banking services charges.
