ICT body calls for cut in ICT services taxes
ICT Association of Malawi (Ictam) has urged the Ministry of Finance and Economic Affairs to review taxation policies on information and communications technology (ICT) services to make Internet services accessible.
The association’s president Clarence Gama said this in his submission to the 2023/24 National Budget proposal to the Ministry of Finance And Economic Affairs.
He said ICT services are generally unaffordable due to high taxation regimes in the sector, a situation which calls for a review on the same.
“We have the 15 percent non-residence tax on software licenses and this affects cost of operating systems sourced outside the country. We thus urge government to consider revising this to at least five percent.
“We would also want to see the government revising the 20 percent withholding tax on local software developers by considering an exemption regarding their role in the country’s digital transformation agenda. Further, a review on excise tax on telecommunication and bandwidth-related products will also go a long way in promoting ICT services as Internet is the fuel for the fourth industrial revolution,” he said
Gama further called for tax waivers for local ICT companies that are making heavy investments to ICT infrastructure that will support the national agenda.
He said: “Waivers on technology devices can be used to promote online and electronic learning in primary and secondary schools.”
Meanwhile, the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has also observed that the ICT sector needs to be incentivised to grow the sector.
MCCCI chief executive officer Chancellor Kaferapanjira, in his presentation to the same, urged government to consider policies for innovation and entrepreneurship.
He said: “We hope to see a tax structure that promotes domestic assembly, processing and manufacturing rather than promoting imported finished products, in the computer industry.
“Government should provide incentives for new value chains including tax waivers for a specified time-span to allow for growth, reduce 15 percent non-residence tax to 5 percent on software licences to reduce licence cost to third-party subscribers. This will encourage growth in technology uptake.”
He also urged the government to remove some of the levies charged on ICT equipment saying this will go a long way in making ICT accessible.
“Currently, there are a lot of levies being on ICT, for instance, Malawi Bureau of Standards currently charges a levy of 0.5 percent on every ICT equipment coming into Malawi, then Cosoma media levy is also charged on ICT equipment.
“Although government stated that this was only going to be applied for ICT storage equipment which are sold to the end users, the reality on the ground is that it is being applied on all ICT equipment including cables and even switches,” he argued.
Minister of Finance and Economic Affairs Sosten Gwengwe has since indicated that government will consider proposals made for the forthcoming fiscal plan but mostly focus on quick wins in sectors that can generate wealth and create jobs.
