MRA reintroduces VAT on wheat flour
Consumers of bread and other confectionaries should expect to pay more for the commodities effective May 1 as public tax collector Malawi Revenue Authority (MRA) has asked milling companies to start charging value added tax (VAT) on wheat flour and wheat by-products.
In a letter addressed to local milling companies which The Nation has seen, MRA said the development follows the expiry of the period for the administrative suspension of 16.5 percent VAT on wheat flour and wheat flour by-products in 2010.
“We write to inform you that the period for the administrative suspension of VAT on wheat flour and wheat flour by-products expired in 2010. You are aware that law was amended in 2010 to remove excise tax on wheat flour and this was the time that your concession on VAT expired,” reads part of the letter dated March 25 2015 signed by MRA deputy commissioner (Large Taxpayer Office) Rainnie Vokhiwa.
Ministry of Finance spokesperson Nations Msowoya said the move is in line with taxation rules and regulations.
Said Msowoya: “VAT is a provision in the Customs Tariff Book. Companies that have been written the letter, asking them to start charging VAT were given a grace period to let them grow and familiarise with the market since they were new in the industry. Now that period has expired, they are required to do as asked as the law demands.”
On his part, Consumers Association of Malawi (Cama) executive director John Kapito said the development is not worrisome to the consumer, pointing out that some market products are driven by demand.
“This requirement is clear and we are sure that the milling companies were aware of this development even before the official communication. The market will be determined by the demand and I am sure the milling companies will consider this,” he said.
