MRA warns on funding plan
Public tax collector Malawi Revenue Authority (MRA) has cautioned Minister of Youth and Sports Richard Chimwendo Banda to tread carefully on his ministry’s proposal for companies to allocate one percent of their profits towards sports sponsorship.
Reacting to the proposal, MRA deputy commissioner general Henry Ngutwa said on Wednesday “there is need for a holistic approach to make it a win-win situations”.
He said: “I would say it is a good proposal at government level as what is intended is to involve all major stakeholders so that they can contribute towards sports development in the country. But from MRA perspective, there are definitely policy consideration.
“But I would reckon that as the corporate world contribute their one percent of their profit, from MRA side we have to consider how that plays into overall taxes they pay because you have to recall that
these corporate players are also taxpayers and government already chops 30 percent of their profits through taxes.”
Ngutwa said it has worked elsewhere, but through a different approach.
“I can confidently say elsewhere what they have done is to look at such contribution as allowable expenses or as allowable deductions so that as they are computing their final taxes these are taken out of the taxable amounts to give them some breathing space,” he said.
Ngutwa has since advised the Ministry of Youth and Sports to have a discussion with the Ministry of Finance to find a workable solution.
He said: “Since the Ministry of Finance is the main driver of policy, I would think as the proposals are being thought through we will sit down with the ministries of Finance and also of Youth and Sports so that everything is looked at holistically to make sure that contribution also gives the corporate contributor the benefits.
“The corporate will want to get some breathing space on tax relief and extras on such contribution. It’s a policy issue that require a meeting between Ministry of Finance and all involved.”
Ngutwa said companies will ask what they will benefit because they need to know the returns.
During a sports stakeholders meeting held two weeks ago, Chimwendo Banda said his ministry is planning to lobby Parliament to enact legislation for companies to remit one percent of their annual profits towards sports development.
He said companies make huge profits annually, but few contribute to sports.
Said the minister: “Why is it that many private companies and some government organisations are not willing to contribute something to the sports fraternity despite making billions in profits every year? How can we develop sports if organisations leave the responsibility to government alone?
“I challenge you to reflect on these questions and generate relevant answers that should help you make corporate decisions as whether to begin contributing something towards sports development.”
However, in an interview yesterday, the minister insisted that companies must comply with the proposal.
Minet Insurance Brokers general manager operations Lester Chinyang’anya also said the idea is good, but suggested that the companies should instead come up with a package as part of their corporate social responsibility.
“It is a brilliant idea from Minister Richard Chimwendo Banda because as a nation, we will have a pool of readily available resources that we can tap from for youths and sports development activities. But maybe the best way is for the private sector to come up with a vehicle that can be built and treated as part of corporate social responsibility instead of introducing it as levy,” he said.
Some financial analysts have also warned that the proposal is not as straightforward as it seems because companies already pay government a lot of money through taxes
