The Malawi Revenue Authority (MRA) has issued a statement clarifying that it has not introduced any Value Added Tax (VAT) on any industry.
According to MRA, tax laws are formulated through policy at the Ministry of Finance and passed in the National Assembly in the country.
The statement says the Authority is only implementing section 16 of the VAT Act which deals with VAT on supply of service. Pension administrators charge an administration fee for managing pension schemes. The fee attracts VAT like any other fee charged on taxable services.
The public should note that according to the VAT Act, pensions contributions do not attract VAT. However, as per the same Act, fees for the administering the pensions contributions do attract VAT. The VAT charged on fees is paid by the employer who is the recipient of the pension administration service.
The Authority is encouraging members of the general public to always seek clarification from MRA on tax matters through the Head of Corporate Affairs.