By Robert Katuli
Lilongwe, April 24, Mana: The Malawi Revenue Authority (MRA) has paid back about K9.5 billion to tobacco farmers in the country as refund for the deductions the farmers were subjected to between 2014 and 2019.
This was disclosed on Wednesday at Crossroads Hotel in Lilongwe during a meeting between MRA and tobacco farmers.
MRA Deputy Commissioner (Lilongwe Domestic Taxes) Janet Kholowa said the Authority was applying and deducting withholding tax on the farmers’ tobacco sales at the auction floors at a rate of three percent from 2014.
“When a farmer brought his or her tobacco to the auction floors, there was a law that mandated the auction to withhold three percent from the sales.
“It was now up to the farmer to bring the financial accounts of the business to MRA so that we could see whether the farmer made profits or not,” she explained.
Kholowa further said that this was like making the deductions in advance before properly assessing the profits the farmer made.
“Many times we could see that the farmer never made any profits at all, so that he wasn’t supposed to be deducted withholding tax or was not supposed to pay tax, hence we had to process a refund to the farmer. So, this amount is from 2014,” she added.
A representative of the tobacco farmers, Lyson Artwell Banda, who is also Group Village Head Kasangazi, confirmed that MRA has refunded them their money from 2014 to 2019.
“The money reached this amount because we weren’t getting refunds in the past. We are thankful to the current administration, as it has initiated so many things for the good of the farmer.
“In the past years, we weren’t benefitting from our tobacco farming because of the taxes that weren’t helping us. We were, however, lucky in 2020 when this government reduced the tax at the auction floors from three percent to one percent,” said Banda.
The one percent rate of the withholding tax, which Banda is referring to, was arrived at by government, through MRA, as a way of correcting the situation and doing away with the past anomalies.
The new rate is also being calculated basing on the total tobacco sales and not profits, as it was the case before.
With this arrangement, the tobacco farmers have now no need of providing MRA with any information about how their business has performed and, on the other hand, MRA has also been spared from going through the process of refunding the farmers whenever they have not made profits.
The total amount of money, K9,491,710,628.12, has been refunded to a total of 14,800 farmers’ clubs, with one club comprising at least ten members.
