Malawi is imposing VAT on certain banking transactions. However, stakeholders remain confused about precisely how authorities will implement the new VAT rules.
Following an amendment to the VAT Act, authorities are charging VAT of 16.5% on specified transactions.
Initial reports suggested that VAT could apply to ATM transactions, transfers to other bank accounts, cash transfers to mobile wallets, among certain other transactions.
When is a banking transaction not a banking transaction? T
The Malawi Revenue Authority (MRA) says that VAT only applies to ‘non-banking services’. Moreover, on their Facebook page, the MRA posted a graphic stating that VAT act ‘exempts banking services from VAT
However, the MRA says that services subject to VAT include fees for providing statements, interchange fees for banks, and other fees. Charges on drawing cash from ATMs are also subject to VAT.
Seeking clarity from Malawi authorities
Commentators suggest that such transactions are clearly banking transactions and say that authorities are not effectively explaining the new rules.
“The banks to whom the law is addressed have no clue what they’re expected to do with it. I’ve looked at the so-called law, I’m not sure the person who drafted it knew what they were putting down on paper,” law professor Danwood Chirwa told Malawi24.
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