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| Socam says more tax reforms needed |
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by
Frank Phiri, 10 July 2006
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07:47:19
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The Society of Accountants in Malawi (Socam) says it will “carry forward” a number of tax relief and gaining proposals which have been left out of Finance Minister Goodall Gondwe’s 2006/07 budget.
Chairman of Socam’s Taxation Committee Nkondola Uka said this at the organisation’s post-budget meeting in Blantyre on Friday.
In his paper presented to the meeting, Uka cited dividend tax, capital gains, withholding, pension, capital allowances, fringe benefit and income taxes as needing attention.
He said dividend tax—levied on a company’s or shareholders’ profit—is a form of double taxation and must be eliminated or reduced to 5 percent from 30 percent.
“If not eliminated completely, then it should be reduced to 5 percent and should not be applicable where the recipient is a company. Group relief can also be introduced,” he said.
On capital gains tax—levied on the gain made from selling an asset—Uka said Socam remains of the view that a comprehensive indexation allowance be introduced, in addition to that for periods up to January 1999, as spelt in the 2006/07 budget.
Uka also called on government to put in place clear transfer pricing rules to guide multinationals and others with foreign interests.
Transfer pricing refers to the pricing of goods and services within a multi-divisional organisation which entails that some of its activities may not be taxed where there are no clear rules.
Uka said Socam is also proposing that government should consider introducing relief on mortgage interest to promote the building of decent houses in the country.
On fringe benefit tax (FBT), Socam proposed that the threshold be increased from K5,000 to K7,000.
Uka also proposed relief on pension premiums for life policies of at least 10 years to encourage savings. At present individual pension premiums are taxed, and this has made pensions unattractive, he said.
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