Malawi Revenue Authority (MRA) says the Specific tax that the institution is starting to implement from 15th July, 2023, has relinquished powers that the collection body had and give it to motor vehicle importers which they said is good in as far as determination of duty is concerned.
Over the weekend media platforms were filled with reports that MRA has unreasonably increased duty on all vehicle imports which led to panic buy people with dream of buying a car one day.
This followed gazetted new tax measures government published on Friday last week.
But briefing journalists in Blantyre on Monday, MRA’s Deputy Commissioner responsible for facilitation under Customs and Exercise, Chimwemwe Kawalewakle said what MRA has done is just to change a way of determining duty of cars.
“All along MRA has been using an ad valorem tax whose amount is based on the value of a transaction or of a property. The duty was typically imposed at the time of a transaction which caused a lot of problems. This led to people saying the tax collecting body is over charging duty because it is different with what they planned for.
“Now, parliament approved other tax measures like specific tax which has put fixed duty to cars according to their size, type and year of make, among others. This has given power to car buyers because the new measures provide predictability of duty to be paid and will not be charged extra amount in all borders,” he said.
Kawalewale said for example, in 2022-2023 financial year, MRA headquarters received a total of 290 duty appeal cases from different borders and out of this, 254 were appeals from used vehicle buyers which represents 87.6 percent.
He said: “you can see that it was important to have specific duty to avoid misunderstandings between MRA and customers as this was portraying bad image to the institution. Usually, specific tax is given to items or goods that are difficult to determine its value like used cars and second-hand clothes”.
MRA’s Head of Corporate Affairs, Steven Kapoloma said the new tax was driven by importers themselves and that MRA is just administering it after government followed all procedures including passing through parliament.
Kaploma said all along there has been challenges when it comes to calculation of duty in all used cars hence importers proposed the idea of having specific tax saying the new measure is in line with international standards.
“This means there will be no frequent disputes when it comes to clearing of vehicles. On several occasions people have been forging documents to reduce the price of vehicles so that duty can also be low. The matter is history now. No one will cheat his or her friend that can do something to reduce duty at the border.
“MRA was surprised that similar cars were being charged different duties because someone is using fake documents. Now cars have been put in bands meaning when buying, everyone will know the duty to be paid. The new measure is easy to administer because the value is prescribed. This will give proper planning for all car buyers,” he said.
Kapoloma said during 2021-2022, 2022-2023 and 2023-2024 budget consultations, many people including importers suggested for specific tax which they said would reduce misunderstandings when it comes to vehicle clearance at the border.
He said the new measure is fair and has ended corruption when it comes to clearance since it has provided uniformity on duty issues.