Some irate tobacco growers from central and northern regions are planning to hold a vigil at Malawi Revenue Authority (MRA) headquarters in Blantyre over what they described as “perpetual failure” by the tax collecting body to remit their withholding tax.
The irate growers claim that MRA still owes them refundable withholding tax dating back from the year 2014 and they estimate that the cumulative figure is in billions of Kwachas.
The farmers, mostly from Dowa, Ntchisi and Kasungu in the central Region as well as Mzimba and Rumphi in the north, argue that should MRA softens up and remit their deservedly withholding tax, the move could see most farmers access fertilizer from the commercial market whose price has exponentially skyrocketed to a record high of K80,000 per bag.
In a telephone interview, spokesperson for the aggrieved farmers Titus Kandinga said despite all their efforts in submitting relevant paperwork at MRA to claim their withholding tax, they are still surprised that MRA is still snubbing and ignoring them.
Kadinga, who is based in Madison, Dowa alleged that some MRA officials are demanding a kickback of 30 percent from a single expected payout from a farmer, stressing that some desperate farmers have already dished out the kickbacks but still to no avail.
“To our dismay, our counterparts from southern region were given their dues but it has been a tall-order since 2014 for us from central region and our friends from the north.It is very unfair,” said Kandinga who is also chairperson for Moyo Uzuza Farmers Club in Bowe, Madisi in Dowa.
He further said failure by MRA to refund the said tax dues to the farmers could dampen the outlook for tobacco output this year, which he said could exacerbate foreign exchange situation in the short to medium term.
He added:” Farmers are already squeezed with the shooting of fertilizer on the market and most of them are comprising with manure.If this money is made available to us, then we will be in a position to purchase some fertilizer and boost the quality and output of our crop thereby boosting further economic prospects for the country.”
Tobacco remains Malawi’s number one crop in terms of foreign exchange generation as it wires over 60 percent of the country’s foreign exchange. However, in recent times, the crop has continued to face numerous shocks including the Withhold Release Order (WRO) in the USA as well as anti-smoking campaigns championed by the World Health Organisatioon (WHO).
Previously, tobacco farmers were being deducted a refundable 3 percent withholding tax from auction floors when they sell more than 10 bales or 1, 200kgs quantity of tobacco.
The farmers who did not meet the threshold for paying income tax were required to apply for a tax refund. However, due to several challenges, the process to receive the refund has over the years been delayed and farmers have continued to cry foul.
In the 2022/23 national budget, Finance Minister Sosten Gwengwe provided a sigh of relief to small-scale tobacco farmers in the country as he reduced such withholding tax from 3 percent to 1 percent final tax.
“To ease the burden of travelling and the amount of tax that tobacco farmers pay, the government has decided to reduce the withholding tax rate from 3 percent to 1 percent and make the tax final,” said Gwengwe.
This meant that tobacco farmers will no longer be deducted 3 percent withholding tax as it were but rather they will just be deducted 1 percent final tax from their total sales regardless of quantity of their sales. Consequently, it also meant that farmers are not expected to travel to MRA offices to claim their refunds.
Our efforts to talk to MRA on the complaints and vigil plans by the farmers has proved futile as we went to press