Malawi: Finance Minister Gwengwe’s Tax Decision Shocks Banks – Accused of Imposing Selective Tax On Bank Profit

Representatives of banks and shareholders say they are shocked by Tuesday’s decision by Finance Minister, Sosten Gwengwe to impose a selective income tax on banks that make profits of K10 billion or more.

The representatives said they are discussing possible legal redress over the decision which comes as Parliament plans to approve the 2023/24 budget on Friday, which the august House is deliberating in Lilongwe.

“What is the legality of this in the context of the Malawi Taxation Act? asked one senior banker who did not want to be named.

“While we appreciate the need to raise funds for recovery and relief after Cyclone Freddy, the Finance Minister’s decision appears selective and illegal.

“Why is he only targeting banks leaving out other sectors like telecoms, construction and agriculture that make similar levels of profit, if not more?”

Another member of Bankers Association of Malawi (BAM) said profitable institutions like banks and others are accountable to their shareholders and are charged with the responsibility of protecting shareholder interests.

“Such selective taxes will hurt the goose that lays the golden egg, and ultimately derail the economy which is already in doldrums,” she said.

“The government needs banks to be strong and resilient for it to navigate the financial markets easily when accessing credit to balance its budgets.