Stakeholders protest 40% tax on bank profits

Stakeholders are reacting angrily to the government’s decision to introduce special tax on banks that post profits in excess of 10 billion kwacha.

The 40 % levy, according to Finance Minister Sosten Gwengwe, is supposed to be a temporary measure to raise resources to fund various Cyclone Freddy affected sectors.

The development also comes after there have been growing public concerns over questionable resilience executed by banks, as they have remained highly profitable despite various economic and health crises that cripple the local economy.

Top 4 players on high street have for at least two consecutive years registered profits in excess of 20 billion kwacha.

However, former finance minister Joseph Mwanamvekha described the move as unfortunate, in insisting it has the potential to inhibit profit or incite misreporting.

“I am opposing the decision because this is in some ways discouraging companies from making profits,” he said.

Others have argued that the move may push some financial institutions to under declare their profits.

The Bankers Association of Malawi has since written the authorities on the matter, which they stress they were not consulted on.

“We understand what government is going through, but we believe that each business player should be accorded the same treatment during such tough times,” said BAM Chief Executive Officer Lyness Mkungula.

Meanwhile, Secretary General for the Minority Shareholders Association of Malawi Frank Harawa is worried that the additional tax will reduce their dividends.

“It’s like government is shooting its own leg. How could they claim to encourage people to participate at the stock market and start to limit their benefit from their investment?” Harawa asked.

Currently, Standard bank, FDH Bank and NBS bank have reported profit after tax of K39.2billion, K22.9 billion and K18billion respectively, for the year ended 31 December 2022.