The government of Malawi has removed 16.5% Value Added Tax (VAT) on internet services, which was introduced last year by the regime of late President Bingu wa Mutharika.

The announcement was made in Parliament, when Finance Minister Dr. Ken Lipenga tabled a K406 bn 2012/2013 national budget.

Dr. Lipenga explained that government had removed VAT on newspapers and internet services to allow Malawians access information at affordable prices.

While internet users and service providers are happy there are fears within the section of people who use mobile internet as the Finance Minister had bad news for mobile phone operators.

“I wish to report that Government has increased the rate of corporate tax paid by cell phone operators from 30% to 33%,” announced Lipenga.

Random interviews conducted in most internet cafes in the commercial capital, Blantyre, indicate that consumers are set to enjoy reduced prices as a result of the VAT removal.

“At the moment we charge K5 per minute when customers come here to browse on the internet and we might remove K2 or K1 because although the tax has been removed, other costs remain the same,” says Alfred Phiri, an internet bureau owner in Chilomoni Township in the city.

Meanwhile, the Malawi Confederation of Chambers of Commerce and Industry (MCCCI), wants more light shed on corporate tax on the cellphone operators.

“Government has to explain the raising of corporate tax rates for cellphone companies in the interest of transparency,” said MCCCI CEO Chancellor Kaferapanjira.

He said while discriminatory corporate tax rates can be applied to achieve set government objectives, it is necessary for the objectives to be explained to the public.

President Mutharika was implementing a zero deficit budget that necessitated taxing, everything including internet services and newspapers in the country.

Newspaper companies who also run online versions hailed the removal of the taxes.

Soon after announcement, the media fraternity welcomed the development, starting with the Malawi chapter of the Media Institute of Southern Africa (MISA-Malawi).

MISA-Malawi chairperson Anthony Kasunda says this is proof that the administration of President Joyce Banda is serious about supporting the growth of the media industry in the country.

The deputy CEO and Editor-in-Chief of the Nation Publications Limited (NPL), Alfred Ntonga, says access to information is a right in a democratic Malawi and by imposing VAT on newspapers and internet, the previous administration was simply pushing news beyond the reach of the majority of Malawians.

Tikhala Chibwana General Manager of Blantyre Newspapers Limited (BNL) said the idea of taxing public information was wrong.

Source: BiztechAfrica By Gregory Gondwe, Blantyre, Malawi