Government exempts cooking oil, water from VAT

Government has exempted cooking oil and tap water from Value Added Tax (VAT) following concerns on the rising cost of the commodities.

Minister of Finance, Honourable Sosten Gwengwe announced the VAT exemptions in Parliament on Friday, 18 February 2022 when he presented the 2022/23 fiscal budget.

He said the Ministry of Finance had received many suggestions on the taxation of cooking oil and held various meetings with players in the industry.

“A study was conducted by my Ministry to see how best we can assist the industry to ensure that the cost of cooking oil is affordable for all Malawians,” he said.

The Finance Minister said the key contributing factor for the high cooking oil prices is the huge increase in prices of raw material used for the production of cooking oil, most of which are imported.

“Government has henceforth decided to exempt cooking oil from VAT. It is my belief that this gesture will be reciprocated by the cooking oil manufacturing companies by reducing cooking oil prices hence forth,” he said.

He said Government has also exempted tap water from VAT as one way of ensuring that potable water is accessible to all Malawians at affordable rates.

Honourable Gwengwe also announced that Government has abolished the Withholding VAT system.

“Government noted that the Withholding VAT system is causing various problems to business people, mainly with regards to holding up their operational revenue,” he said.

The exemptions will become effective on 1 April 2020 once Parliaments approves the amendments and the President assents to the changes.

By Wadza Otomani