An economic think tank; the Economists Association of Malawi has advised the government to reach an agreement with Castel Malawi Limited, manufacturers of alcoholic and non-alcoholic beverages, over taxes to prevent its closure.
Kalilombe: If Castel closes that would affect Malawi's economy
President of the association Chiku Kalilombe said this after Castel Malawi officials said the brewery is on the verge of closure due to what they said continued decline in sales volume, turnover and heavy excise tax rate.
"The government should ensure that the taxes imposed on the company does not choke its operations. There can be a win-win situation agreement between the two," said Kalilombe.
He said averting the closure of the company would save thousands of jobs.
"If the company closes, the number of jobless people would increase and that would affect the country's economy," he said.
Castel Malawi managing director Herve Milhade says excise tax rate on malt beer would be 60 per cent on ex-factory price (sales price).
He said the 60 per cent is higher for operations, saying the taxes have been increased by 22 per cent on clear beer compared to what they were paying at 90 per cent on production cost.
There was no immediate comment from the government or the Malawi Revenue Authority.
Tax expert Emmanuel Kaluluma said now that excise tax calculation is based on production cost and mark-up, how much one loses out depends on their profit margins.
He, however, said government ought to have done a proper analysis before effecting the new tax as "government too can lose out on tax revenues from the employees in the case of retrenchments".
Castel Malawi is rated as one of the top 10 taxpayers in the country, contributing to the development of the economy for over 50 years and is also the number one taxpayers of import duties.
The company employs 1 284 people and has a business network of over 100 000 stakeholders, customers, suppliers, distributors contractors, locally and internationally.