VALUE ADDED TAX (AMENDMENT) BILL, 2016
MEMORANDUM
This Bill seeks to amend the Value Added Tax Act in order to—-
(a) provide for registration of mining projects for VAT purposes;
(b) Prescribe definitions of -
(i) business;
(ii) taxable person; and
(iii) mining project to carter for mining projects;
(c) provide for a basis for mining projects to be able to claim input VAT; and
(d) widen the tax base by reducing zero rated and exempt supplies..
ARRANGEMENT OF SECTIONS
SECTION
1. Short title and commencement
2. Amendment of s. 2 of Cap. 42:02
3. Amendment of s. 11 of the principal Act
4. Insertion of new sections 19A, 19B and 19C into the principal Act
5. Amendment of the First Schedule to the principal Act
6. Repeal of paragraph 6 of the Second Schedule to the principal Act
A BILL
Entitled
An Act to amend the Value Added Tax Act
ENACTED by the Parliament of Malawi as follows—
1. This Act may be cited as the Value Added Tax (Amendment) Act, 2016, and shall come into operation on 1st July, 2016.
2. Section 2 of the Value Added Tax Act (hereinafter referred to as the “principal Act”) is amended by—
(a) deleting the definition of “business” and substituting therefor the following definition—
““business” means the carrying on of any form of commercial activity, by a corporate body, individual, partnership or any organization and includes the conduct of a mining project;”;
(b) deleting the definition of ‘'taxable person” and substituting therefor the following definition—
““taxable person” means a person registered under section 11 and includes an individual, partnership, group of persons, company or corporation registered by the Commissioner General under that section and includes a person registered in relation to a mining project under that section, which shall be taken to be a separate taxable person from that person registered or on whose behalf another person is registered in any other respect;”;
(c) inserting, immediately after the definition of “lotteries”, the following new definition:
““mining project” means—
(a) the holding of a mining permit;
(b) the conduct of activity under that "permit including reconnaissance for, exploration for, and mining operations for minerals and including like operations for clay, sand, gravel, stone, or for any substance commonly won by quarrying;
(c) the financing of any of those activities in (a) or (b) whether by debt or by equity; and
(d) the supply by sale or otherwise of anything resulting from those activities or of anything used, created or acquired in those activities;”; and
(d) inserting, immediately after the definition of “mining project”, the following new definition—
““mining permit” means—
(a) a mineral tenement or an artisanal mining permit as defined under the Mines and Minerals Act; and
(b) where a mining permit covers an area taken from another mining permit while that permit was held by the taxpayer, the area of the other mining permit during the period before the later mining permit was taken from it.”.
3. Section 11 of the principal Act is amended by deleting subsection (1) and substituting therefor the following subsection—
“(1) A person is registrable as a taxable person if he is a person who makes taxable supply of goods or services or conducts a mining project and, whose business turnover is, or exceeds, K 10,000,000 per annum.”.
4. The principal Act is amended by inserting, immediately after section 19, the following new sections—
“19A. A taxable person in relation to a mining project makes a taxable supply when any goods or services are used for purposes other than the mining project or are supplied to any other person, and that taxable supply is taken to be for consideration equal to the value of die goods and services so used or supplied,
19B—(1) A taxable person in relation to a mining project shall be considered to make a taxable supply of all the assets of the mining project when no mining permit continues to apply to the project, and the person remains a taxable person in relation to that mining project for the purposes of this Act even though the mining project may otherwise cease to exist,
(2) For purposes of this section, taxable supply is taken to be for consideration equal to the value of all the assets of the mining project so disposed of.
19C_-(1) A taxable person in relation to a mining project shall be considered to make a taxable supply if control or effective control of the conduct of the taxpayer’s mining project, or of the taxpayer, or of the benefit of the conduct of the taxpayer’s mining project changes, whether by a transaction to which the taxpayer is a party or by some other transaction.
(2) The taxable supply shall be considered to be of the results of reconnaissance and exploration in relation to the mining project and the consideration for that supply is taken to be the value of the results of reconnaissance and exploration in relation to the project.”.
5. The First Schedule to the principal Act is amended by-—
(a) deleting subparagraph (c) of paragraph 2, and substitutingtherefor the following subparagraph—
“birds’ eggs, natural honey and infant milk under Customs Tariff Headings 0407.11.00 to 0407.90,00, 0409.00.00 and 1910.10.10”;
(b) deleting paragraph 4;
(c) deleting paragraph 9; and
(d) deleting paragraph 5 and substituting therefor the following paragraph-
“Printed Matter—Books Exemption covers printed books under Customs tariff headings 4901.10,00 to 4903.00.00, 4905.10.00 to 4905.99.00 and 4907.00.90.”.
6. The Second Schedule to the principal Act is amended by repealing paragraph 6.
Objects and Reasons
The object of this Bill is to amend the Value Added Tax Act in order to—
(a) provide for registration of mining projects for VAT purposes;
(b) prescribe definitions of—
(i) business;
(ii) taxable person; and
(iii) mining project to carter for mining projects;
(c) provide for a basis for mining project to be able to claim input VAT; and
(d) widen the tax base by reducing zero rated and exempt supplies.
Kalekeni Kaphale, sc
Attorney General
B. No. 19
Please share your feedback below and help us improve our content.