The Malawi Revenue Authority (MRA) has revealed that government loses taxes valued at five percent of the country’s GDP, slightly over K90 billion per year to defaulters.
Malawi’s 2013 GDP is estimated at K1.9 trillion.
MRA commissioner for customs and excise (exports) Shadric Namalomba responding to an e-mailed questionnaire on Wednesday said due to tax defaults MRA collects tax revenues valued at 17 percent of the country’s GDP but has the potential to collect around 22 percent of the GDP.
To ensure that taxpayers regularise their affairs, MRA introduced a Voluntary Compliance Window (VCW) from November and closes today January 31.
But during one of the VCW sensitisation workshops in November last year the Asian business community complained that the period was short and asked for an extension.
A representative of the community, Altaf Mahommed ,was quoted having said that they would have loved if the window was extended to 12 months.
Namalomba noted that default rates are high in all tax lines especially incomes tax but was quick to point out that the tax collector has so far compiled a list of non compliant taxpayers.
“MRA knows who is defaulting or not. However, we want to give everyone out there who knows that they have taxes to be paid but failed to do so voluntarily come out now to any of our offices to declare their tax liability and negotiate with us on how that amount will be settled. This offer is still open until close of business on January 31,” he said.
In November MRA commissioner general John Biziwick was quoted in The Nation having said that people are exposed to punitive taxes because of tax defaulters.
But Namalomba added that the cost of not participating in the VCW programme is huge for the non-compliant tax payers and could wipe out an entire business and or send one into bankruptcy.
During the launch of the VCW late last year, he said after the closure of the window all tax defaulters will face stiffer penalties and heavy fines and risk being arrested, prosecuted in a court of law, or their accounts garnished.
According to the recent tax outturn, MRA collected K185.6 billion between July and December 2013.
Malawi’s total budget is projected at K640 billion. Tax revenues are projected at K328.1 billion while non-tax revenues are estimated at K35 billion ,according to the 2013/14 budget statement.