Public tax collector Malawi Revenue Authority (MRA) has admitted facing challenges in some tax lines due to the coronavirus (Covid-19) pandemic.
In an interview on the sidelines of the launch of Voluntary Compliance Window last week, MRA commissioner general Tom Gray Malata indicated that the disease, which has affected economies globally, has made it difficult for the authority to collect enough revenue.
He said given that most of the country’s products are imports, there has been an impact on duty.
He said: “Taxes are collected on imports and we have seen countries going on lockdown. By going into a lockdown,it means we are losing out on duty because imports are not coming in.
“The fact that there is a challenge on materials means production of manufacturing companies has and will also be affected together with the sales.
“Equally, taxes like the value added tax [VAT] will go into the negative and corporate tax which is measured on performance of the company, will also have a big challenge. We are visiting taxpayers to assess the impact of this virus on businesses.”
In its latest assessment of the economic impact of the Covid-19, Economics Association of Malawi (Ecama) said revenue targets are likely to be lower than projected as businesses slow down due to multiple restrictions as a result of Covid-19.
The economists body also indicated that the reduction in trade taxes as a result of a major cut back in cross-border trade will mean that MRA may need to revise revenue targets for the last quarter of the financial year, a development which will result in widened budget deficits.
Meanwhile, Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has indicated that majority of businesses have been affected turnover, production, and availability of inputs, goods and services due to the Covid-19.
Government is already under pressure as it continues to record deficits with figures showing that central government budgetary operations for the first half of this financial year closed with a deficit of K165.7 billion.
At K165.7 billion, the half year deficit of the 2019/20 financial year meant treasury surpassed the earlier set deficit target of K155.9 billion by K9.8 billion