Public tax collector Malawi Revenue Authority (MRA) has missed its August 2015 target by three percent, by collecting K44.3 billion against targeted projection of K45.7 billion due to poor performance in corporate and trade taxes.
“The underperformance in corporate tax signals a decline in economic activity in the month of August 2015 partly due to frequent power shortages.
“The scaling down of expected profits by businesses as a result of using more expensive sources of power to sustain their production explains the underperformance of the corporate tax,” said MRA in a commentary accompanying revenue performance report for August 2015.
The report shows that company taxes totalled K964.9 million as company assessments and provisional taxes fell below their monthly targets by 44 percent and 23 percent respectively.
In July, the first month of the first quarter (July-September) of 2015/16 fiscal year, MRA beat its target by K100 million, by collecting K52 billion.
Cumulatively, MRA has collected K96.4 billion in the fiscal year, which is one percent below the projected K97.7 billion.
In other taxes, the report shows that under income and profits, MRA over-performed by one percent by collecting K19.5 billion against a projection of K19.3 billion, thanks to positive performances in pay as you earn (Paye) and fringe benefits tax (FBT).
Paye collections amounted to K11.9 billion, which his six percent above the monthly target of K11.21 billion largely due “to timely remittance of Paye to MRA by compliant employers”.
On FBT and non-resident taxes (NRT), the tax collection agency collected K410.8 million, beating the monthly target by 13 percent.
Value Added Tax (VAT) also performed well with a collection of K15.1 billion, beating the target by three percent, pushed by a good performance in domestic VAT, which registered a collection of K7 billion, according to the report.
Excise duties, import duty and other taxes also performed well in the month under review.
University of Malawi (Unima) Chancellor College economics lecturer Ben Kaluwa said MRA’s sluggish performance mirrors the performance of the private sector, which is touted as the engine of economic growth.
“The private sector has been depressed, a situation which impacts negatively on the economy and revenue collection,” he said.