Malawi Revenue Authority (MRA) has faulted the sluggish economy for continued underperformance in the Pay as You Earn (Paye) and Corporate Tax lines.
MRA deputy commissioner Roza Mbilizi in an interview on Tuesday said while the tax collection projections are too high, the sluggish economy is partly to blame for the recent tax under collection.
“Sometimes we expect the economy to respond in a certain way and it doesn’t. Sometimes you base your targets that there will be raises in salaries and if that doesn’t happen in that year, then you don’t collect as much as you planned,” explained Mbilizi.
Since March this year, MRA has continued to miss tax collection targets especially, in two tax lines—Paye, a tax derived from payrolls and Corporate Tax, a tax levied on the profits of a firm—despite the revenue collection agency beating its monthly targets.
In March, tax revenue collection stood at K61.09 billion against a target of K55.92 billion where as a total of 19.98 billion was collected against a target of K21.51 billion in Paye and a K3.03 billion shortfall was registered in corporate tax.
Similarly in April the revenue collecting agency collected K17.60 billion against a monthly target of K20.51 billion on Paye while corporate taxes at K11.45 billion also fell short of the K20.07 billion target as a result of the underperformance of all taxes under the corporate target category.
In May, the tax bull underperformed, collecting K58.67 billion against the monthly target of K61.42 billion due to underperformance corporate taxes at K2.06 billion which fell short of the K22.68 billion monthly targets. At K17.44 billion Paye also fell short by K5.96 billion.
Speaking recently in view of MRA’s underperformance in the two tax lines tax expert Misheck Msiska said could be a sign that the economy is either stagnant or dwindling. n