Public tax collector Malawi Revenue Authority (MRA) has missed its April target by K6.83 billion, collecting K70.99 billion against a projected target of K77.82 billion due to underperformance of corporate taxes, domestic value added tax (VAT) and pay as you earn (Paye).
In recent months, MRA has continued to miss targets 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 K19.98 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 collector collected K17.60 billion against a K20.51 billion target on Paye.
According to the tax revenue outturn from MRA published on Wednesday, 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.
At K8.58 billion domestic VAT also fell short by K2.22 billion while a 23 percent overage registered by import VAT at K11.09 billion positively propelled the VAT category.
Speaking recently to Business News in view of MRA’s underperformance in the corporate and the Paye tax-lines, tax expert Misheck Msiska said-could be a sign that the economy is either stagnant or dwindling.
He said: “Both corporate tax and Paye are taxes that have to do with business. When the economy is thriving and businesses open up and when money changes hands employment is created which in the end creates Paye and corporate.
“If Paye is going down, this can definitely not be non compliance of taxpaying, but an indication that businesses are not performing well. If the economy is growing, the Paye and corporate tax are the two indicators from the tax front that show that the economy is doing well.”
But despite the MRA missing its target the revenue collecting agency cumulatively has collected K634.82 billion for the 2016/17 fiscal year which ends on June 30 against the target of K597.46 billion.