MRA upbeat, collects K355.6bn in 3 months

Malawi Revenue Authority (MRA) has collected K355.1 billion in tax revenue in the first quarter (April to June) of this fiscal year, slightly  missing the target of K355.6 billion by K536.01 million.

Briefing journalists in Blantyre yesterday on  quarterly revenue performance, MRA commissioner general John Biziwick said the performance, at 99.85 percent, was enhanced by new tax measures and the 25 percent devaluation of the kwacha.

During the same period last year, MRA collected K302.1 billion, representing a growth of 17.52 percent over last year.

In his presentation, Biziwick said the revision of pay as you earn (Paye) bracket, increased enforcement through the block management system (BMS), commencement of advance income tax and an increase in value of duty purposes resulting from devaluation of the kwacha, helped improve tax collection during the year under review.

He said: “If K6.57 billion in Paye was cleared by the Reserve Bank of Malawi by close of business on June 30 2022, MRA could have beaten the quarterly target by K6.03 billion.

“Otherwise, exemption of value added tax [VAT] for water and cooking oil negatively affected VAT collection. Continued effects of forex shortages affected import duty, VAT and excise tax.”

Data shows that in April and June 2022, MRA beat its target by 105 percent and 102 percent, collecting K130.5 billion and K119.921 billion, respectively.

In May, however, MRA missed its target by eight percent by collecting K104.679 billion.

In June, for instance, data shows that Paye, penalties, dividend tax, import exercise and advance income tax performance was at 116.94 percent, 554.61 percent, 30465 percent, 107 percent and 173 percent in that order.

The tax bull collected K30.8 billion on Paye, K803 million on penalties, K2.8 billion on dividend tax, K8.6 billion on import excise and K1.1 billion on advance income tax.

Under BMS, which brings informal traders and small and medium enterprises into the tax net, MRA registered 405 new taxpayers between December and June, collecting K4.33 billion.

In June alone, MRA collected K1.41 billion from 94 new registrations, the data shows.

On the part of advanced income tax, which targets con-compliant taxpayers as well as bringing more informal traders into the tax net, MRA collected K2.11 billion against a target of K1.25 billion between May and June.

Increased enforcement at the Blantyre Inland Examination Centre as well as audits saw MRA collecting K1.44 billion from large taxpayer office audit and K141.95 million from post clearance audit between April and June this year.

Biziwick said the public tax collector is banking on widening tax base, enhanced trade facilitation, increased tax compliance and enhanced taxpayer education, among others.

In a separate interview, tax expert Emmanuel Kaluluma, senior tax consultant at EK Tax Consultants, said yesterday there is still room for improvement if corruption was thoroughly dealt with.

“They need to get rid of ineffencies and increase taxpayer education. It is also fair to assume that employees have had pay rise which results in more tax,” he said.

Institute of Chartered Accountants in Malawi chief executive officer Francis Chinjoka Gondwe said in an interview that while the efforts of widening the tax net are paying off, strengthening internal controls and compliance around VAT is key to improved performance.

“Government should also consider reducing Paye to cushion consumers,” he said.

This month, MRA projects to collect K141.92 billion, a 24.76 percent growth from the previous year’s K113.75 billion.

In the 2022/23 fiscal year, MRA projects to collect K1.5 trillion, an 18 percent increase from the previous year.