The Malawi Revenue Authority (MRA) hopes the tax base will widen and value added tax (VAT) collections jump by 20 percent following the introduction of Electronic Fiscal Devices (EFDs)—an advanced version of an electronic cash register.
MRA commissioner general John Biziwick told journalists in Blantyre on Wednesday the rollout of EFDs effective on March 6 will play a critical role in improving efficiency and effectiveness in the administration of VAT—a form of consumption tax levied on the purchase price—and also level the playing field.
“As a revenue collecting body, we shall always endeavour to find ways to enhance tax compliance, increase revenues and reduce cost of compliance by the taxpayers,” he said.
Biziwick said one of the objectives of EFDs, apart from helping businesses improve their records management systems, is to track down businesses that have not been remitting the correct amount of VAT collected.
According to Biziwick , there are about 8 800 businesses, that “faithfully and honestly” pay their VAT.
EFDs are being introduced following the enactment of the law in July 2011 to introduce and enforce the use of these devices.
MRA has certified local distributors, Business Machines Limited, Canotech Limited, Gestetner and Xerographics, to sell these devices ranging from $787 to $930 to eligible VAT operators and also install, train, maintain, integrate them to existing systems and securing of after sales support.
The rollout of the device will start with phase one from March 6 to June 31 2014, targeting all VAT operators currently issuing manual receipts and those using ordinary cash registers while the second phase, at a large stage, will target VAT operators currently using Point of Sale (PoS) systems and business to business invoicing system.
In essence, the devices are free of charge because all VAT operators that will procure, install and use the EFDs within the stipulated timeframe will benefit from a cost recovery scheme by claiming 100 percent cost of the device from MRA through subsequent VAT returns.
MRA commissioner of domestic taxes Nellie Jimu said the tax collector has been facing tax compliance challenges that include the suppression of sales, non-issuance of tax receipts/ invoices, non- remittance of VAT collected, undervaluation of tax receipts/ invoices, using multiple sets of business records and non -disclosure of branches and associated businesses.
She said EFDs record all sales transactions at the point of sale, have fiscalised memory, which means data cannot be erased, produce fiscalised receipts and uses GPRS/mobile network connectivity to transmit the data to MRA central server.