Malawi tax revenue beats target
The Malawi Revenue Authority (MRA) collected K29.09 billion in August, approximately 12 percent above its projection for the month, published figures indicate.
The tax collector, in a press statement published in The Nation on Tuesday, notes that the strong performance in the revenue collection reflected relatively strong growth in Pay As You Earn (Paye), withholding tax and value added tax (VAT) largely on account of good economic performance.
The good performance in the tax revenue points to a high likelihood of MRA meeting its annual target thereby ensuring that the central government does not borrow to meet its operations.
MRA, however, struggled in excise tax where it collected K3.16 billion about 7.2 percent below its August projection.
The tax collector also struggled in fringe benefits, company assessment and import duty.
“Local excise exceeded the monthly target by 21.69 percent on account of increased domestic production of excisable goods. On the contrary, import excise was about 18.8 percent below the month’s projection owing to a significant reduction in the value of imported excisable goods from K13.5 billion in July to K10.8 billion in August 2013,” reads the statement in part.
A further analysis of the August tax outturn indicates that individual income tax (largely Paye) contributed about 24 percent of the total revenue for the month.
This is apparently in tandem with Centre for social Concern (CfSC) which has faulted the country’s tax regime arguing it perpetuates income inequality in Malawi.
CfSC programme officer for economic governance Mathias Kafunda was quoted in The Nation saying that when corporate individuals are able to avoid their fair share of tax, ordinary citizens must bear a greater share of the of the burden thorugh Paye and sales tax.
The figures indicate that corporate tax contributed 3.2 percent while withholding tax contributed slightly above 13 percent of the total August tax revenue.
The analysis further reveals that VAT contributed 36 percent, excise duty 11 percent and international trade12 percent to the total.
However, MRA in the press statement notes that at K11.99 billion, the taxes on income and profits were 27.9 percent above the projection for the month against a background of strong performance in PAYE and Withholding tax.
MRA attributes the underperformance of fringe benefit tax by K13.69 million to companies migrating from paying fringe benefits to grossing up salaries.
The tax collector notes that corporate income tax collections totaled K4.75 billion during the period under review, an increase of 29.43 percent above forecast.
