In the wake of inadequate funds to finance the national budget, Treasury has been cracking ideas on how to maximise domestic revenue to finance social services.
Until three years ago, Malawi Revenue Authority (MRA) was collecting taxes manually, a system that was porous and aiding tax evasion.
In light of the realisation that globally, countries are digitising their taxation regimes for maximised revenue collection, MRA recently introduced digital e-payment system.
Information and communication technology (ICT) expert, Vincent Kumwenda, who is also chief executive officer of Mhub, a technology firm, said in an interview on Monday that Malawi faces infrastructure challenges that need to be sorted out to scaleup digital payment platforms.
He said: “Government should try to push Internet rates down to induce accessibility because most of the things people do to digitise their services or even paying taxes hinge on accessibility and affordability of Internet.”
Last week, tax experts from African Tax Administration Forum (Ataf) and the African media met in Rwanda and agreed that digitisation of taxation systems is long overdue.
They argued that infrastructure and accessibility issues remain impediments to digitise the taxation system.
Ataf director of tax programmes Mary Baine said African countries, including Malawi, cannot achieve meaningful development if they fail to maximise domestic tax revenue aided by digital platforms.
She said: “The era of digitisation is upon us, and we can no longer ignore the fact that Africa’s much-needed tax base is being eroded through unrecorded revenue.
“Our continent needs all the resources if it is to promote its socio-economic growth and the well-being of its populations.”
In his contribution to the taxation discussion, MRA media expert Henry Mchazime said MRA continues to achieve progress in the automation of its services and provision of such services electronically.
He said the introduction of e-payment service three years ago is enabling taxpayers to make tax payments at any place of their choice.
“Access to the e-payment service is available 24/7 through MRA’s website and latest information that is there shows that over 70 percent of tax revenue collected comes through e-payments,” said Mchazime.
On his part, Rwanda Revenue Authority commissioner of domestic taxes Aimable Kayigi Habiyambere said taxpayers digitisation enhances tax compliance.
He said: “Taxes play a critical role in the growth of each country, so providing information to the community is something that is important. On our part as the Rwanda Revenue Authority, we give feedback to the citizens, we collect the taxes and channel it to government coffers.”
Local tax analyst Emmanuel Kaluluma said in an interview on Tuesday it is time Malawi embraced digitisation of its taxation regime.
“Digitisation of the taxation regime will enhance revenue collection and transparency in the payment systems because everything is automated.
“What is important for now is for Malawi to work on its infrastructure challenges, to create a fallback solution when Internet is affected to ensure seamless digital services,” he said.
On compliance issues, Kaluluma said government needs to combat corruption and enhance transparency so that people see the value of paying tax.
Another tax expert, Misheck Msiska, who is also director of taxation services at EY, an audit and business advisory firm, said MRA needs to put its house in order because there are a lot of inconveniences in relation to tax remittances on digital platform.
“You find that you make your payment today and days later the payment is not reflected on the tax returns form, then you are forced to physically go to MRA office to register your complaint by way of showing proof of transaction physically.
“So, we have a long way to go when it comes to digitisation of our taxation systems,” he said.