Deloitte, a business advisory, tax and auditing firm, has faulted government for lacking efficiency in providing crucial information to firms on the amended Taxation Act.
The firm’s managing partner Nkondola Uka said this yesterday during their 2018/19 National Budget analysis session in Blantyre to advise auditors on the new taxes that became effective on July 1 this year.
He said the proposed changes not highlighted in the budget presented by Minister of Finance, Economic Planning and Development Goodall Gondwe in May include the requirements contained in the new Taxation Act for firms to have a tax identification number and for banks to start deducting a non-resident tax.
However, Uka said the Taxation Act, the Value Added Tax (VAT) Act and the Customs and Excise Act amendments lacked crucial details that could assist businesses to ably comply with various tax regimes.
He said: “In as much as the minister gave indications of the changes that are to come, what we find is that the devil is always in the detail. There is much more information that businesses need to know in the bills than what was given by the minister.
“Of course, it is unfortunate that these bills come out pretty late and at the same time they are effective on the first day of July. So, we thought we should be with our clients and advise them on the changes with a focus on those issues that may impact on them.”
Among others, the Taxation Act was amended to introduce a requirement for the registration of salaried employees and issuance of taxpayer identification number by Malawi Revenue Authority (MRA) which Uka said most firms were not aware of.
Treasury also introduced a requirement under Section 34 of the VAT Act for submission of VAT returns to MRA on imported services.
This measure is applicable only to services delivered by non-residents who are not registered for VAT and this will be a compliance measure.
One of the participants, Robert Chileka from Central Africa Limited, commended the latest tax changes in the current budget.
“We have learnt a lot of things. Some of these tax issues are not clear. In my case, I deal with the foreign investors [and] now there is need to furnish the Malawi Revenue Authority with the returns whenever we declare a dividend and we have to do that quickly,” he said.
Chileka said auditors previously faced challenges, including the estimation of income, and the session has helped them to make such projections as accurate as possible.
In the budget speech, Gondwe said government intends to bring efficiency in tax dispute resolution mechanism through the establishment of the Tax Revenue Appeals Tribunal and also improve on tax administration through the implementation of the Tax Administration Act.