MRA chief speaks on taxes

The Malawi Revenue Authority (MRA) has during the 2020/21 financial year beat its target by K28.7 billion. In this current financial year, the public tax collector is optimistic of beating the revenue target amid Covid-19 pandemic. Our business news analyst Grace Phiri engaged MRA Commissioner General (CG) John Biziwick on his turn-around strategy and more.

In the 2020/2021 fiscal year, MRA beat its tax revenue target by K28.7 billion. What is your secret for the turnaround?

Indeed, for the 2020/21 fiscal year, which is the fiscal year that ended on June 31 2021, MRA collected K1.108 trillion against a target of K1.079 trillion. This means that the authority exceeded the set target by K28.7 billion. This is a record collection considering the various challenges that the economy encountered such as Covid-19, which negatively affected operations of businesses as well as operations of the authority.

We must recognise that in the first quarter we had political impasse that had been there for sometime. Even business were slow. But after the elections, business became as usual and we encouraged taxpayers tostart paying their taxes as well as encouraged members of staff to own the processes of revenue collection.  I thank members of staff for a job well done.

But the credit for beating the 2020/21 tax revenue should not only go to MRA. I want to take this opportunity to applaud the taxpayers. This record collection is a true testimony that there are numerous compliant taxpayers who pay their tax liabilities on time and in full. It is, therefore, with great humility that the authority sincerely expresses its heartfelt gratitude and appreciation to all taxpayers who voluntarily came forward to pay their taxes. Even those that we had to push here and there for them to comply, we say thank you for paying the taxes.

Having said this, I would like to encourage those who failed to honour their tax liabilities in the last fiscal year to please come forward and pay the due taxes. Talk to us if you are not able to pay all your tax arrears at once. We can always find a winning solution for both you and MRA.

In the current financial year, your revenue target has been pegged at K1.033 trillion, which is a 26 percent growth considering that this fiscus runs for nine months. How optimistic are you of beating the target?

Despite the short period and the Covid-19 pandemic, we are highly optimistic that this target will be met. We have put in place a number of measures that will enable us achieve the target. Some of these measures are as follows: 

Block management system: As you were taken through the system yesterday, the Block Management System is a system designed to manage tax affairs of individuals, small and medium enterprises by demarcating an area, such as Blantyre central business district, into sizeable and manageable blocks. We will assign officers in these blocks to assist and ensure that everyone within that block is tax compliant.

Tax stamps: From the presentations made yesterday I believe that you fully appreciate the challenge of smuggling in Malawi. One way of dealing with this challenge is to put tax stamps on products that are frequently smuggled. To fight smuggling and seal revenue leakages, we are, therefore, extending the use of tax stamps from cigarettes to other products, mainly alcoholic and non-alcoholic beverages thereby dealing with the issue of smuggling and illegal production of these products.

Msonkho Online:  This is our flagship initiative for this year. The Msonkho Online project will see an automation of all domestic tax processes and procedures, leading to improvements in management of taxpayer compliance in terms of registration, filing and filing accuracy, and payments, in so doing, help taxpayers better fulfil their tax obligations. In other words, taxpayers will have more time allocated to their core businesses rather than queue just to get tax services.

These key interventions and many other strategies will be employed meticulously to assist broaden the tax net and improve tax compliance so that we meet the target.

Covid-19 cases continue to rise ad businesses have expressed worry that the rising cases and vaccine shortage could affect performance. What is your view?

Nothing has changed much since the previous financial year. Covid-19 isstill here, we just have to learn to live with it. We will continue from where we stopped in the last financial year to try and be sure that our staff is not exposed to Covid-19 as well as taxpayers, but I think we just have to encourage compliance by taxpayers without having the need to force them to pay their taxes.

Following the Tax Amendment Bill, Malawi will have a tax tribunal and this changes the role of the commissioner general in settling tax disputes. How do you view the formation of the tax tribunal?

It’s a good development for the taxpayers because the Bill puts obligations of MRA as well as those of the taxpayer under the tribunal.Previously, the CG could sit on an issue for months or years without making a determination but now we have a period under which this has got to be determined. But what ispleasing is that previously, the CG was the persecutor, jury and judge and if you were aggrieved with the  determination of the CG, you can appeal to the tribunal.

Finance Minister Felix Mlusu announced in his 2021/22 National Budget Statement that government will be implementing the duty free week to help cushion small enterprises. But other sectors feel this will drain the public tax collector of its much needed resources. How do you view this decision to have the duty free week? Is it political?

No, this is not politically motivated. Right now, trade taxes account for 30 percent of our taxes. Majority is domestic taxes. The duty free week will only apply to those registered tax-payers and this means once you register, we have recorded you in our books. This is about widening the tax net.