Malawi Revenue Authority (MRA) says it expects to bring more Malawians and small and medium enterprises into the tax net to widen the tax base and promote a fair taxation system.
Speaking in Blantyre on Wednesday during a media interaction, MRA commissioner general John Biziwick said the tax collection agency has 33 143 active taxpayers of whom only 2.5 percent of the 1.14 million small businesses are tax compliant.
He said: “We are trying to widen the tax base so that more people are in the tax net in terms of registration, filing and payment.
“We have put several initiatives to do this, including the implementation of the Msonkho online, which is an integrated tax administration system to enable us to get hold of people who are outside the tax net.”
While observing that most local businesses remain largely untaxed with employees heavily taxed, Biziwick said MRA is also banking on the block management system rolled out last year to help broaden the tax base to meet its domestic revenue targets.
“With these and certain compliance tools which we are employing such as the tax clearance certificate and withholding tax exemption certificate, we are hopeful that we will enhance compliance on the part of taxpayers and help boost domestic revenue mobilisation,” he said.
Biziwick said MRA is positive about beating its revenue target this financial year since the revenue collection agency beat its target for the first month by collecting K130.46 billion against K124.75 billion.
Reacting to the development, tax expert Emmanuel Kaluluma, a senior tax consultant at EK Tax Consultants, said in an interview on Wednesday that improving tax compliance will require an overhaul in the way tax issues are handled.
He said: “The challenge we have seen over the years is that corruption has been pronounced and corruption does not sit well with voluntary tax compliance.
“We need to make sure that the general feeling that tax officials are corrupt is eliminated.”
In the 2022/23 financial year, Treasury projects total revenues and grants at K1.956 trillion representing 17.2 percent of gross domestic product (GDP).
Of the K1.956 trillion, domestic revenues are estimated at K1.636 trillion, of which tax revenues are estimated at K1.528 trillion while non-tax revenues is estimated at K107.8 billion.
In its recent report titled ‘Innovation in Tax Compliance’, the World Bank advised the Malawi Government to be innovative in its tax system to overcome persistent technical, political and social barriers to improve tax compliance and broaden domestic revenue.