MRA targets MDAs to boost revenue
Malawi Revenue Authority (MRA) has outlined a bold plan to connect with three government ministries, departments and agencies (MDAs) by the end of the year as part of a larger strategy to increase revenue collection.
MRA officials disclosed this in Lilongwe on Thursday during a presentation to the Budget and Finance Committee of Parliament where they updated lawmakers on the progress of the World Bank-supported Fiscal Governance Programme.
MRA is set to receive $14 million (about K24 billion) from the World Bank to support the government’s efforts to improve resource mobilisation, budget execution and accountability to strengthen the country’s fiscal resilience.
In an interview, MRA marketing communications manager Wilma Chalulu said two MDAs have already met with the revenue authority to discuss the collaboration.
“Collaborating with the MDAs will enable us to quantify how many taxpayers are obligated to pay VAT [value-added tax] and evaluate their compliance capacity. We are on track to have three MDAs connected by year-end,” she said.
According to the presentation, MRA is required to connect with three MDA systems by the end of 2024, the first year of the project.
The tax collector also aims to increase the number of large companies filing tax returns electronically from 75 percent in 2023 to 85 percent by the end of 2024.
Additionally, it also plans to boost the number of companies filing income tax and personal income tax returns from 58 percent to 70 percent over the same period.
Budget and Finance Committee of Parliament chairperson Gladys Ganda commended MRA for staying on schedule and expressed optimism that its efforts will support the government’s goal of reducing deficits.
“As you know, the government is carrying about K15 trillion in debt. We have moved from around K4 trillion to K14 to 15 trillion, highlighting the pressure on the government to generate more revenue. This project offers us a chance to create another revenue stream,.”
Figures from the Ministry of Finance and Economic Affairs reveal that Malawi’s debt increased by K2.1 trillion in the first half of 2024, bringing total debt to K15.1 trillion.
Ganda’s concerns about Malawi’s debt and fiscal situation align with a World Bank analysis in the latest Africa Pulse report, which indicates that Malawi has one of the highest fiscal deficits, along with Burundi, Namibia, and Rwanda.
The report reads: “These deficits contribute to exchange rate instability, as observed in Malawi, where the deficit is projected to reach 18.7 percent of gross domestic product in 2024, putting pressure on international reserves.”
Global financial institutions, including the International Monetary Fund (IMF) and the World Bank, have urged the Malawi government to increase revenue collection, particularly through the Domestic Revenue Mobilisation Strategy, to offset rising deficits.
The MRA has been officially implementing the Malawi Fiscal Governance Programme for Results for three months. Parliament passed the Bill during its last sitting and the $80 million (about K140 billion) project is set to run for five years.
The programme depends on the government achieving key goal, namely improving public resource mobilisation, strengthening budget prioritisation and execution, and enhancing resource transparency and accountability.