New system rakes in K40.9bn tax revenue
The Malawi Revenue Authority (MRA) says the Block Management System (BMS) has helped the tax agency.to widen the tax base, with K40.9 billion more collected since its introduction in 2021.
Speaking at a media training in Lilongwe on Thursday, MRA BMS manager Hlupekile Msyali said since its introduction, 5 455 new businesses have been registered nationwide.
She said: “Block Management System physically identifies and maps taxpayers and breaks them down into manageable blocks to allow MRA to visit them in person as well as to educate and encourage them in tax compliance.
“Since the introduction of the system, we have registered 5 455 new businesses across the country. However, we are still experiencing lack of cooperation by some taxpayers and bringing everyone in the tax net has been a challenge.”
Msyali indicated that establishing BMS was inspired by the 2019 FinScope Malawi micro, small and medium enterprises (MSMEs) study, which showed that there were only 27 732 taxpayers out of 1.6 million MSMEs in the country as of December 2020.
Out of these, 74 percent were micro businesses, 23 percent small and three percent medium small enterprises.
Now, with BMS successfully rolled out in Blantyre, Lilongwe and Mzuzu since the 2021/22 financial year, MRA is planning to expand to Zomba for increased coverage.
MRA is also implementing several other initiatives apart from BMS to achieve sustainable growth in revenue collection, including excise tax stamps, presumptive tax, Msonkho online and others, according to officials.
The presumptive tax, for instance, which is the advanced income tax for MSMEs with less than K12.5 million annual turnover, has already increased tax registration, improved compliance and broadened the tax base, according to MRA taxpayer education manager for Centre and North, Thoko Chiwaya.
Meanwhile, MRA head of corporate affairs Steve Kapoloma said the tax collection agency has achieved record revenue collection in the first six months of the 2023/24 fiscal year compared with the previous year, thanks to the implementation of some of these initiatives.
“In the first seven months of the fiscal year, we had numerous compliant taxpayers who paid their tax liabilities on time and in full,” he said.
Kapoloma was optimistic that the targeted revenue collection performance for the rest of the year will be met despite the challenges that the economy is encountering.
MRA is expected to collect K2.13 trillion in tax revenues in the 2023/24 financial year.
