The November 2013 total tax revenue fell by 25 percent to K28.12 billion compared to October but was 11.4 percent higher than the projection for the month, available figures indicate.
The Malawi Revenue Authority (MRA) November 2013 report, released this week shows that the fall was due to seasonal factors and a reflection of a typical tax cycle whereby certain taxes are collected on a quarterly basis.
The public tax collector has added that the good performance in some taxes against the projected revenues for the month reflected relatively strong growth in Pay As You Earn (Paye), withholding tax, Value Added Tax (VAT) and excise taxes on account of continued good economic performance.
But Centre for Social Concern (CfSC) economic governance programme officer Mathias Kafunda, responding to an e-mailed questionnaire on Tuesday, said tax revenue fluctuations mean that authorities are failing to manage tax risks.
“Tax revenue fluctuations mean that governments have to cope with less revenue and a higher cost to ensure compliance. Moreover, the lack of tax revenue leads to critical under-funding of public investment that could help promote economic growth,” said Kafunda.
He added that when tax rules permit certain businesses to reduce their tax burden by shifting their income away from Malawi, where income producing activities are conducted, other taxpayers bear a greater share of the burden.
Specifically, the MRA report indicates that taxes from income and profits totalled K10.44 billion, 21 percent above projection due to strong performance in all the tax lines under this category while Paye revenue stood at K6.90 billion, 28 percent above projection and seven percent higher than the October 2013.
However, corporate tax underperformed its monthly projection by 35 percent during the month under review owing to underperformances in both company assessment and provisional taxes.
MRA further attributes the fall in provisional tax from K9.2 billion to K328 million due to the nature of the payments which are paid on a quarterly basis.
The report also indicates that a total of K10.69 billion was collected from VAT while a total of K3.58 billion was collected from excise tax.
The report further shows that import duty collections were 11 percent below target as a result of a reduction in the value of dutiable imports from K25.7 billion in October 2013 to K24.8 billion in November 2013.
The tax collector notes that seasonally, Malawi imports non-dutiable agricultural-related items such as fertiliser during this period.
