The Malawi Revenue Authority has said tax rates in Malawi are lower than in most of the countries in the southern region of Africa.
Head of Cooperate Affairs, Steve Kapoloma made these remarks in an interview with the Malawi News Agency (Mana) Tuesday in reaction to widespread concerns from the public that the revenue collecting agency is overtaxing Malawians.
“Malawi rates are comparable to other countries in the region and in some instances lower. This is supported by data from a study conducted by the International Monetary Fund (IMF) comparing Malawi and countries within the region like Mozambique, Zambia, Zimbabwe and Kenya among other.
“A recent look at monthly income tax rates for individuals, commonly known as Pay as You Earn shows that it is 30 percent here in Malawi. PAYE in South Africa is 41 percent, Zimbabwe at 50 percent, Mozambique 32 percent and Tanzania 30 percent,” Kapoloma said.
He warned that MRA would deal with any type of tax evasion in the country to make sure that the body meets its goals.
According to Kapoloma if more people pay tax it would improve people’s lives through construction of new roads, schools, hospitals and others hence the need for citizens to voluntarily pay tax or expect a fight from tax evasion by MRA.
He said the coming in of Electronic Fiscal Devises (EFDs) was the capstone in the automation of Malawi’s Value Added Tax (VAT) system which is part of reform and modernization initiatives which MRA has been implementing under the Public Sector Reform Programme.
“EFDs have led to steady growth in VAT collection as it is now much easier to verify transactions with VAT registered businesses. The sustained demand of EFD receipts by members of the general public has also proven very crucial in ensuring that the tax is well accounted for,” he said.
He said that cumulative VAT collected in the 2015/2016 fiscal year was K175.93 billion, which was short by K10.33 billion from the estimated K186.27 billion.
While in the 2016/2017 financial year VAT collection totalled K237.73 billion up by K29.35 billion from the projected K208.38 billion. The movement registered a year on year growth of 35 percent.
“This is against an average annual VAT collection growth of only around 10 percent recorded in the prior 4 years before EFDs were introduced,” he stated.
MRA came in 1998 and was officially launched in 2000 as an amalgamation of the department of customs excise and Income tax that were under ministry of finance.