Malawi Revenue Authority introduces withholding VAT
The Malawi Revenue Authority (MRA) will start implementing withholding Value Added Tax (VAT) system from June 1 2021, when some institutions will be remitting VAT on behalf of suppliers.
Previously, suppliers would remit the tax to MRA after dealing with the institutions.
According to MRA Corporate Affairs Manager Steven Kapoloma, the arrangement created problems for the tax collecting body as some suppliers would fail to remit taxes as MRA was unable to track them.
Kapoloma said the new system will enable the revenue collection body to properly account for revenues.
“We expect to increase VAT inflows because we have created a system in which all the revenue will be accounted for. We expect an increase in revenue since we have closed the loophole,” he said.
Tax expert Emmanuel Kaluluma commended the authority for the system.
He said, in the past, the arrangement helped the government collect enough VAT from sectors such as construction.
“This is primarily about risk management because they know that some entrepreneurs were not paying,” he added.
Meanwhile, the authority has punished 566 traders for tax evasion. They were exposed through its Kuyiphula ndi Lisiti Langa promotion.
Through the promotion, MRA has also splashed K22 million to some winners who reported the cases.
It expects to raise K321 million through fines and penalties.
“We want to inculcate the culture of voluntary tax compliance among traders because it is a requirement under the law that traders should issue Electronic Fiscal Devise receipts which will improve our revenue collection,” he said.
Justin Mkweu is a fast growing reporter who currently works with Times Group on the business desk.
He is however flexible as he also writes about current affairs and national issues.
