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MRA pursuing K50 billion transfer pricing cases

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Steven Kapoloma

The Malawi Revenue Authority (MRA) is pursuing transfer pricing cases at the newly established Revenue Court where it projects to recover in excess of K50 billion, if the cases were to go in the revenue collection body’s favour.

MRA has been missing its monthly revenue targets in recent months, except in October, when it collected over K120 billion.

Speaking in an interview on Monday after Minister of Finance Felix Mlusu toured the revenue collection body’s offices MRA Head of Corporate Affairs Steve Kapoloma said the timeframe for the cases not known.

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He said executing such cases has been a challenge as there was no specific court to handle them but the establishment of the Revenue Court would help speed the wheels of justice.

“All the cases are in court. So, it is difficult to put a time line on the trial or when judgement will be passed. The processes are now faster because Revenue Court was established,” Kapoloma said.

In a separate interview on the sidelines, Mlusu said he was impressed with progress registered and other matters that arose during the meeting.

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“The message that I brought to the board and employees at MRA is that the authority has a very critical role to play in the development of this country. As you know, they [MRA] contribute 90 percent to our local budget requirements but there is room to do more,” Mlusu said.

Last year, Reserve Bank of Malawi (RBM) indicated that it was investigating over 11 multinational companies and individuals for possible transfer pricing.

RBM Deputy Governor, Grant Kabango, said on the sidelines of the 2019 financial lawyers’ conference that the companies were suspected to be externalising agricultural produce and products by under-declaring sale prices and concealing amount of foreign currency expected to be received by the country.

“We believe that the rest of the funds are being returned outside the country, thus defrauding the country of its export proceeds. The total amount suspected under this criminal activity has not yet been quantified but is estimated to be in billions of Malawi kwacha,” Kabango said.

According to the 2020/21 National Budget, domestic revenues have been projected at K1.179 trillion, representing 16.5 percent of Gross Domestic Products.

Of the said amount, K1.11 6 trillion is expected to come from tax revenue while K63.1 billion is other revenues.

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