Most Malawian businesses are not tax compliant -Consultants
Prominent tax consultants have acknowledged that there are many businesses and entrepreneurs in Malawi who are not paying taxes.
The observation was made by Misheck Msiska, a partner at Ernst and Young, and Vyalema Moyo of Pricewaterhouse Coopers (PwC) during their presentations in Blantyre at the launch of a book titled “ A Comprehensive Guide to Taxation in Malawi” written by Moffat Ngalande.
This is coming hot on the heels of an advice given by the African Tax Administrators Forum Executive Secretary Logan Wort that tax collectors on the continent must systematically broaden their tax base by registering businesses in many areas that are neglected like the property, entertainment, sports and SMEs sectors.
In a presentation that looked at challenges for taxpayers Moyo challenged the audience, comprising of accountants, auditors and senior business executives, that Malawi’s tax figures always show more collections on individual taxes such as Value Added Tax (VAT) and Pay As You Earn (PAYE) compared to corporate taxes.
“This is not supposed to be the case because businesses in Malawi do make money. On the other hand it may mean Government is having it easy to capitalise on already established companies where employees do not have a choice but pay taxes by the end of each month, But there is huge potential for more tax collection,” Moyo said.
Chipping in on the subject Msiska said he has studied the status and that the major reason for high collections in individual taxes is because businesses and even other organisations are running away from paying tax.
“Entrepreneurs are building mansions and driving expensive cars in the country, many SMEs are growing but if they are registered for tax you will note that they are always reporting losses. It is a huge challenge for Government because at every opportunity a Malawian is going to evade tax, on top of this individuals who are not in employment are very difficult to catch. So in a nutshell most Malawian businesses are not tax compliant,” observed Msiska.
He said much as no-one enjoys paying tax it is high time for businesses and all Malawians to be ethical in their respective practices and improve on tax compliance.
Msiska also commended Government’s outreach programmes to taxpayers saying awareness and constant engagement is very crucial to achieve more tax compliance by entrepreneurs, SMEs and even corporates.
The book by Ngalande is expected to assist accountants, students in institutions of higher learning, the business sector, tax professionals and the academia as regards taxation in Malawi.
The demand exerted by MRA to have one’s small business to register for tax are too expensive and unaffordable and so time consuming procceses. MRA demands audited accounts for the past year on a newly born SME are they really interested in collecting taxes from minute minute growings SMEs? I the regime can not fight corruption expect dwindling tax levels and general complince. Electorate would want see a government delivering or that delivers? The APM regime is probably the worst regime on accountability and delivery of natikal interest and the most corruptive condoned by the leadership as everyoe testiffies nationally… Read more »
Yes this is very true that many businesses are not tax compliant. I was surprised to read on this site that there are only 10,000 registered tax compliant businesses in the whole country. M.R.A , or who ever is responsible to see to it that businesses are registered to pay tax ,needs to go round the country to investigate all registered / not registered businesses. There are definitely more than 10,000 businesses in Malawi . What is the minimum income threshold for businesses to start paying taxes in Malawi?
The reason we are reluctant to pay tax is that the money is stolen by people who never sweated for it like politicians etc. Secondly, Asians get away with huge unpaid taxes, drive poshy cars or send the money out but are not brought to book.
If I pay tax, I still have to pay my own hospital and cousin’s bill, and pay high school fees for the same. What is my tax for? So I decided to tax myself, keep the money in my personal ‘MRA’ account and pay the bills myself without bothering the Govt. Fair, yes?