Malawi collecting only 14% of VAT

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Malawi collecting only 14% of VAT
Malawi collecting only 14% of VAT

Africa-Press – Malawi. Malawi can raise more revenue and lessen the debt burden if it enhances efficiencies in the Value Added Tax (Vat) regime, the Ministry of Finance has said.

Ministry of Finance Revenue Policy Division Chief Economist Wazi Ligomeka told delegates to a National Debt Conference which the Malawi Economic Justice Network (Mejn) organised in Lilongwe that Malawi is only collecting 14 percent of the VAT it is supposed to be collecting when other countries in the sub-Saharan Africa region are at 32 percent.

Ligomeka, who said this yesterday, said most developed countries are doing better than Malawi and sub-Saharan Africa countries, with a VAT collection rate of 50 percent.

He said much as Malawi is losing revenue through double tax agreements, VAT is an area with unexploited potential.

“We can collect more revenue to finance our expenditures through VAT,” Ligomeka said.

He observed that Malawi’s VAT under-collection is due to both policy and administration gaps.

Ligomeka said the country’s VAT policy, which sees it giving exemptions to certain products, individuals as well as institutions, might be leading to the revenue loss.

He cited members of Parliament, the President, Vice President, senior chiefs, senior government officials, senior officers in the Judiciary, military personnel among those who are exempted from paying VAT.

On the administration part, Ligomeka said there are many people and businesses who are supposed to be paying tax but the tax collector has not reached out to them.

Meanwhile, Malawi’s civil society leaders Thursday made a fresh push for the cancellation of the country’s unsustainable public debt.

Speaking in a panel discussion, debt campaigners Mabvuto Bamusi, Pastor Zacc Kawalala, Benedicto Kondowe, Moses Mkandawire and Dalitso Kubalasa observed that high debt levels are hurting the country.

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