The Malawi Revenue Authority (MRA) has admitted the existence of both genuine and fake Electronic Fiscal Devices (EFDs) and receipts on the market but defended the development, saying it is not affecting its revenue collections targets.
MRAlaunched the EFDs in 2014 inorder to enhance tax collections by ensuring tax compliance of Value Added Tax (VAT) registered tax payers.
MRA’s pomposity of beating revenue targets despite this conspicuous anomaly even got a nod from Malawi Finance Czar Doctor Goodall Gondwe, during his presentation of the midterm budget review, a week ago.
“Domestic Revenue that amounted to K400.2 billion outpaced a target of K378 billion by 5.7 percent. Tax revenue overperformed by 7.7 percent. The annex shows that large increases were particularly discernable in import based taxes as well as income and profit taxes that scored increases of 9 percent and 7.5 percent, respectively.
“These improvements in domestic revenues are largely due to the improved efficiency of the MRA, but they also point to a surge in the economy that increased the tax base. Moreover, some significant tax reforms that accompanied the 2016/17 budget are believed to have contributed to this result,” Gondwe said.
But two years down the line, MRA unashamedly admits that there are two kinds of receipts and EFDs on the market which are confusing consumers.
Nyasa Times visited several shops in Mangochi, Liwonde and Blantyre and discovered that most receipts which customers were getting after buying various goods lacked key features of a legal MRA receipt.
For instance, many receipts had a single black logo on top of the receipt which is in contradiction with a legal EFD receiptas it has to have a black logo on top of the receipt and several coloured logos of MRA embedded in the receipt, according to www.mra.mw.
In an emailed response MRA Corporate Affairs Manager Steven Kapoloma admitted the presence of two kinds of receipts on the market he said the usage of these two different kinds of receipts is not compromising revenue collection.
“It is important to know that the use of ordinary roll paper does not affect the information of the recorded sales. The logo can only be printed on the roll paper if the Electronic Fiscal Device (EFD) is connected to MRA.
“Fake receipts in whatever form will not have the logo and words reading ‘start of legal receipt’ and ‘end of legal receipt’. Therefore, it is not possible for traders to evade tax by using ordinary roll paper as the information is never altered by a type of roll paper that has been used,” Kapoloma said.
He continued saying that the legal receipt starts with‘start of legal receipt’ and ends with‘end of legal receipt,’ a thing which is not included on the six key features of the fiscal receipt.
MRA revealed that there are only 10,000 VAT registered traders across the country saying those without the EFD machines on counter are obliged to use income tax receipts which they pay though wholesalers when ordering goods.
Though MRA says other traders pay VATthrough income tax receipts, NyasaTimes still found hordes of Traders that are still shunning use of the EFD machines because it eats into their profit margins.
“The Authority is also conducting a countrywide tax registration exercise for businesses coupled with several enforcement activities on a daily basis where we monitor taxpayers physically in their trading places and through our system to ensure acquisition and usage of EFD machines,” Kapoloma said
To ensure that VAT is rightly paid, MRA says that it is conducting a massive public awareness campaign where members of the general public are being encouraged to always demand fiscal receipts and report any fraudulent activities by traders.
“Our appeal is to encourage each and every Malawian to sustain the practice of always demanding fiscal receipts from every VAT registered trader for every purchase made,” he said.
- The Center for Investigative Journalism and the National Integrity Platform with financial assistance from GIZ supported this story’.