Electronic Excise Tax Stamps implementation, a step towards enhanced revenue collection in Malawi
The implementation of Electronic Excise Tax Stamps in the 2024-2025 Mid-Year Budget Review is said to be a positive step towards enhanced revenue collection in Malawi.
In his 2024-25 Mid-Year Budget Review Statement, Malawi’s Finance Minister Simplex Chithyola unveiled a critical measure aimed at strengthening the country’s revenue collection system: the introduction of electronic excise tax stamps.
According to the Minister, the initiative targets specific excisable goods, including bottled water, alcoholic beverages, cigarettes, and soft drinks, marking a significant shift in combating tax evasion and smuggling.
“Electronic tax stamps are secure digital markers affixed to goods to verify their authenticity and confirm that the necessary excise duties have been paid.
“This system ensures that products circulating in the market are legal, compliant with tax regulations, and contribute their share to government revenues,” says the Minister.
Chithyola adds, “The measure serves multiple purposes. First, it addresses revenue losses due to tax evasion, which has long been a challenge in the excise goods sector. Second, it discourages the smuggling of taxable goods by making it easier to identify products that have not met legal compliance.”
The statement appeals, “The Malawi Revenue Authority (MRA) has called on all traders to register immediately. Non-compliance will result in the confiscation of goods, signaling the government’s firm stance on enforcement.
“The introduction of electronic tax stamps aligns with broader fiscal reforms aimed at improving revenue collection and transparency. By curbing leakages and increasing accountability, this initiative is expected to bolster fiscal consolidation efforts, providing much-needed resources for the government to invest in critical sectors like health, education, and infrastructure.”
He added, “As Malawi embraces this measure, the successful implementation of electronic tax stamps will require strong collaboration between the government, businesses, and enforcement agencies to ensure compliance and support economic recovery.
“This step reinforces Malawi’s commitment to innovative, accountable governance in managing public resources.”
In response to the implementation of digital tax stamps in the budget, MRA Head of Corporate Affairs Steve Kapoloma said, “The Malawi Revenue Authority has actively engaged a wide range of stakeholders, including manufacturers, distributors, wholesalers, cross-border traders, and importers, regarding the excise tax stamp system both before and during its initial implementation phase. Months ago, the Authority conducted meetings in Blantyre and Lilongwe with cross-border businesswomen.
“During these engagements, the Authority and concerned stakeholders agreed on a way forward, and the Authority is currently addressing all issues noted during the initial phase before full rollout. It is important to clarify that excise tax stamps are not additional taxes but rather a tool to identify products on which excise tax has been paid.”
Kapoloma adds, “For the record, the implementation of excise tax stamps was extended following the amendment of the Customs and Excise Act of 2021.
“This amendment expanded the requirement for excise tax stamps under Section 77C to include other specified excisable products beyond tobacco cigarettes.”
Kapoloma said the implementation of the initiative in the budget has numerous advantages, including protecting local and legitimate businesses, “Safeguarding them from unfair competition due to illicit trading activities such as smuggling and counterfeiting.”
He explains, “The initiative will also enable controlling consumption: reducing the consumption of harmful, unbranded, and counterfeit products whose sources and quality cannot be verified.
“Promoting voluntary tax compliance: encouraging compliance among manufacturers, importers, and distributors through the availability of production and importation data.”
He added, “The initiative will be optimizing excise tax collection: enhancing tax collection for the improved delivery of social services.”
Excise tax stamps have been applicable on cigarettes for over 10 years in Malawi.
The stamps have just been extended to a few excisable products such as alcoholic beverages (beer, wines, spirits, whiskies, and opaque beer) and non-alcoholic beverages (bottled water, energy drinks, carbonated soft drinks, fermented sweet tea, drinks made from cereals like Mahewu, non-alcoholic beer), as well as lotion and glycerine.
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