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.