Electronic Fiscal Devices (EFDs)

Last Updated: 14 April, 2023 - Print

The Malawi Revenue Authority (MRA) is implementing the Electronic Fiscal Device (EFD) Project which will make it mandatory for every Value Added Tax (VAT) taxpayer to procure, install and use EFD machines.

Over the years, the main challenge in VAT administration has mainly been through tax evasion by non-issuance of tax invoices especially by small to medium taxpayers. It is hoped the introduction of EFDs will help curb this situation as sales transactions will now be monitored electronically, through a GPRS modem to the Authority’s central server. To further ensure compliance, the buyer will be encouraged to demand a tax invoice that will be generated by the EFDs as this is the only way a taxable transaction will be captured.

OBJECTIVE

The Core objective of the EFD project is to enhance revenue collections by ensuring tax compliance of VAT Registered taxpayers by enforcing the use of the Electronic Tax Registers (ETRs)

BENEFITS

• Computerising  the Tax Auditing Process:

The verifiable, authentic electronic files and the fiscal memory device make it possible for the tax authorities to use computers and software to verify instantly a large number of invoices (or retail receipts digitally signed) for their authenticity to the last letter and digit.

• Less Work for Tax Authority:

MRA will issue an electronic signature device to a certain company / user that covers all the needs of the user to issue tax documents. This saves a lot of time and personnel for the tax authority that was previously needed to control and authorize the issue of electronic documents for the various companies in the tax territory.

• Less Disputes:

Because of the nature of the fiscal device, much less disputes arise during a tax audit. The fiscal memory can provide indisputable evidence for the innocence or guilt of the user.

• Increased Tax Revenue:

Thanks to the tight security and the accuracy of all financial records authenticated by the electronic signature, the revenue of the tax payers is revealed and taxed much more easily, providing significant increase in tax revenue.

KEY OUTCOMES

• For the law abiding citizens, fiscal device adoption means a step towards a more fair society since the system will ensure everybody  pays their share of taxes;
• For the tax authorities it means less time and effort wasted in  tax audits and investigations

IMPLEMENTATION

The Electronic Devices Project (EFD was fully rolled out in 2014.