The Malawi Revenue Authority (MRA) will have to engage an extra gear to collect even more taxes in the second half of the 2016/17 fiscal year after the Malawi Government revised upwards tax revenue targets by 6.5 percent.

Finance Minister Dr. Goodall Gondwe announced the upward revision of the tax revenue targets when he presented the mid-year budget review statement in parliament on Friday, 17th February, 2017.

“Tax revenue has been revised upwards by K46.1 billion from K708.8 billion to K754.9 billion, based on actual tax performance during the first half for the financial year,” he said

The Minister also announced that Government had revised upwards domestic revenue by 7.3 percent and non-tax revenue by 14.9 percent.

“Domestic revenue has been revised upwards from K783.3 billion to K840.5 billion, an increase of K57.2 billion. Non tax revenue has also been revised upwards from K74.5 billion to K85.6 billion due to a higher than originally anticipated dividend from the Reserve Bank of Malawi,” he said.

Gondwe said domestic revenue that amounted to K400.2 billion outpaced a target of K378 billion by 5.7 percent while tax revenue over-performed by 7.7 percent.  

He said the 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’’ he said adding that some significant tax reforms that accompanied the 2016/17 budget are believed to have contributed to this result.

MRA collected K377 billion between July and December 2016, beating a six-month revenue target of K339.1 billion by K37.9 billion.  

During the presentation of the mid-year budget review statement, the Finance Minister also announced that the 2016/17 national budget had been trimmed by K20 billion, representing a reduction of 1.7 percent.

“It should be noted, Mr. Speaker, Sir, that the downward revision in total expenditure from K1,149.2 billion to K1,129.4 billion is due to an expected decrease in disbursements of foreign financed projects.  This reduction in overall expenditure would have been larger were it not for the increase in interest payments as indicated earlier,” he concluded.

By Wadza Otomani