The Malawi Revenue Authority (MRA) is confident of collecting the K1.5 trillion set out in the K2.84 trillion 2022/23 national budget, but tax experts have said revenue collection results will depend on prevailing economic environment.

MRA deputy commissioner general Henry Ngutwa expressed the confidence this week after appearing before the Budget and Finance Committee cluster to share the organisation’s plans for the new budget based on its given targets.

MRA has been tasked to collect more than K1 trillion this fiscal year

Ngutwa said MRA will enhance tax administration efficiencies which have been the main contributor to the revenue success for the past two years.

He said apart from enhancing tax administration efficiencies, MRA is banking on several tax measures announced in the budget which will in turn help achieve the targets.

Ngutwa said: “If we implement revenue enhancing measures in the budget then we should be able to compensate for the effects of Covid-19 impact on revenue.

“There are doubts that we may not meet our targets based on other economic fundamentals such as forex shortage which affects international trade as businesses cannot import and export goods but that notwithstanding, businesses are still running and whatever the case we should be able to collect revenue”.

However, Ngutwa acknowledged the existence of Covid-19 which is slowing down the economy but said through implementation of tax measures, the targets should be met.

He said in the 2022/23 national budget, MRA budget has increased by about 18 percent from the previous financial year totalling to K45.5 billion representing a three percent from the total domestic revenue collection target of K1.5 trillion.

He, however, said the K45.5 billion will carter for operational expenses and all capital requirements for MRA, but he lamented that the resources may not be enough because they would like to undertake several investments, to modernise systems automation, including scaling up of the Blockchain system to maximise revenue collection.

In terms of economic environment affecting businesses, Ngutwa admitted that businesses are struggling to be tax compliant, including ministries, departments and agencies with total tax arrears being in the region of K58 billion.

Budget and Finance Committee of Parliament chairperson Gladys Ganda said the revenue targets are very ambitious and unattainable for MRA to achieve.

She said for the past two years, the MRA has been given targets that are unrealistic given the challenging economic environment coupled with Covid-19 impact and the natural disasters in the country.

She said: “MRA have promised a lot, we are not agreeing that they will meet their targets. However, we are at the same time giving them benefit of doubt because they have promised that the moment they finish automating their system they will be able to collect more because they will have dealt with inefficiencies”.

She noted that the main challenge for MRA has been tax evasion which has been affecting revenue collection but through scaling up of the Blockchain system, the Committee feels the tax collector will stay the course.

Taxation expert Emmanuel Kaluluma of EK Tax Consultants said while measures in the budget are favourable for MRA to collect revenue based on targets, the economic environment remains rough.

He said even if MRA may improve its tax administration systems but the economy remains hostile to businesses and targets may not be met because the success of MRA is dependent on the thriving business environment.

He also urged MRA to put its house in order, saying top management may have good intentions by way of modernising systems but there are some employees who may do the opposite by indulging in corruption to detail MRA’s pure agenda. Minister of Finance and Economic Affairs Sosten Gwengwe presented the K2.84 trillion 2022/23 National Budget in Parliament on February 18 2022, which contained numerous the tax measures.

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