Ministry of Finance and Economic Affairs says various tax incentives are bearing fruits as businesses are embarking on more productive initiatives and seeing growth from these incentives, resulting in government collecting more revenue.

The ministry’s deputy director responsible for tax policy and revenue policy, Gresham Kandiwo, said this on Thursday in Lilongwe during the fiscal incentives for entrepreneurship workshop organised to raise awareness on tax and non-tax incentives available to local entrepreneurs.

The workshop was organised by the National Planning Commission (NPC) alongside Malawi Revenue Authority (MRA) and the Ministry of Finance and Economic Affairs.

Kandiwo: Tax incentives on their own are an expenditure

Kandiwo observed that when added up, the total collections made by the government from the various sectors of the economy where the tax incentives are offered, what is collected is more.

“When we give an incentive, it means we are removing something which government could have collected in terms of revenue. We realise that you do not reap where you do not invest, so tomorrow government cannot collect where it has not invested. As such, tax incentives on their own are an expenditure on the part of government.

“Government has to invest to allow the entrepreneurs to use that revenue that is forgone, for productive initiatives so that tomorrow after producing and selling more, a lot more can be collected from there,” he said.

Figures from the Ministry of Finance and Economic Affairs indicate that government forwent K486 billion in tax incentives in the 2018-19 financial year which represented 51 percent of the revenue collected by MRA in that year. In 2019-2020, K493 billion was forgone, representing 49 percent, while in 2020-2021 K480 billion was sacrificed.

NPC development planning manager Sipho Billiat said the workshop has helped entrepreneurs to know what they are supposed to do.

MRA deputy commissioner (technical) in the domestic taxes division, Gray Balawe, said the purpose of the incentives is to cushion the entrepreneurs and enable them to operate without a lot of impediments, as well as to help them in holding on to their capital.

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