Contents of the 2020/21 national budget submission by the Institute of Chartered Accountants in Malawi (Icam) show that the accountant’s body has called on the ministry of finance to consider reducing the Value Added Tax (VAT) rate from the current 16.5% to 12%.
Addressing the Minister of Finance Joseph Mwanamvekha, Icam has said the move will encourage consumer spending to stimulate the economy and business. The call arrives amidst the Malawi Revenue Authority’s target to collect K1.3 trillion in taxes, while implementing other stricter measures to boost collection. The coronavirus pandemic also makes it difficult to collect taxes, while preventative measures may also be costly, making it difficult to lower VAT.
On the other hand, MRA opened up a voluntary tax compliance window for six months, as part of mitigation measures for Covid-19 threats on businesses and the economy. MRA Commissioner General, Tom Malata, said that the window will see individuals and organisations to regularize their tax affairs without suffering from penalties, interests and charges.