Malawi: MRA pilots Electronic Fiscal Devices, a new system of collecting VAT
22 March 2014
The Malawi Government has intensified its efforts to address various challenges it faces with tax collection from big shops and companies as Malawi Revenue Authority (MRA) pilots the use of Electronic Fiscal Devices (EFD), a new system for collecting Value Added Tax (VAT).
EFD, according to MRA’s Manager for Operations, Kondwani Sauti-Phiri, is a device that records all sales transactions and provides evidence of such transactions in a technically easy and undisputed way.
“EFD would replace manually generated receipts, invoices and ordinary electronic cash register. The EFD has non-erasable inbuilt fiscal ‘read only’ memory that stores business and tax data at the time of sale,” Sauti-Phiri said, adding that the EFD’s in-built GPRS modem will help MRA to capture data on a daily basis.
To verify reports submitted and ensure efficiency in tax collection, Sauti-Phiri added that there will be machine at MRA’s offices connected to EFDs.
“The EFD can be connected to a network to store every sales transaction while receipts, that have a life span of five years, are being issued to buyers.
The types of the EFDs are electronic tax register (ETR), electronic signature device (ESD) and electronic fiscal printer (EFP), Sauti-Phiri while pleading with Malawians to be asking for receipts when buying goods from shops to confirm VAT is included. Sauti-Phiri said a shop is registered to collect VAT if it make sales of up to ten million kwacha per year. He further explained that companies will purchase the machines through local suppliers Gestetner, Business Machines Limited (BML), Canotech and Xerographics.
As a way of making the landing cost cheaper, Sauti-Phiri said that Government has put a duty waiver on the machines.
“Much as you buy the machine upfront, you will be able to claim 100 percent cost. Effectively, this means Government has subsidised the cost of the gadget.” Sauti-Phiri said.
The Law regarding EFD was amended and passed in parliament in 2011 and twenty VAT operators are currently involved in the pilot phase.