Malawian delegation studies VAT implementation

Accra, May 10, GNA - A three-man Malawian delegation which undertook a Value Added Tax (VAT) study tour of the country ended its visit on Wednesday with members lauding the publicity campaign of the implementation of the tax.

At a reception organised by the VAT Service for the delegation in Accra, Mr Ted Sitimawina, Deputy Chief Economist of Malawi said Malawi is on the verge of introducing VAT.

This is to enable her to move away from over dependence on foreign aid to dependence on internally generated revenue. He said Ghana, Kenya and South Africa were recommended to the Malawian government as countries that have successfully implemented the tax.

Mr Sitimawina, who was the leader of the delegation, said Ghana, as a fellow African country has experienced both a failure and a success in implementing VAT and, therefore, serves as a perfect model to understudy. He praised the structure of Ghana's legal framework and the way public awareness campaign was handled, saying, "we have learnt a lot from the Internal Revenue Service, Customs, Excise and Preventive Service and the VAT Service."

"This will go a long way to help us tailor the implementation of VAT in a way that will suit our conditions. "We have also learnt that the implementation of the tax should be properly timed to enable people, especially those in the rural areas, to understand and accept it to ensure a successful implementation."

On the issue of a starting rate, Mr Sitimawina said this would depend on the coverage area. "A higher rate will depend on a narrow coverage and a lower rate will depend on a wider coverage but subsequent increases will depend on successful evaluation of the tax."

The current tax system in Malawi is known as the Surtax and covers mainly, the manufacturing sector. Mr Timothy Makamba, Malawi's Treasury Economist, said the surtax operates in a similar way as the VAT but does not have the capacity to cover many sectors.

VAT in the country would therefore serve as an extension of the surtax. Mr Ezekiel Asamoah, Commissioner of VAT, in a farewell message said Ghana went through a lot of trauma at the initial stages of implementation but learnt her lessons which led to a successful implementation. He expressed the hope that Malawi would enjoy a smooth implementation.