Malawi Revenue Authority (MRA) Wednesday disclosed plans to install electronic monitoring system in all businesses registered to collect value added tax (VAT).

MRA deputy director responsible for corporate affairs, Steve Kapoloma, said  the system dubbed Electronic Fiscal Device (EFD) is aimed at enhancing efficiency and compliance on VAT collection.

He made the remarks at a pre-budget consultation meeting held in Mzuzu. He said the system will target businesses that generate sales on the minimum benchmark threshold of K6 million (about $15 000) per annum.

Kapoloma said the tax collecting body conceived the idea after noticing many challenges in the current implementation and monitoring system.

“When VAT was introduced it was realised that its implementation was facing some challenges. First, it was discovered that some of the businesses that were registered to collect VAT were not collecting.

“Then there were some who were charging VAT but were not remitting it to MRA, and there were others who were paying either half or quarter of what they have collected,” he explained.

He said with the new system customers will be issued receipts processed through EFD and the transaction data will instantly be relayed to MRA’s main server.

He added that customers who will report any incident of non-compliance by businesses will get 10 percent of the fine the errant businesses will be required to pay.

According to Kapoloma ,the system will first be tested on pilot phase in selected places before rolling it out across the country.

Meanwhile, the tax collecting body is currently in the process of identifying the supplier of the device and service provider who will manage the network of the EFD system.