Some Business people in the country have obtained an injunction stopping the Malawi Revenue Authority (MRA) from implementing the newly introduced Electronic Fiscal Devices (EFDs) as a collecting mechanism of Value Added Tax (VAT).

In July 2011, Parliament amended VAT Act giving mandate to the MRA to implement usage of EFD in collection of VAT. In March 2014, MRA introduced EFD which required that all VAT operators should buy EFDs from licensed distributors at $850 (MK349, 350).

MRA has begun the process of vacating the injunction and hearing of the case began on Friday July 18, 2014 and will proceed on Friday July 25,2014.

Court documents has indicated that business persons namely; Imran Meman (trading as Kamlisha Enterprises), Mansoor Ibrahim (trading as Mansoor wholesalers), Azizur Rahman Vali Patel (trading as Aziz’s Cash and Carry) and Naseer Ahmed (trading as Food City Take Away) through their Lawyer Frank Mbeta obtained the injunction on June 27, 2014 stopping the tax collecting body from implementing the system.

They argued that even though MRA is a public institution which is mandated to carry out tax collection exercises on behalf of the government, it went ahead to implement mandatory use of EFD despite knowledge of the many irregularities in the system.

The complainants argue that the EFDs pose a problem since operators would have to seek permission from MRA to change information that has already been registered in case a customer has decided to order fewer goods than earlier ordered.

“VAT operators also wouldn’t be allowed to operate if there is no power or electricity or the EFD network failure,” the document reads in part.

It also points out that while the cost of EFD machine is $255 (MK104, 805) from the manufacturer, the licensed distributors are selling at $850 (MK349,350) representing a 333 percent increase in price, a thing which they said is unfair and expensive for VAT operations.

The complainants further argue that MRA must ensure that it addresses and resolves all irregularities of the mechanism that may cause unreasonable disruptions and frustrations to the effect and effective operations of the tax payers’ business before implementing it.

“The Respondent’s duty is not to abuse its powers by insisting on implementing a particular tax collecting mechanism when it is abundantly clear that implementation of the same shall have far reaching adverse [consequences] on the tax payer’s business operations thereby leading to massive loss of income on tax payers,” reads the court document.