21 February 2019

Malawi to Have Improved Tax Systems With New UK Support

Malawi has been listed as one of the developing countries across the world expected to master the art of managing improved tax systems that will, in turn, ensure maximum collection of taxes with assistance from UK's Department for International Development (DFID).

The new package of support will among others help tackle tax evasions and avoidance in Malawi; and, hence creation of a more stable environment for future UK investments.

According to a statement, the assistance will also help build effective tax systems and generate more revenue to fund public services such as health and education as well as provide British experts to support tax reforms in the developing world.

DFID head in Malawi, David Beer, said the new global package of support for tax reform is a great resource for Malawi to potentially draw on.

He said: "The African Tax Administration Forum has already been active in helping improve the tax system in Malawi, which is the foundation for a self-sustaining future beyond aid. It also helps create the right environment to attract foreign investment and drive economic growth."

Malawi is said to be losing about K64 billion ($86 million) yearly through tax losses due to profit shifting by multinational companies, according to figures that were published by the Tax Justice Network in London, Britian in 2017.

She was among 74 countries among the United Nations University World Institute for Development Economics Research (UNU-WIDER) in Helsinki, Finland, analysed with results estimating global losses at $500 billion a year.

The Organisation for Economic Co-operation and Development (OECD) estimates the average developing country generates tax revenues of around 14% of GDP.

This is way below the 35% average for developed countries. Less tax revenue means less funding for public services.

The new DFID assistance will help developing countries generate greater revenues to support increased spending on essential services such as health, education and infrastructure. It will help support stronger, more transparent and more accountable governments.

The support will also contribute to economic growth by helping tackle tax avoidance and evasion and creating a more level playing field for businesses.

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