MALAWI REVENUE AUTHORITY

REVENUE PERFORMANCE REPORT FOR JULY 2014TAX REVENUE OUTTURN FOR THE PERIOD: JULY 2014 (UNAUDITED)

(All figures in Millions of Malawi Kwacha)

In the month of July 2014, gross tax revenues amounted to MK40.97 billion, some 2 percentage points higher than the monthly projection and 21 percent above the June 2014 collection. The marginal performance was on account of underperformances in goods and services, international trade and other taxes. Income and profits however, exceeded its target for the month by 16 percent on account of good performance from PAYE and Corporate taxes.

JULY 2014 OUTTURN

Income and Profits: At MK22.51 billion, income and profits over performed its projection by 16 percent reflecting strong performance in all tax lines under this category.

Pay As You Earn (PAYE): A total of MK9.00 billion was collected in PAYE during the month under review. This was 14 percent and 27 percent above the projection for the month and the June 2014 level, respectively. This was attributable to receipt of delayed PAYE payment on salaries; the payment for June 2014 was only received in the month of July 2014. In addition, new taxpayers who registered in the month under review contributed to the good performance.

Fringe Benefit and Non-Resident Taxes: A total of MK1.33 billion was registered under fringe benefit and non-resident taxes. This compared favorably with the target of MK1.26 billion. Fringe benefit tax and non-resident tax grew by 6 percent in part due to the effect of the modest depreciation of the kwacha on payments to non-residents. The Malawi kwacha depreciated marginally against the US dollar during the month under review.

Company Tax: A total of MK8.46 billion was collected in July 2014 by way of Company taxes compared to a projection of MK7.01 billion and an actual of MK2.86 billion collected in June 2014. The good performance was against a backdrop of over performances in both company assessments and provisional tax against targets for the month. Ordinarily this trend is expected during July because this is one of the months during which quarterly taxes such

as provisional taxes fall.

Goods and Services Taxes: At MK14.32 billion, taxes in this category underperformed their target for the month as well as their June 2014 level by 12 percent and 9 percent, respectively. With the exception of local excise, all tax components under-performed their targets during the month under review.

VAT: Both domestic and import VAT underperformed their monthly targets on account of reduced government expenditure and cost recovery on EFD machines on the domestic front; and a decline in the volume of imported goods where VAT is applicable on the import side.

Excise Tax: Excise tax over-performed its monthly target by 9 percent largely due to a 34 percent growth in local excise, which benefited from increased private sector expenditure on domestic excisable products. In contrast, import excise underperformed its target mainly on account of reduced importation of fuel products and excisable goods. Traders avoided ordering big consignments due to elections uncertainty and in anticipation of new budget measures.

Import Duty: A total of MK3.80 billion was collected as import duty during the month under review representing a deficit of 6% on the target. The deficit resulted from lower volumes of imports during the month under review.

Other Taxes: All other taxes amounted to MK343.42 million, which was 26% below the monthly estimate. All tax lines under this category underperformed their targets except miscellaneous duties. Penalties underperformed its target by MK28 million partly as a result of penalty waivers that taxpayers were granted under voluntary compliance window. Dividend and turnover taxes were lower because these are paid on a financial year basis.

Jun-14 Jul-14 Cumulative 2014/15 FY

Type of Tax Actual Actual Projection Variance Actual Projection Variance

Income and Profits 13,885.14 22,513.29 19,349.49 3,163.80 22,513.29 19,349.49 3,163.80

Individual 7,090.96 9,000.52 7,893.04 1,107.48 9,000.52 7,893.04 1,107.48

Pay As You Earn (PAYE) 7,090.96 9,000.52 7,893.04 1,107.48 9,000.52 7,893.04 1,107.48

Other 255.58 1,330.77 1,260.78 69.99 1,330.77 1,260.78 69.99

Fringe Benefits Tax (FBT) 95.44 1,073.01 1,017.32 55.69 1,073.01 1,017.32 55.69

Non Resident Tax (NRT) 160.14 257.76 243.47 14.30 257.76 243.47 14.30

Corporate 2,855.74 8,462.61 7,008.79 1,453.83 8,462.61 7,008.79 1,453.83

Company Assessments 1,689.37 1,220.41 1,056.25 164.16 1,220.41 1,056.25 164.16

Provisional Tax 1,166.37 7,242.21 5,952.54 1,289.67 7,242.21 5,952.54 1,289.67

Withholding Tax 3,682.86 3,719.38 3,186.88 532.50 3,719.38 3,186.88 532.50

Goods and Services 15,800.96 14,316.42 16,350.93 (2,034.51) 14,316.42 16,350.93 (2,034.51)

Value Added Tax (VAT) 11,973.83 9,737.15 12,157.23 (2,420.08) 9,737.15 12,157.23 (2,420.08)

Domestic 5,084.18 3,756.73 5,361.65 (1,604.92) 3,756.73 5,361.65 (1,604.92)

Import 6,889.66 5,980.43 6,795.59 (815.16) 5,980.43 6,795.59 (815.16)

Excise Duties 3,827.13 4,579.27 4,193.70 385.57 4,579.27 4,193.70 385.57

Local 1,133.72 1,880.47 1,408.68 471.79 1,880.47 1,408.68 471.79

Import 2,693.40 2,698.80 2,785.02 (86.22) 2,698.80 2,785.02 (86.22)

International Trade 4,033.35 3,795.58 4,037.90 (242.32) 3,795.58 4,037.90 (242.32)

Import Duty 4,027.70 3,795.09 4,037.90 (242.80) 3,795.09 4,037.90 (242.80)

Prepayment 5.65 0.48 - 0.48 0.48 - 0.48

Other 156.43 343.42 465.97 (122.55) 343.42 465.97 (122.55)

Miscellaneous Duties 24.87 48.85 41.67 7.18 48.85 41.67 7.18

Penalties 19.66 5.39 33.68 (28.29) 5.39 33.68 (28.29)

Dividend Tax 111.08 288.43 389.29 (100.86) 288.43 389.29 (100.86)

Turn-over Tax 0.82 0.75 1.32 (0.58) 0.75 1.32 (0.58)

Gross Tax Revenues 33,875.87 40,968.70 40,204.29 764.41 40,968.70 40,204.29 764.41

Tax Refunds (1,000.31) (636.73) (1,005.11) 368.38 (636.73) (1,005.11) 368.38

Net Tax Revenues 32,875.56 40,331.97 39,199.18 1,132.79 40,331.97 39,199.18 1,132.79