Sudhamo Lal, director general, Mauritius Revenue Authority (MRA), spoke to AfricaMoney on how tax collections for 2013 were in line with economic growth. Our financial expert highlighted some steps planned by the agency to facilitate tax compliance of small scale operators this year. He went on to detail MRA’s strategies to crack down on tax evasion, with a dedicated Special Measures Unit lined up for 2014 which will focusmainly on the hospitality, restaurant and construction sectors.
- What was the total revenue collected in 2013 and how does it compare to 2012?
During the calendar year 2013, MRA collected Rs 61.8 billion of revenue which represents an increase of 6.4% over the preceding year. In fact the growth in collections has been broadly in line with the rate of economic growth for the year 2013.
Ninety percent of MRA’s collections come from three major sources, namely VAT, income tax and excise duties. During the year, VAT receipts which grew by 4.4% were dampened by the reduction in imports with VAT collected at importation falling by 2% over the preceding year. Corporate income tax registered a growth of 5% whilst personal income tax receipts, boosted by the salary increase in the public sector, grew by 17%. Excise receipts increased by 4% in 2013 as the additional receipts expected from the increase in the rates of excise duty for alcoholic products and tobacco were moderated by a slight fall in consumption of these items.
- What are some steps that have been taken to recover delayed and non-paid taxes?
The year 2013 was yet another exceptional year for the MRA in terms of collecting tax arrears. In fact, we managed to raise Rs 1.7 billion out of our tax arrears thereby setting a new precedent since the establishment of the MRA in 2006. I must say that the tax incentive schemes, in particular the Tax Arrears Settlement Scheme (TASS) and the Voluntary Disclosure of Income Arrangement (VDIA), by giving interest and penalty waivers for settlement of tax debts or agreement on the amount of tax assessments raised by the MRA (instead of having recourse to tax objections and appeals) have contributed to increasing debt collections.
The MRA can have recourse to various instruments to recover tax debts such as attachment orders (e,g on bank account, salary, receipts on performance of contract for goods and services), inscription on immovable property, distress warrants, objections to leave the country, prosecutions etc. The Revenue Laws also empower the MRA to proceed with the sale of the assets of a tax debtor to recover any outstanding amount.
- How efficient is the tax collection process in terms of collecting money from the informal sector?
The MRA has a wide network of third party information which allows the organization to identify recipients of income in various sectors of activity, including informal sector operators, and checkmate their tax compliance. During the last three years, our networking has enabled us to identify 9,700 persons who were not registered with the MRA and therefore were not meeting their tax obligations.
At the MRA we also have several teams carrying out field work activities with a view to identifying interalia informal sector operators. In 2014, we will further increase our visibility on the field – a dedicated Special Measures Unit (SMU) focusing mainly on the hospitality, restaurant & construction sectors has been set up and has started carrying out surprise visits over the island to monitor tax compliance.
I must also say that some operators may choose to remain in the informal sector due to lack of tax knowledge to prepare and file their tax returns. At the MRA we fully recognize the importance of taxpayer education to address these concerns and we have accordingly revamped our taxpayer education programme. Similarly, every year we strive to improve the facilities we provide to taxpayers to enhance their tax compliance. This year we will facilitate the tax compliance of small scale operators through simplified tax returns, simplified recordkeeping requirements and advisory visits for return filing, book keeping and maintenance of records.
- The MRA recently cracked down on tax evasion by businessmen. How can the public help in directing the MRA to instances of suspected tax evasion?
It is part of MRA’s strategy to enlist the taxpayers in the fight against tax evasion. During education campaigns the MRA puts a lot of emphasis on the importance for taxpayers to assist the MRA in identifying non-compliant taxpayers. The public can send to the MRA, informationrelating to those persons who they suspect of tax evasion through its website under the menu “contact us”. They can also send us an e-mail on firstname.lastname@example.org or write a letter to the Director General, MRA with the mention “Confidential”.
Actually, the MRA has launched this year a campaign aiming at establishing a tax culture in Mauritius and the first phase of this campaign concerns VAT compliance. The MRA is seeking the support of the public to ensure that the VAT Registered persons issue a receipt for every transaction. This will enable us to verify that the persons concerned are remitting the actual money collected under VAT to the MRA. To further motivate the public to adopt this good habit of claiming a receipt for every purchase, the MRA has launched a VAT Lucky Draw Scheme whereby the public is invited to claim a receipt and send to the MRA the details of the receipts. A draw organized under the supervision of the MRA every quarter will enable the public to win 20 prizes worth a total of Rs 210,000.
Photo : MRA
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