An assessment of the effectiveness of integrated tax audit administration among large taxpayers in Malawi: a case of brewery industry

Abstract

Integration of tax audit systems becomes effective if all stakeholders are collaborating. This will ensure an effective tax administration which maximizes revenue mobilisation and enhances voluntary compliance. Around the world, effective integrated tax administration system has seen countries collecting more tax revenues for the betterment of their socio economic growth. In Malawi, little is known despite the country introducing the integrated tax audit system in 2007. The knowledge of an effective integrated audit system is paramount to a country like Malawi which, for almost five years now after donor freeze, is grossly dependent on its domestic revenues to support its recurrent budget. This knowledge will help Malawi to understand the bottlenecks related to revenue collection and taxpayer compliance as well as draw lessons on how to improving its revenue mobilization strategies and promote voluntary compliance. It is against this background that the study objected to explore the effectiveness of integrated tax audit systems among large tax payers in Malawi. The study collected a sample of 40 internal tax auditors’ respondents and 5 tax representatives that were randomly selected from Malawi Revenue Authority and selected large tax payers in the brewery industries in the country respectively. The large taxpayers are; Carlsberg Malawi Limited, Chibuku Product Limited, Malawi Distillers Limited, Bowler Beverages Limited and Shine Beverages Limited. Thereafter, descriptive statistics in which frequencies, percentages and charts/ tables were used to test the study objectives. Furthermore, t-student test was used to test the statistical significance of the factors influencing the effectiveness of the integrated audit systems along the sampled companies. The study found that current tax payments, tax debts payments (timeliness of the tax debts payments) and tax return (correctness and timeliness of return filing) improved after the implementation of the integrated tax audit system in Malawi. Furthermore, it was observed that the audit findings with regards to the trends of appeals and objections after implementation of the integrated tax audit systems, as there were fewer appeals and objections. vi Therefore based on these findings, the study concludes that the rolling out of the integrated tax audit system to some extent promoted voluntary tax compliance among large tax payers firms in the country. There is therefore need to promote the usage of more integrated tax systems, processes, procedures and encourage execution of more integrated audits among all taxpayers. This will assist in enhancing voluntary compliance in form of tax payments, return filing, tax debt payments as well as minimize audit objections and appeals in the course of the tax payers dealing with tax matters. Over and above, there will be improvements in tax revenue collections which will result in rapid socioeconomic development of the country.