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Top1. Introduction
Malawi is categorised under low-human development economies in the human development index rankings of the United Nations (UNDP, 2019). The economic production of the country is relatively low to fully finance the national budget. For decades, the country depends on donor aid (about 40%) for the budget deficit (Chiumia & Simwaka, 2012; Wroe, 2012). However, the multilateral donors (e.g. USA, United Kingdom, Germany, Norway and Sweden) that directly finance the national budget and international financial lending organisations (e.g. The World Bank and International Monetary Fund) suspended their financial support following the poor governance in public finance management in 2012 (Cammack, 2012; Majanga, 2015). The situation was challenging for the government of Malawi to meet public services delivery targets with limited financial resources. The government enhanced the implementation of Value Added Tax (VAT) as one option to increase the revenue base and tax collection. The aim was to support the national budget and improve the economy of the country (Kalizinje, 2016; Keen & Lockwood, 2010). Nonetheless, studies have shown that tax evasion, fraud and corruption are some of the issues that affect implementation of VAT compliance among taxpayers (Abay, 2015; Adams & Webley, 2001; Lubua, 2014). Against this backdrop, the government of Malawi through the revenue authority (Malawi Revenue Authority) introduced Electronic Fiscal Devices to mitigate some of the problems of tax collection, tax administration and tax compliance among taxpayers (Chafuwa, Kenani & Kaunda, 2014; Ligomeka, 2019; Kenani, Masiya & Njolomole, 2021).
Electronic Fiscal Devices (EFD) are a wide variety of technological devices that revenue administrations can use to monitor and record business transactions of taxpayers. EFD can be used to support tax administration in activities for revenue collection and compliance (Casey & Castro, 2015). EFD, like any other technology, have inherent values and meanings that can be assigned to their application and use. In this view, some actors can use EFD to perpetuate domination, exploitation and marginalisation of other stakeholders when enforcing tax compliance (Grant, Hall, Wailes & Wright, 2006; Tarafdar, Gupta & Turel, 2015). Although several studies have been conducted on the implementation of EFD in the context of developing countries e.g. Kenya (Omweri & Obongo, 2010), Malawi (Kenani, Masiya & Njolomole, 2021) Nigeria (Atawodi & Ojeka, 2012), Tanzania (Chege, Kiragu, Lagat & Muthoni, 2015; Lubua, 2014), Zimbabwe (Nyasha et al., 2014) and Ethiopia (Muhammed & Tesafa, 2015), issues of power relations have received less attention. Understanding power relations can help revenue authorities to come up with effective means of tax compliance. Hence, it was important to understand and highlight issues around VAT compliance through EFD among the tax stakeholders.
The study was guided by the research question: What are the strategies for implementing EFD to maintain and govern VAT compliance? To answer this question, the study used the concept of governmentality (Dean, 2009; Foucault, 2009) which is used to explain the conduct of state and non-state actors in the exercise of power. The research was based on the case of Malawi that represented a developing country in Africa that was implementing EFD to support VAT compliance and tax administration.
The rest of the paper is presented as follows. Section 2 summarises the background to the study. Section 3 presents the theoretical underpinning of the study. Section 4 outlines the research methodology. Section 5 summarises the research findings. Section 6 discusses the research findings followed by conclusions drawn from the study.