Tax laws Malawi
Malawi's taxation system comprises various taxes administered by the Malawi Revenue Authority (MRA), which is responsible for assessing, collecting, and accounting for tax revenues.
1. Income Taxes:
Personal Income Tax: Malawi imposes a progressive tax on individual income, with rates applied to income brackets. For the 2024/2025 tax year, the rates are as follows:
First MK 150,000: 0%
Next MK 350,000: 25%
Next MK 2,050,000: 30%
Excess of MK 2,550,000: 35%
Corporate Income Tax: Companies are subject to a standard tax rate of 30% on their taxable income. Branches of foreign companies are taxed at a rate of 35%.
Non-Resident Tax (NRT): Non-resident individuals and entities not engaged in trade or business through a permanent establishment in Malawi are subject to a 15% tax on gross income sourced from Malawi.
2. Value Added Tax (VAT):
Standard Rate: VAT is levied at a standard rate of 16.5% on most goods and services.
Zero-Rated Supplies: Certain goods and services, such as exports, fertilizers, and specific pharmaceuticals, are zero-rated, meaning VAT is charged at 0%.
Exempt Supplies: Some goods and services are exempt from VAT, including basic food items and financial services.
3. Withholding Taxes:
Dividends: Subject to a 10% withholding tax.
Interest: Subject to a 15% withholding tax.
Royalties and Fees: Subject to a 15% withholding tax.
4. Other Taxes:
Excise Duty: Applied to specific goods such as tobacco, alcohol, and petroleum products.
National Pension Scheme (NPS) Contributions: Employers and employees contribute to the NPS, with expatriates on Temporary Employment Permits exempt if they are part of a home country pension scheme.
Recent Amendments:
The Taxation (Amendment) Act of 2024 introduced changes to various tax provisions. Part II of this Act is set to come into force on a date to be appointed by the Minister.
Administration:
The Malawi Revenue Authority (MRA), established in 1998, oversees tax collection and administration. It operates under the Ministry of Finance, which is responsible for state finance, including taxation and economic policy.
Note: Tax laws and regulations are subject to change. For the most current information, it is advisable to consult official sources such as the Malawi Revenue Authority or seek professional tax advice.
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