Taxes in Malawi

Malawi uses a mainly source-based tax system: income arising from Malawi or treated by law as arising there can be taxable. The MRA administers domestic taxes through its Domestic Taxes Division and customs matters through its Customs Division. The Taxation Act, VAT Act, Customs and Excise Act and Tax Administration Act 2021 provide the main legal framework. The Tax Administration Act has applied since 21 March 2025, and the Revenue Appeals Tribunal has operated since 1 April 2025. Businesses, individuals and organisations that fall within the registration rules need a Taxpayer Identification Number (TIN). Registration is free and can be completed through Msonkho Online or an MRA office. The process can require identification, know-your-customer information and business registration documents. MRA has more than 30 stations. Msonkho Online supports registration, returns and payments, although technical availability can vary. Local access is formally established, but a taxpayer should keep evidence of submissions and payments. Employment income is commonly collected through Pay As You Earn (PAYE), which is tax withheld by an employer from monthly employment income. From 30 December 2025, the monthly gross-income bands are 0% up to MK170,000, 30% above MK170,000 up to MK1,570,000, 35% above MK1,570,000 up to MK10,000,000 and 40% above MK10,000,000. The employer normally withholds PAYE and submits the payment and return by the 14th day of the following month. An employer that fails to withhold can become personally liable in addition to statutory penalties. Withholding tax, or WHT, is tax collected at source when specified payments are made. Typical rates include 20% on royalties, 15% on rent, 10% on fees, 20% on services and commissions, 20% on bank interest above MK10,000, 10% on carriage and haulage, 3% on farm produce, 4% on construction contractors and 20% on public entertainment. Gambling and lottery winnings have been subject to 15% WHT since 30 December 2025 without a general exemption threshold. A WHT exemption certificate may be available, but the stated rules exclude royalties, rent, fees, commissions, contractors and bank interest from that relief. Dividends are generally subject to 10% WHT as a final tax. Non-resident income can be subject to 15% tax on gross amounts under the applicable MRA rate table. An individual receiving residential rental income is generally taxed at 15% of gross rent as a final tax. The individual cannot deduct expenses or losses against that amount. The return and payment are made quarterly. If the rental activity is conducted as a property-letting business, ordinary income-tax rules can apply instead. Payments made by a non-individual payer may also trigger WHT rules. Capital gains on share disposals have been taxable since 30 December 2025 regardless of the length of time the shares were held. The calculation uses the adjusted basis and the rules in the Taxation Act. Records supporting acquisition cost, improvements, transfers and consideration should therefore be retained. A domestic incorporated company generally pays 30% corporate income tax. A foreign incorporated company generally faces an additional five percentage points, while special rules can apply to priority industries, export processing zones, insurance businesses, trusts and pension funds. Supernormal-profit rules use a 30% rate where taxable income is below MK5 billion and 40% where it exceeds MK5 billion. A minimum alternative tax (MAT) of 0.5% of turnover can apply to a company with turnover above MK5 billion that has operated for more than three years. These rules require separate review where a company falls within a special regime. Presumptive Tax is a simplified annual tax for qualifying micro, small and medium businesses with annual turnover below MK12.5 million. Turnover up to MK4 million is taxed at MK0; above MK4 million up to MK7 million, the annual amount is MK110,000; above MK7 million up to MK10 million, it is MK170,000; and above MK10 million up to MK12.5 million, it is MK225,000. The amount is paid in four equal quarterly instalments. The regime excludes rental income, management, professional and training fees, incorporated companies and income already subject to final WHT. An MRA leaflet refers to payment by the 14th day after the quarter; the current MRA instruction should be checked for the applicable deadline. Fringe Benefit Tax (FBT) applies to taxable benefits provided by employers other than the Government. The rate is 30% of the taxable fringe benefit. A concessional loan benefit is measured using the commercial market rate for the relevant quarter. FBT is due by the 14th day after the end of the quarter. Value Added Tax (VAT) applies to taxable domestic supplies, imports and imported services. The standard rate has been 17.5% since 30 December 2025. VAT registration generally applies when annual turnover reaches MK50 million, while voluntary registration can be possible below that threshold. Returns and payment are normally due by the 25th day of the following month. Input tax can be credited only for creditable acquisitions. Goods and services on exempt and zero-rated schedules have different consequences: examples of exempt goods include fish, dairy, honey, infant milk, milling products, cooking oil and wheat flour, while examples of zero-rated supplies include buses with at least 45 seats, tourism building materials and laundry soap. Special VAT rules apply to non-resident digital-service suppliers, intermediaries and electronic-marketplace providers. They can require registration regardless of the MK50 million threshold when they supply streaming, cloud services, software, online advertising, marketplace services, e-books, apps or in-app products to customers connected with Malawi. The place of supply can be based on the recipient's usual residence or establishment in Malawi. These non-resident suppliers generally cannot claim input tax credit. The Electronic Invoicing System (EIS) is governed by the Value Added Tax (Electronic Invoicing System) Regulations 2026. Businesses and taxable persons subject to the system need an EIS account, must issue electronic invoices and must keep stock records. Relevant information is transmitted to the MRA in real time. From 1 February 2026, an electronic fiscal device (EFD) issued after 31 January 2026 is no longer accepted as a tax invoice or basis for an input-tax claim, and non-compliance can attract sanctions. Imports and exports can involve customs duty, import excise, import VAT, advance income tax and other customs measures. There is no single customs rate because the amount depends on the goods, Harmonized System classification, customs procedure and applicable exemption. Import VAT can arise in addition to customs duty and other charges. The MRA Taxpayer Charter refers to customs-duty processing within 10 days after import. For 2026/27, measures include duty-free treatment for selected technical-college equipment, luxury-goods excise, a sugar-export VAT refund subject to export and foreign-exchange evidence, and an extended motorcycle moratorium. Advance Income Tax (AIT) is stated at 10% on imports and 10% on exports under the applicable measures and exemptions. Other statutory charges can apply to specific transactions. A money-transfer levy of 0.05% applies to bank transfers and to mobile-money transfers above MK100,000 under the stated rules. The sender bears the economic burden, while the bank or electronic-money provider collects and remits the levy by the 14th day of the following month. A motor-vehicle insurance levy of 3% applies to insurance premiums and is collected by the insurer. Provisional tax is generally due by the 25th day after each quarter. A taxpayer is expected to pay 90% of the annual income-tax liability through provisional tax by the fourth quarter and the remaining 10% with the income-tax return. The income-tax return is generally due within 180 days after the end of the financial year. Domestic excise returns are generally due by the 20th day of the following month. Businesses and individuals should retain tax records for at least six years, in English where the rules require it. A return should still be filed on time even when payment is temporarily difficult; late filing, late withholding or late payment can produce penalties and interest. The MRA can issue assessments, request information, conduct audits, make adjusted or pre-emptive assessments and recover unpaid tax. A taxpayer can submit a written objection to the Commissioner General under the Tax Administration Act. After an objection decision, an appeal to the Revenue Appeals Tribunal generally must be filed within 30 days. Access to the Tribunal usually requires payment of undisputed tax and a deposit of 50% of the disputed assessment; import tax can require payment of the full amount. A Tribunal decision can be taken to the High Court on questions of law. Cross-border matters require separate analysis. Malawi's source-based rules interact with non-resident WHT, transfer-pricing and related-party rules based on the arm's-length principle, and the country's BEPS policy. A double-tax agreement can change the result, but treaty benefits should not be assumed without checking the relevant treaty, current status, residence evidence and procedural requirements for the specific case. Import VAT, customs duty, advance income tax and digital-services VAT address different taxable events and should not be treated as interchangeable. National income-tax and VAT rules are not replaced by a separate municipal tax system.