Develop Malawi, Pay Taxes

Malawi Revenue AuthorityMsonkho HouseIndependence DrivePrivate Bag 247Blantyre

Tel: +265 - 1 822 588Fax: +265 - 1 822 302E-mail: mrahq@mra.mwWeb: www.mra.mw

Produced by Malawi Revenue Authority

The amendments are as follows:-

1. INCOME TAX

Pay As You Earn (PAYE)• Increase of PAYE zero percent threshold from K15,

000 to K20, 000 per month. The next K5, 000 will be taxed at 15 percent whilst the excess over K25, 000 per month will be taxed at 30 per cent.

Loss Carry Forward Provision• Reduction of the indefinite loss carry forward

provision under section 42 of the Taxation Act to 6 years for the manufacturing sector in order to encourage investment in profitable business ventures.

Interest on overdue accounts• The tax provision that mandates the Commissioner

General to charge interest on unpaid taxes has been amended to remove the insignificant amounts of K22 and K5.50.

Transfer pricing • The provision relating to transfer pricing has been

reviewed and provides clarity on the matter.

Withholding tax on imports

• Introduction of 3 percent Withholding tax on all imports excluding travellers’ personal rebate.

• The tax will be paid at the border (point of entry) by all importers who do not possess a valid Withholding tax exemption certificate.

• The Withholding tax paid on imports will be credited upon submission of a tax return by a taxpayer at the end of the accounting period as the tax is not final.

2. VALUE ADDED TAX• Increase of VAT registration threshold from K6 million

to K10 million.• Removal of import VAT on other lifting, handling,

loading or unloading machinery.• Removal of import VAT on crane lorries, mobile drilling

derricks and concrete – mixer lorries.• Re- introduction of 16.5 percent VAT on raw materials

imported by manufacturing industries registered under Industrial Rebate

• Introduction of a standard rate of 16.5 percent VAT on Internet services so as to allow Internet service providers claim input VAT.

Travellers Rebate (allowance) increased from K150,000 to K300,000 on accompaned non-commercial goods

JULY 2013-JUNE 2014

NEW TAX2. AMENDEMENTS FOR DOMESTIC TAXES

Import Duty and Excise Duty free

1. NEW MEASURES FOR CUSTOMS & EXCISE (TARIFFS) ORDER FOR 2013/2014 FINANCIAL YEAR

The Minister of Finance in his 2013/2014 Budget Statement announced new Customs & Excise measures affecting the Customs & Excise (Tariff) Order. These changes are with effect from the midnight of 24th May 2013.

The amendments to the Customs & Excise (Tariffs) Order are as follows:-

A. IMPORT DUTY 1. Removal of import duty on live bovine, swine,

sheep and goats meant for breeding2. Removal of import duty on track laying tractors,

crane lorries and concrete mixer lorries3. Removal of import duty on mobile drilling derricks4. Removal of import duty on bicycles 5. Removal of import duty on inverters6. Reduction of import duty on motorcycles not

exceeding 250 cc from 25% to 15%7. Reduction of import duty on buses from 25% to

15% of seating capacity of 11 to 31 and 32 to 44 persons including the driver regardless of engine capacity and year of make

D. CUSTOMS PROCEDURE CODES (CPCs)

1. Increase in travelers rebate from MK150,000 to MK 300,000

2. Deleting the words under CPC 4000.442 (a) and 4071.442(a) “furnishing” and substituting the words “ curtains, carpets and rugs permanently or indelibly marked”

3. Deleting the words “ ESCOM” under CPC 4000.489 and 4071.489 and replace with the words” any company involved in the generation and supply of commercial electricity as approved by the responsible Minister”

4. Increased the number of passenger carrying motor vehicles including shuttles imported by hotels, lodges, and inns licensed under the Tourism and Hotels Act from one to two in every five years under CPCs 4000.450 and 4071.450 and removal of 10% duty and 16.5% VAT

5. Introduction of new CPCs 4000.480 and 4071.480 to cater for specialized broadcasting equipment for direct use in Television and Radio stations.

6. Re- introduction of CPCs 4000.481 and 4071.481 to cater for specialized goods for use in mining being machinery, plant and exploration equipment

7. Introduction of new CPCs 4000.451 and 4071.451 to cater off-road game/ scenery viewing vehicles( Safaris)

E. OTHERS

1. Creation of new subheadings to cater for food supplements, burial caskets, inverters and buses

2. Deletion of tariff subheading 4421.90.10 which covers “Other articles of wood for industrial use”

3. Introduction of 3% Withholding Tax on all imported goods, applied on Value for Duty Purposes (VDP) excluding Traveler’s Rebate. The effective date for implementation is 1st July 2013

4. Various Customs fees have been increased. The effective date for implementation will be communicated to the general public at a later date through a public notice.

B. IMPORT EXCISE

1. Removal of excise duty on matches2. Removal of excise duty on ball point pens3. Removal of excise duty on motorcycles4. Reduction of excise duty from 20% to 10% on

waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured such as soft drinks, squashes etc.

5. Reduction of excise duty on buses of a seating capacity exceeding 32 persons but not exceeding 44 persons including the driver from:

• 5% to 0% for new and used buses not exceeding 8 years

• 30% to 10% for used buses exceeding 8 years but not exceeding 12 years

• 60% to 25% for used buses exceeding 12 years

C. IMPORT VAT

1. Removal of import VAT on other lifting, handling, loading or unloading machinery

2. Removal of import VAT on crane lorries, mobile drilling derricks and concrete – mixer lorries

3. Re- introduction of 16.5% VAT on raw materials imported by manufacturing industries registered under Industrial Rebate CPC 401

Import Duty and Excise Duty reduced