By Duncan Mlanjira
Malawi Revenue Authority (MRA) has announced that it has commenced to execute the Taxation (Amendment) Act and the Value Added Tax (Amendment) Act which have been published in the Malawi Government Gazette on November 3, which President Lazarus Chakwera assented to on October 31.
As presented in Parliament in September by Minister of Finance, Felix Mlusu, the monthly taxable income rates has been confirmed at 0% for first K100,000 while 30% is from K100,001 to K2.9 million and 35% in excess of K3 million.
A public notice from MRA’s Commissioner General, John Biziwick says the rates are applicable to income of an individual including employment income under Pay As You Earn (PAYE).
There will also be a 30% tax charged for income for ecclesiastical, charitable or educational institutions of a public character or of trusts.
There will also be taxable income charged for taxpayers with mining projects as follows:
• 30% provided that an additional tax of 5% of taxable income charged for taxpayers whose companies are not incorporated in Malawi and the taxpayers are not resident in Malawi.
• An additional resource rent tax at a minimum rate of 15% on after-tax project resource rent.
• Taxable income charged at 30% for life insurance business.
The 14th Schedule of the Taxation Act, has been amended as follows;
• Introduced 20% Withholding Tax on winnings on betting and gambling transactions including lotteries. Winnings means any payment made to any person who wins a bet or a gamble including a lottery.
• Increased tax-free threshold for casual labour from K15,000 to K35,000 per transaction.
• Payment in excess of K35,000 for casual labour charged at 20%.
• Increased Withholding Tax on rent from 15% to 20%. Rent includes rent for movable and immovable property whether paid under a lease or otherwise but excludes rent payable by an individual whose source of income is only from employment and the rent is payable in respect of property used as a dwelling house.
• Increased Withholding Tax on fees from 10% to 20%.
• Introduced 3% Withholding tax on payment for farm produce other than tobacco.
The Taxation Act, Section 2 has been amended on the definition of the words ‘amount realized’ by deleting paragraph (a) and substituting it with new paragraph (a); “in the case of disposal of an asset by sale for cash, means the cash received or contracted to be received, including any contingent amount agreed at the time of disposal”.
The Taxation Act, Section 15 (1) paragraph (e) has been amended by inserting immediately after the word “trust” the words “in which the individual is a settler of a trust”.
Value Added Tax(VAT) Act has been amended in order to introduce a 16.5% VAT on refined cooking oil.