Payments made to foreign artists for performances and related engagements in Malawi subject to tax

* In accordance with the Taxation Act under Section 11 unless specifically exempted under the provisions of the Act

* Announced jointly by MRA, Copyright Society of Malawi (COSOMA), Malawi Censorship Board and Musicians Union of Malawi

By Duncan Mlanjira

Payments made to foreign artists for performances and related engagements in Malawi are subject to tax in accordance with the Taxation Act.

In a joint statement from Malawi Revenue Authority (MRA), the Copyright Society of Malawi (COSOMA) and the Malawi Censorship Board (MCB) — with support from the Musicians Union of Malawi (MUM), indicates that under Section 11 of the Taxation Act, “the income of a person includes all amounts received from a source within Malawi, including any capital gain”.

“Such income is assessable for tax purposes unless specifically exempted under the provisions of the Act,” says the statement addressed to event managers, concert promoters, companies, organisations, institutions, artists and members of the general public.

It further says “any income earned by a non-resident artist from performances, appearances, entertainment services, endorsements or any other activities undertaken in Malawi constitutes income derived from a source within Malawi and is, therefore, subject to taxation.

“The Taxation Act further provides that income payable to a person who is not resident in Malawi, and which arises from a source within Malawi and is not attributable to a permanent establishment of that person in Malawi, shall be subject to a final withholding tax at the rate of 15% of the gross amount payable.

“The tax becomes due at the time the income accrues to the non-resident artist, when payment is made directly or indirectly to the artist, when the amount is credited to the artist’s account within or outside Malawi, or when any person, institution, platform or intermediary receives, processes, facilitates or handles the payment on behalf of the artist.”

The statement further enlightens event managers, promoters, companies, institutions, agents and any other persons responsible for making or facilitating such payments, that they are required by law to deduct the applicable tax and remit it immediately to the MRA.

“Additionally, it is mandatory for event managers or promoters to obtain a Tax Clearance Certificate (TCC) before the externalisation of funds to foreign artists.

“The TCC confirms tax compliance and is a prerequisite for banks to process transfers of funds to foreign bank accounts.

“Beyond tax compliance, organizers of events involving foreign artists are reminded that they are also required to comply with copyright and public entertainment laws before any performance is conducted.”

On the role of the COSOMA — mandated under the Copyright Act 2016 (Cap. 26:01 of the laws of Malawi — it is responsible for administering copyright licensing and ensuring compliance in the creative sector.

Section 5 of The Act empowers COSOMA ‘administer rights on behalf of authors and other right holders, including the licensing of the public performances and reproduction of works’.

Thus in the statement, the COSOMA reminds promoters and event organisers that “any public performance involving foreign artists requires prior authorisation through the acquisition of a copyright licence from COSOMA and payment of the prescribed licence fees”.

“Organisers are encouraged to engage COSOMA well in advance of their events to facilitate timely processing, avoid inconveniences and ensure that performances are conducted within the legal framework.

“Compliance with copyright licensing requirements is not only a legal obligation but also an important contribution towards protecting the rights of creators and performers.

“Proper licensing safeguards royalties, ensures fair remuneration to copyright owners and strengthens Malawi’s creative economy in line with the aspirations of MW2063.”

Operating under the Ministry of Youth, Sports & Culture, the Censorship Board falls under the mandate of the Censorship and Control of Entertainments Act of 1968.

Section 3 of The Act establishes the board to ‘regulate the importation, production, dissemination, and exhibition of film, publications, and public entertainments’ to protect Malawi’s socio-cultural value and public safety.

In the statement, the Censorship Board reminds all event organisers that any event involving foreign artists “requires an Entertainment Permit issued by the Board before the event is held”.

“The permit ensures compliance with the provisions of the Censorship and Control of Entertainments Act by safeguarding Malawi’s socio-cultural values, protecting minors from harmful content, promoting public safety and ensuring that appropriate security, crowd control, emergency exits, fire safety and health measures are in place.

“Failure to obtain the required permits and licences or to comply with the applicable legal requirements may result in penalties, revocation of permits or licences, and other legal action as provided under the relevant laws.”

On its part, the Musicians Union indicated that it “supports this collaborative initiative aimed at strengthening the regulation of foreign artists performing in Malawi”.

“While recognising the importance of cultural exchange and international collaborations, the Union emphasises the need for a transparent and well-coordinated system that promotes fairness, protects the interests of local artists, encourages compliance with the law and enhances revenue collection for national development.”

The Union thus encourages continuous stakeholder engagement and education “to ensure smooth implementation of these regulatory requirements”.

“Failure to deduct and remit tax as required constitutes an offence under the Taxation Act,” emphasises the Union in the statement.

“Any person who fails to withhold the tax shall be personally liable to pay the amount that should have been deducted together with any applicable penalties and interest as provided under Section 112 of the Taxation Act and other relevant provisions of the law.”

The four institutions thus urges all stakeholders in the entertainment industry “to familiarise themselves with these legal requirements and ensure full compliance before entering into contractual arrangements, making payments or conducting any public performance”.

“Compliance with tax obligations, copyright licensing requirements and public entertainment regulations contributes to fair taxation, protects intellectual property rights, promotes transparency, safeguards creators’ earnings, enhances public safety and supports Government’s efforts to mobilise domestic revenue — while fostering a vibrant, responsible and sustainable creative industry in line with MW2063,” emphasises the joint statement.