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Taxation law gazetted

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The Ministry of Justice finally gazetted the Tax Amendment Act last week which, among other things, allows the government to increase the tax free band of Pay as You Earn from K45, 000 to K100, 000.

This follows President Lazarus Chakwera’s assenting of the Tax Amendment Bill on October 31.

A document from the Malawi Revenue Authority (MRA) seen by Business Times indicates that the law came into effect day it was gazetted.

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Ministry of Finance spokesperson, Williams Banda, confirmed the development.

“Yes I can confirm that the bill was assented to on October 31 and gazzeted on November 3 which means that it has come into effect this month,” Banda said.

This means that, from this month, Pay as You Earn (Paye) tax would not be deducted from the first K100, 000.

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The tax-free threshold of casual labour has also been increased from K15, 000 to K35, 000.

The adjustments would help free some disposable income to low income earners, according to economic experts.

The law also allows the government to earn a 20 percent withholding tax on all winnings from betting, gambling and lotteries.

Taxation expert Emmanuel Kaluluma however, insists that the law should have been in effect from July 1.

“This bill is for the 2020/21 financial year which starts from July 1, 2020. So, we cannot say it should start from November. It needs to start from July for the sheets to balance because we have been told this is an annual rate,” Kaluluma explained.

Institute of Chartered Accountants in Malawi (Icam) Chief Executive Officer, Francis Gondwe, said in a separate interview that, practically, effecting the implementation of the provision to July 1 would be difficult.

“The new tax measures have been gazetted after the new financial year commenced and this happens when we have a new government, therefore, appropriate adjustments will have to be made so that Paye is not overpaid,” he said.

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