Treasury speaks on income tax


The Ministry of Finance has said the newly introduced Advanced Income Tax will only apply to commercial imports and non-compliant taxpayers.

This is contained in a press release issued by the Ministry on Thursday.

On Wednesday, Parliament passed the Taxation Amendment Bill No.13 of 2021 which contains the controversial Advanced Income Tax.


During the debate, opposition Members of Parliament spoke against implementation of the same.

The statement from Treasury indicates that small cross border traders are exempted from import taxes on consignments of goods of up to $3,000.

It further says the tax is targeted at commercial imports and not imports for personal use and that it will be collected at the point of entry into Malawi at the rate of three percent of the landed cost of imports.


It adds that a tax refund will be given if the actual income tax paid by the trader at the end of the year is more than the applicable tax on the profits of the business.

“The nature and quantity of goods as well as the frequency of importation will be used to determine whether goods are for commercial use or for personal use. Imports by businesses that are tax compliant will not be subjected to the Advance Income Tax provided that the business has a Withholding Tax Exemption Certificate or a Tax Clearance Certificate (TCC),” the statement reads.

However, tax expert Emmanuel Kaluluma maintains that the tax is prohibitive to economic growth as companies will be spending more on the tax than boosting their businesses.

“The government’s policy is prosperity for all but the Malawi Revenue Authority and Finance (Ministry) are looking at a smaller picture; this is trying to expand a tax that has exploited a certain section of our people such as farmers, now they want to extend it to traders. It should not be allowed.

“How can you be made to pay income tax through customs, which is a consumer tax? How are they going to reconcile these things? There will be problems. Right now they (MRA) are sitting on tones and tonnes of withholding tax certificates but they can’t marry that to an individual pin as they are advancing now. So it’s a nonstarter,” Kaluluma said.

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