Malawi Revenue Authority - Advance Income Tax (AIT)

Advance Income Tax (AIT)

Last Updated: 19 July, 2023 - Print

Advance Income Tax (AIT) or Withholding Tax on Imports is a tax paid in advance on imported goods for commercial purposes. The Malawi Government introduced AIT to bring the informal sector into the tax net and enhance tax compliance.

What are commercial goods?

Commercial goods are defined as goods imported by persons engaged in business activities and these goods are not intended for personal, family, home usage.

How are commercial goods determined?

The determination of commercial goods is based on the following:
-   Statement of a person about the imported goods in oral or written form using a passenger customs declaration
-   Nature and quantity of the goods
-   Frequency of importations by a person.

Which imports are exempted from AIT?

1. Goods imported for personal use. 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;

2. Imports by businesses that are tax compliant but they should produce a VALID Withholding Tax Exemption Certificate or a VALID Tax Clearance Certificate considering that all the two documents have a validity period;
3. Imports by Government Ministries, Departments and Agencies (MDAs);
4. Imports by any person that is exempt from income tax under the Taxation Act.

How is AIT computed?

AIT is charged at 10 percent of the Customs Value for Duty Purposes (VDP) at the port of entry into Malawi. However, AIT is not a final tax and a tax refund could be given if the total AIT paid by the importer at the end of the year is more than the applicable tax on profits of the business.

How can an importer claim a refund under AIT?

The individual should submit an annual Income Tax Return at the end of the charge year accompanied by copies of the following:

•    Customs and Excise Declaration (Form 12)
•    Customs assessment notice on which the AIT was charged
•    For motor vehicles, the individual should show evidence of ownership by producing copies of a blue book
•    The submitted refund requests will go through a refund process to verify the correctness of the request.