What is a Tax Return?

Last Updated: 15 March, 2022 - Print

A tax return is an authorised document used by a taxpayer to declare tax payable or claimable or any information as provided by the Taxation, Value Added Tax (VAT) and Customs & Excise Acts to enable MRA assess one’s tax liability.

How many tax returns are there?

There are three types of tax return. These are monthly, quarterly and annual returns.

Monthly Returns

These are expected to be submitted every month like Pay As You Earn (PAYE), Withholding Tax (WHT), Value Added Tax (VAT), Presumptive Tax and Domestic Excise. PAYE return should be submitted by the 14th and should be accompanied by Form P12 and P12A, WHT return is due by the 14^th and should be accompanied by Form WTF1 & 2, Domestic Excise is due by the 20^th and should be accompanied by Form 32 for goods and Form 32A for services. Presumptive Tax is also due by the 20^th and should be accompanied by a Presumptive Return. VAT is due by the 25^th and should be accompanied by Form VAT3.

Quarterly Returns

Quarterly returns are required to be submitted to MRA at the end of each quarter. These deal with Fringe Benefit Tax (FBT) and Provisional Tax. FBT return is due by the 14^th after the end of each quarter and must be accompanied by Form FBT2 while Provisional Tax is due by the 25^th after the end of each quarter and must be accompanied by Form PTF1.

Annual Returns

Annual returns are supposed to be submitted to MRA annually after 180 days from the accounting date of each taxpayer. For instance, self–assessment return for a large taxpayer under LTO and medium taxpayers under MTO; ITF1 for individual businesses and ITF12 for limited companies respectively.

Where should taxpayers submit their returns?

Taxpayers can submit their tax returns at their nearest Domestic Taxes offices such as Blantyre, Lilongwe, Mzuzu, Zomba, Karonga, Mangochi, Dedza, Mzimba, Mulanje, Salima, Balaka, Kasungu and Dwangwa. Taxpayers can also submit their tax returns at Customs & Excise stations at Chitipa, Nsanje, Mwanza, Liwonde, Chiponde and Muloza.

What will happen to those who submit their tax returns late or none at all?

Taxpayers who fail to meet their tax obligation to compile and submit their tax returns when due would be penalized accordingly;

·      For income tax such as PAYE, WHT and FBT, the penalty would be K300, 000 for companies and K75, 000 for individuals for the first month or part thereof. Any further delay for the above would attract MK50, 000 for companies and K10, 000 for individuals on top of the MK300, 000.00 for companies and the MK75, 000 for individuals or part thereof for the return that remains un-submitted.

·      For VAT returns, a penalty of MK300, 000 would be charged for companies and MK75, 000 for individuals for the first month or part thereof and a further charge of MK50, 000 for companies or MK20, 000 for individuals for each month or part thereof for the return that remains un-submitted. 

·      For Domestic Excise, late submission will attract a penalty of MK20, 000 and MK1, 000 for each additional day whereas failure to submit a return attracts a fixed penalty of MK100, 000.

·      For Presumptive Tax, the penalty would be MK5, 000 for the first day, MK250.00 each day the return remains un-submitted and 20% interest of the amount due plus 5% for any additional month.

Please, note that with effect from July 2017, the revised penalties on accruing or outstanding tax arrears are the taxes due plus 5% interest for each month the debt remains unpaid.