A Tax Clearance Certificate (TCC) is a transaction-based written confirmation from the Malawi Revenue Authority (MRA), or any other tax administration, that a person’s tax affairs are in order at the date of issue of the certificate. It states that an individual or corporation has no tax due.
The TCC may be issued for all taxes or for a tax or taxes specified by the business. The Taxation Act, Section 85A (1) stipulates that notwithstanding anything to the contrary contained in any other written law, the conclusion of any transaction specified in the Fifteenth Schedule shall be subject to a TCC to be issued by the Commissioner General.
The Fifteenth Schedule lists a number of transactions which require a TCC. Such transactions include but are not limited to transfer of land and buildings, renewal of certificate of fitness for commercial vehicles, renewal of Business Residence Permit, change of ownership of a company, renewal of Temporary Employment Permits and renewal of telecommunications license among others.
A person requiring a TCC shall apply in writing for such certificate either by himself or through his representative or agent to the Commissioner General stating the reasons thereof. A TCC shall be issued by the Commissioner General only where conditions as may be prescribed by the Commissioner General are satisfied.
Such conditions shall include evidence that the applicant is a registered taxpayer, except where the applicant is not subject to, or is exempt from, income tax. The tax law requires owners of businesses to regis¬ter for tax purposes regardless of the size of the business or location.
Registration for taxes is free and can be done at any nearest MRA of¬fice. MRA issues a Taxpayer Identification Number (TPIN) on registration that should be used on any correspondence with the Authority.
The other conditions are that the income tax returns of the applicant that are due have been submitted to the Commissioner General and the applicant has no outstanding income tax.
If a taxpayer’s tax affairs are not in order, there is little point in applying for a TCC; such applications, that will in any event be refused, simply create unnecessary expense and delay for all concerned.
Any person who concludes, or causes the conclusion of, a transaction without a TCC shall be liable to a penalty of K50, 000, in addition to any other penalty that may be prescribed under the Taxation Act. Taxpayers with TCCs stand to benefit from business contracts through tenders from government and private companies which require only tax compliant bidders.