Malawi Revenue Authority - Registering for Tax

Registering for Tax

Last Updated: 14 April, 2023 - Print

Who should register for tax?

The tax laws (Taxation Act and VAT Act) require owners of businesses, both individuals and companies, to register for tax purposes regardless of the size of business, nature of business or location.

Is there any fee for registering for tax?

Registration for taxes is free and can be done at any nearest Malawi Revenue Authority (MRA) office. MRA issues a Taxpayer Identification Number (TPIN) on registration that should be used on any correspondence with the Authority.

Are there any advantages for registering for tax with MRA?

There are several advantages for registering for tax with MRA. For example:

MRA provides information on preparation of business accounts for tax purposes. The accounts enable the taxpayer to know whether the business is making profits or losses;
Registration for taxes proves one to be patriotic and the registration itself generates trust with other entities thereby enabling ease in transaction of business;
Business is operated freely without fear of being caught by MRA or any authority
MRA issues tax clearance certificate that enables the business compete for any public/open tender.

When one is registered for business what is he/she supposed to do?

When a business is registered for taxes, MRA requires the trader to be compiling business accounts and file tax returns periodically (monthly and / or yearly) to their nearest tax office.

For income tax purposes, the accounts are supposed to be submitted to the Authority at the end of the accounting period. The date of submission is 180 days or six months from the end of the accounting period. The accounting period or business year is decided by the taxpayer.

For example, the accounting period/year can be from 1st January to 31st December or 1st April to 31st March the following year or 1st July to 30th June.

All incomes are recorded in one column while all expenditures are recorded in another column. At the end of the accounting period, all incomes and expenses are added up. Profit or loss is determined by subtracting expenses from incomes.

For VAT, the returns are supposed to be submitted to MRA on or before the 25th day of the following month.

How is tax levied?

Tax is levied on the net profit using prevailing rates. For instance, if total income is K2, 500, 000 and total expenditure is K2, 000, 000, the net profit is K500, 000.

Tax will; therefore, apply on K500, 000 as follows:

•The first K240, 000 is taxed @ 0%
•Balance is K260, 000
•Next K60, 000 is taxed @ 15% =K9, 000
•Tax on K200, 000 @ 30% =K60, 000

•Total tax to pay= K9, 000 + K60, 000=K69, 000

The amount of tax payable depending on gross profit of K500, 000 will be K69, 000.
Please, note that when compiling business accounts, expenditures included are those that are wholly, exclusively and necessarily incurred for the purposes of the business.

What documents should one use when registering for tax?

When registering for tax, the following documents are required; business registration certificate, valid ID, articles of association (if limited company). The tax registration application form will then be duly completed and submitted to MRA.