Malawi Revenue Authority - Withholding Tax

Withholding Tax

Last Updated: 17 January, 2018 - Print

Withholding Tax is an advance payment of income tax that is deducted from specified payments. A person making the payment deducts the tax.

Any individual, partnership, trust, association, company, club, statutory body, council, Government ministry or department or any religious organization, as long as it makes payments to any person, is eligible to register with MRA and operate Withholding Tax.

Withholding Tax is deducted using specified rates, according to the 14th Schedule to the Taxation Act, as follows:

Nature of payment	Rate
Royalties	20%
Rent	15%
Supplies to traders and institutions;
Food stuffs	3%
Other	3%
Commission	20%
Carriage and haulage	10%
Contractors/subcontractors	4%
Public entertainment	20%
Casual labour exceeding K15, 000	20%
Services	20%
Bank interest exceeding K10, 000	20%
Fees	10%
Tobacco sales	3%

For example, if a farmer sells tobacco at the auction floors at a cost of K500, 000, he or she will be paid K485, 000, which is 3 percent less in line with payment for tobacco sales.

After making the deductions, the operator should prepare a Withholding Tax Certificate in triplicate and remit the tax to MRA within 14 days from the end of the month during which the deduction was made.