There are two components of Excise Tax. There is Import Excise, which is levied on certain importations and is administered by the Customs Division. There is also Domestic Excise, which is levied on certain locally manufactured products and services and is administered by the Domestic Taxes Division.
Examples of such locally manufactured products include spirits, beer, airtime and cigarettes. It is administered under the Customs and Excise Act, Section 63 to 81 while offences and penalties are stipulated under Sections 140 and 143b respectively of the same Customs and Excise Act. Excise tax rates are in the Customs and Excise Tariff Order under column 10.
A taxpayer is required by law to complete entry of premises EX37 forms in triplicate and must be accompanied by plans of the premises and plant. This application can be renewed or a fresh application must be made whenever there is a transfer or extension of premises or plant.
A license to manufacture is also issued by the Commissioner General upon meeting the set conditions as per the provisions of the Customs and Excise Act. Again a bond on Form 123 should be provided by either a bank or an insurance company established in Malawi. The amount of guarantee will depend on the size of production.
The basis of charging Domestic Excise Tax for locally manufactured products is the price, which shall include any duty payable other than Excise and VAT, and the cost of any ordinary or proper packaging, other than packaging of opaque beer, which the goods would fetch, at the time and place of delivery from the premises of the licence holder, or a sale by the licenced person to a buyer independent of him; and in case of goods imported into Malawi, the price which shall include any customs duty payable other than Excise and VAT.
This is in accordance with the second schedule, to the Customs and Excise Tariff Order.
Domestic Excise is payable by the 20th of the following month in which it was charged. Failure to comply with the Excise Tax Law attracts penalties stipulated under Sections 140 and 143b of the Customs and Excise Act.