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The Malawi Revenue Authority (MRA) has embarked on
a series of engagements with small business owners in Nsanje, Chikwawa, Mwanza,
Neno, Blantyre and Mulanje districts. The main objective of the exercise is to
encourage small businesses to register for the tax.
Speaking at one of the meetings in Mulanje, Wadza
Otomani, Taxpayer Education Specialist, said Presumptive Tax, previously known
as Turnover Tax (TOT), is tailored for small businesses with an annual turnover
of less than K12.5 million in a year.
He said unlike TOT, which charged a flat 2% on
turnover, Presumptive Tax now uses a tiered system with fixed rates depending
on turnover brackets. The tax is also very cheap to operate because it does not
require the services of an accountant to prepare one’s accounts.
‘‘Businesses with turnover below K4 million are
exempt from tax, while those with turnover between K4 million and K12.5 million
are charged fixed amounts depending on their income bracket,” added Wadza.
The tax has the following turnover brackets:
|
Annual turnover |
Annual Rate |
Quarterly rate |
|
Turnover below K4 million |
K0 |
K0 |
|
Above K4 million but not exceeding K7 million |
K110,000 |
K27,500 |
|
Above K 7 million but not exceeding K10 million |
K170,000 |
K42, 500 |
|
Above K10 million but not exceeding K12.5 million |
K225,000 |
K56,250 |
Registration
for Presumptive Tax is for free. One only needs a national ID card and a
business registration certificate to register for the tax.
BY
EDGAR MPELEPELE
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