Fringe Benefits Tax

Fringe Benefits Tax (FBT) is tax charged on the total taxable value of fringe benefits as enjoyed by an employee but paid for by an employer. The employer, and not the employee, pays FBT. FBT is charged at 30 percent of the taxable value.

A fringe benefit is any asset, service or other benefit in kind, provided by or on behalf of an employer to an employee, if such provision includes an element of personal benefit to the employee.

Examples of fringe benefits include accommodation, motor vehicles, school fees and related expenses, interest-free or concessional loans, utilities (electricity and water) and domestic services, for instance maids, chefs, gardeners and security guards. The following items are not fringe benefits; medical facilities for example MASM, housing advance, funeral advance and school fees advance

All employers except the Malawi government are liable to FBT. Fringe benefit tax does not apply on benefits paid to an employee by the employer in cash. Benefits paid in cash form part of the employee’s emoluments, therefore, taxed on the employee under Pay As You Earn (PAYE).

FBT does not apply to fringe benefits provided to an employee whose annual taxable income does not exceed K100,000 per month or K1,200,000 per year. FBT liability should not be imposed on an employee.

Every employer who provides fringe benefits to employees is required to register for FBT 14 days after starting to provide fringe benefits to employees. Employers are required to fill FBT 1.

FBT is paid quarterly on the 14^th of the following month after the end of each quarter. FBT for the second quarter, October-December 2021, is due by 14^th January 2022. FBT returns should be submitted by the same date and should be accompanied by FBT2