The tax law requires owners of businesses in the case of individuals, and companies to regis¬ter for tax purposes regardless of the size of the business or location. 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.
There are several advantages for registering for tax with MRA. For example, MRA provides information on preparation of business accounts for tax purposes. The ac-counts enable the taxpayer to know whether the business is making profits or losses.
It also enables transacting business with other entities as registration for taxes proves one to be patriotic. Business is operated freely without fear of being caught by MRA or any authority. MRA issues Tax Clearance Certificate (TCCs) that enables the business compete for any public or open tender.
When a business is registered for taxes, MRA requires compilation of business accounts that are 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.
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. Tax is levied on the net profit using prevailing rates.
Please note that when compiling accounts, expenditures included are those that are wholly, exclusively and necessarily incurred for the purposes of the business.
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 the same year or 1st April to 31st March the following year or 1st July to 30th June the following year.
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