A Withholding Tax Exemption Certificate is a certificate
issued by the Malawi Revenue Authority (MRA) to exempt a taxpayer from being
withheld tax on specified payments. Withholding Tax is an advance payment of
income tax that is deducted from specified payments. A person making the
payment deducts the tax.
The exemption certificate exempts the taxpayer from being
deducted Withholding Tax at the time of the transaction. However, the taxpayer
would still be required to file a return of income, and pay tax if he has made
a profit, at the end of his accounting period. A taxpayer is required to apply
for an exemption certificate in writing to the Commissioner General who may
issue a Withholding Tax Exemption Certificate to any person who has met all of
the required conditions.
The applicant should meet the following conditions; timely
filed a return of income which is due; filed returns of income for all the
years since commencement of business; paid all outstanding taxes due including
Valued Added Tax (VAT) and Customs duties; and audited for tax if the Commissioner
General so directs and has complied with any special or general directions. A
Withholding Tax Exemption Certificate does not apply on payments for royalties,
rent, fees, commissions, contractors and subcontractors and bank interest.
Any individual, partnership, trust, association, company,
club, statutory body, council, Government Ministries, Departments and Agencies
(MDAs) or religious organization is eligible to operate Withholding Tax if it
makes payments to any person. Withholding Tax is deducted using specified rates
in the 14th Schedule to the Taxation Act.
Any person who fails to deduct Withholding Tax shall be
personally liable to pay the amount of any Withholding Tax which was not
deducted plus an additional penalty of 20% of the amount of Withholding Tax
that was to be paid.
Feedback:
tax@mra.mw; 0888 986 200; 0888 958 220