VAT was introduced in Malawi on 1 October 2002 to replace Surtax. The VAT authority in Malawi is the Malawi Revenue Authority. The head of VAT administration is the Commissioner General.
Rates and scope
VAT is levied at the standard rate of 16.5%. Zero-rated items are charged at 0%. Exempt items are not subject to VAT.
VAT is charged on the supply of taxable goods and services. Certain listed exempt supplies and relief supplies fall outside the scope of the VAT system.
A person must be registered as a taxable person if he or she makes taxable supplies of goods or services and has a business turnover that is or exceeds MK2 million per annum, or has reason to believe that the turnover threshold will be met.
Any business with a turnover below the registration threshold amount may apply for voluntary registration, and the Commissioner General may notify the proprietor in writing and register any class or category of business specified in the notice.
A group of taxable persons may, with the approval of the Commissioner General, be treated as one designated taxable person for VAT purposes.
Nonresidents do not qualify for registration.
Application for registration
Any person who qualifies as a taxable person or has grounds to believe that he or she will qualify as a taxable person must apply to the Commissioner General for registration as a taxable person.
A taxable person must apply in writing for deregistration within 30 days of ceasing to carry on business in relation to which a registration is made. Any deregistration will take effect from the end of the tax period in which the registration is cancelled.
The registration of a taxable person shall be cancelled by the Commissioner General where the Commissioner General is satisfied that the registered person no longer exists. A registered person may also apply for deregistration when he or she no longer meets the requirements for registration.
Advertising and prices
Prices are normally quoted inclusive of VAT.
Calculation of output tax
The output tax is calculated at 16.5% of the value of the taxable supply of the goods, services or import. Net output tax, i.e. output tax less input tax, is payable to the Malawi Revenue Authority by the 25th day of the following month.
Exemptions and zero-rating
Exempt supplies include specific items such as:
certain animal products;
vegetable products in a raw state;
water, non-mineral or aerated water without additives;
residue and waste from the food industries;
petroleum products and petroleum oils;
fuel wood, sawdust, wood waste and scrap;
mosquito and sandfly nets;
mechanical appliances for projecting, dispersing or spraying liquids or powders;
banking and life insurance services;
postal services (but not courier services);
transport of exports;
residential property rental and sale;
hessian cloth; and
betting and gaming, including lotteries and casinos.
Some exempt items are defined by reference to specific Customs Tariff Headings. Reference should be made to the actual Customs Tariff Headings to determine whether an item is exempt.