Tax rates in Malawi

Company Tax

30%

Tax Rate For Foreign Companies

All companies (resident and non-resident) are subject to tax on Malawi-source income.
Branches of foreign companies are taxed at 35%, while Malawi-registered companies are taxed at the rate of 30%.
Non-resident tax is payable on income sourced from Malawi at the rate of 15% of the gross income and 10% for income derived from a mining project by way of interest, royalty, payment for independent personal services, or dividend.
Any income payable to a person who is not resident in the country arising from a source within Malawi is liable to a final withholding tax of 15% of the gross income.

Capital Gains Taxation

Capital gains are taxed at the rate applicable to the particular entity (30% standard rate, 35% for branches of foreign companies, 15% for designated priority industries, etc.).
Gains arising from the sale of shares traded on the Malawi Stock Exchange that have been held for more than one year are not taxable, same as for gains arising from the disposal of personal and domestic assets not used in connection with trade.

Main Allowable Deductions and Tax Credits

Expenses that are wholly, exclusively, and necessarily incurred in the production of income are generally tax-deductible.
Depreciation allowances are applicable with rates varying between 2.5% and 40%. Premium paid for the right of use or occupation of land or buildings, plant or machinery, patent design, trademark, copyright, and similar rights can be deducted. Goodwill is not deductible, whereas start-up expenses incurred up to 18 months before starting business generally can be deducted.
Other deductible expenses include donations made to approved charities and non-profit organisations (capped at MWK 5 million), so as certain contributions towards the construction of hospitals and schools (50% of the donation). Further deductions are allowed for certain costs of research relating to a trade, training allowances and transport allowances and salaries paid to employees with disability (50% of the amount). Ordinary pension contributions to an approved pension fund can be deducted up to 15% of an employee's annual salary or the actual contribution, whichever is lower.
R&D expenses are fully deductible. Exporters of non-traditional can deduct 30% of taxable income for processed goods and 10% of taxable income for unprocessed goods.
Taxes are non-deductible (except for local taxes), so as fines and penalties.
Losses may be carried forward for six years, while the carryback of losses is not permitted.

Other Corporate Taxes

A presumptive tax on turnover applies to small businesses with turnover of less than MWK 12.5 million. The rates are as follows: 0 for income up to MWK 4 million, MWK 110,000 for income between 4 and 7 million, MWK 170,000 for income between 7 and 10 million, MWK 225,000 for income between 10 and 12.5 million. The tax does not apply on rental income and professional management fees; income in corporate companies; and any income that is subject to final withholding tax.
Stamp duty is imposed at 1.5% on transfers of immovable properties (while share transfers are not subject to stamp duty).
A fringe benefits tax is charged at the rate of 30% (benefits include housing, school fees, utilities, travels, etc.). The rate is 15% of the original cost for motor vehicles.
Employers contribute a minimum of 10% of the employee's salary for social security.
Miners pay a resource rent tax of 15% on after-tax profits (determined by using a specific formula).
Malawi does not levy property or transfer taxes.

Other Domestic Resources

Malawi Revenue Authority

Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.

Tax Rate

Allowable Deductions and Tax Credits

In Malawi, non-business expenses are not deductible, and there are no personal allowances. Certain donations are deductible up to a maximum total of MWK 5 million for charities and MWK 5 million for non-profit organisations.
Penalties and fines paid in any country may not be deducted. Individuals may deduct losses and other expenditures that are not of a capital nature and that are wholly, exclusively, and necessarily incurred for the purpose of the taxpayer’s trade or the production of income.
If a married couple elects to file a joint return, tax on the wife’s earned income is computed as though it were the sole income of the couple and added to tax on the husband’s income.

Special Expatriate Tax Regime

Regardless of residence, an individual will be taxed only on Malawi-source income and not on passive foreign income.
Any income payable to a person who is not resident in Malawi arising from a source within the country is liable to a final withholding tax of 15% of the gross of such income.