The Malawi Gazette Supplement, dated 22nd March, 2024, containing

Bills

NOTICE

The following Bills, for introduction in Parliament, are published for

general information.

LILONGWE 22nd March, 2024.

FIONA. KALEMBA
Clerk of Parliament

TAXATION (AMENDMENT) BILL, 2024

MEMORANDUM
This Bill seeks to amend the Taxation Act (Cap. 41:01) in order to—
(a) provide for allowable deductions for monetary donations into the
Disaster Risk Management Trust Fund;
(b) provide for allowable deductions for construction of a borehole, a water
kiosk and other water supply facilities;
(c) to provide for non-allowability of deductions for expenditure where the
invoices of the transactions are not generated from an electronic tax invoicing
system;
(d) delete the “place of effective management” as a determinant of
residency for the purposes of determining tax liability for a non-resident;
(e) provide new rates for presumptive tax for commercial passenger
carrying vehicles;
(f) provide clarification on the entitlement to claim capital allowances in
respect of leased assets;
(g) extend the 40 % tax rate on taxable income above K10 billion, to all
companies;
(h) clarify that the concessional tax rate on investment of pension funds
applies to the returns on the investment;
(i) amend the rates for Pay As You Earn;
(j) clarify that the withholding tax on payment for any supplies to traders
and institutions in respect of foodstuff applies to edible farm produce in their
raw state;
(k) extend the final withholding tax rate of 1% that applies to commissions
for insurance agents and individual banking agents to also apply to individual
agents recruited by an e-money service provider;

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ii Taxation (Amendment)

(l) reduce the withholding tax on interest realised from investment of life
assurance premiums and pension contributions to 15%;
(m) amend the requirement for a tax clearance certificate on purchase of
explosives to apply to issuance of an explosives licence or permit under the
Explosives Act (Cap.14:09) by the Malawi Police Service; and
(n) introduce the requirement for a tax clearance certificate on issuance of
a minerals export permit and application and renewal of industrial rebate
licence.

B. No. 3
 Taxation (Amendment) 1

TAXATION (AMENDMENT) BILL, 2024

ARRANGEMENT OF SECTIONS
SECTION
1. Short title and commencement

PART__I
2. Amendment of s. 39 to Cap. 41:01
3. Amendment of s. 39A (1) of the principal Act
4. Amendment of s. 76A (1) of the principal Act
5. Amendment of s. 91B (1) of the principal Act
6. Amendment of the Second Schedule to the principal Act
7. Amendment of the Eleventh Schedule to the principal Act
8. Amendment of the Fourteenth Schedule to the principal Act
9. Amendment of the Fifteenth Schedule to the principal Act

PART__II
10. Amendment of s. 45 of the principal Act

A BILL

entitled

An Act to amend the Taxation Act

ENACTED by the Parliament of Malawi as follows—
1.—(1) This Act may be cited as the Taxation (Amendment) Act, Short title and
2024. commence-
ment
(2) Part II shall come into force on a date to be appointed by the
Minister, by a notice published in the Gazette.

B. No. 3
2 Taxation (Amendment)

PART__I
Amendment of 2. The Taxation Act (hereinafter referred to as the “principal
s. 39 to Cap. Act”) is amended, in section 39 —
41:01
(a) paragraph (d), by deleting the word “and” appearing
immediately after the word “;”;
(b) paragraph (e), by deleting the full stop at the end of the
paragraph and substituting therefor, the words “; and”; and
(c) by inserting a new paragraph (f), as follows—
“(f) any sum donated by the taxpayer during the year
of assessment, into the Disaster Risk Management
Trust Fund.”.
Amendment 3. Section 39A of the principal Act is amended by deleting
of s.39A of subsection (1) and substituting therefor, a new subsection (1) as
follows—
the principal
Act
“(1).—There shall be allowed as a deduction of fifty
per centum for any amount paid as a social contribution
directly into the—
(a) building of a public hospital or school;
(b) sponsoring of youth sporting development
activities; or
(c) construction of a borehole, water kiosk and
other water supply facilities, as determined by the
Minister by notice published in the Gazette.”.
Amendment 4. Section 76A(1) of the principal Act is amended by deleting
of s. 76A (1) the words “and having a place of effective management”.
of the
principal Act

Amendment of 5. Section 91B of the principal Act is amended by deleting

s. 91B of the subsection (1) and substituting therefor, a new subsection (1) as
follows—
principal Act

“(1) A person operating a commercial passenger

motor vehicle of less than thirty-three seats, including
the driver, shall be liable to pay a tax known as a
presumptive tax, which shall be payable quarterly in
equal instalments, at the rate specified in the Eleventh
Schedule:
Provided that the Commissioner General shall
graduate the person into the income tax regime
applicable to income for individual businesses or
corporations, as the case may be, if he believes that
there are reasonable grounds to warrant the decision.”.

B. No. 3
 Taxation (Amendment) 3

6. The Second Schedule to the principal Act is amended by

inserting, immediately after paragraph 4, a new paragraph 5 as
follows—
“5. The lessor shall transfer the right to claim
capital allowances to the lessee, where a capital asset is
subject to a finance lease.”.
7. The Eleventh Schedule to the principal Act is amended— Amendment
of the
(a) under paragraph (c), by deleting subparagraph (ii) and Eleventh
substituting therefor, a new subparagraph (ii) as follows— Schedule to
the principal
“(ii) an additional tax of ten percent shall be charged Act
on any taxable income above ten billion kwacha;”;
(b) under paragraph (h), by deleting the word “earnings” and
substituting therefor, the word “returns”;
(c) by deleting paragraph (i) and substituting therefor, a new
paragraph (i) as follows—
“(i) in the case of presumptive tax for commercial
passenger carrying vehicles, at K5,000 per seat”; and
(d) deleting the APPENDIX and substituting therefor, a new
APPENDIX as follows—

“APPENDIX
A—TABLE OF RATES OF INCOME TAX ON TAXABLE
INCOME OTHER THAN EMPLOYMENT INCOME
Annual Taxable Income .. Rate
First K1, 800, 000 . . .. 0%
Excess of K1, 800, 000. . .. 30%
B—TABLE OF RATES OF INCOME TAX ON
EMPLOYMENT INCOME
Annual Taxable Income Rate
First K1, 800, 000 . . .. 0%
Next K4, 200, 000 . . .. 25%
Next K24, 600, 000 . . .. 30%
Excess of K30, 600, 000 .. 35%”.
8. The Fourteenth Schedule to the principal Act is amended— Amendment
of the
(a) by deleting paragraph (c) and substituting therefor, a new Fourteenth
paragraph (c) as follows— Schedule to
the principal
Act

B. No. 3
4 Taxation (Amendment)

“(c) Payment for any supplies to

traders and institutions . . .. 9 3%”;
(b) under paragraph (e), by deleting the words “individual
banking agents” and substituting therefor, the words “individual
agents recruited by an e-money service provider”;
(c) by deleting paragraph (g) and substituting therefor, a new
paragraph (g) as follows—
“(g) Payment for farm produce 4 1%”;
(d) by deleting paragraph (l) and substituting therefor, a new
paragraph (l) as follows—
“(l) Interest—
(i) Interest realised from investment
of life assurance premiums and pension
contributions .. .. .. 15%
(ii) Other .. .. . 7 20%”;
(e) by deleting note 4 and substituting therefor, a new note 4 as
follows—
“4. The tax withheld from income from sale of
farm produce shall be a final tax.”; and
(f) by inserting, immediately after note 8, a new note 9 as
follows—
“9. Paragraph (c) shall not apply to the supply of
food.”.
Amendment 9. The Fifteenth Schedule of the principal Act is amended by—
of the
Fifteenth (a) deleting paragraph 21 and substituting therefor a new
Schedule of paragraph 21 as follows—
the principal
Act “21. Issuance of an explosives licence or permit
Cap. 14:09 under the Explosives Act by the Malawi Police
Service.”; and
(b) inserting new paragraphs 23 and 24, as follows—
“23. Issuance of a minerals export permit.
24. Application and renewal of industrial rebate
licence.”.
PART__II
Amendment 10. Section 45 of the principal Act is amended in—
of s. 45 into
the principal (a) paragraph (i), by deleting the word “and” appearing
Act immediately after the word “;”;

B. No. 3
 Taxation (Amendment) 5

(b) paragraph (j), by deleting the word “and” appearing

immediately after the word “;”;
(c) paragraph (k), by deleting the full stop at the end of the
paragraph and substituting therefor, the words “; and” ; and
(d) by inserting a new paragraph (l), as follows—
“(l) any expenditure where the invoices of the
transactions are not generated from an electronic tax
invoicing system, except where the transactions have
been exempted in accordance with the Value Added Tax
Cap. 42:02 Act.”.

OBJECTS AND REASONS

The object of this Bill is to amend the Taxation Act (Cap. 41:01) in order to—
(a) provide for allowable deductions for monetary donations into the
Disaster Risk Management Trust Fund;
(b) provide for allowable deductions for construction of a borehole, a water
kiosk and other water supply facilities;
(c) to provide for non-allowability of deductions for expenditure where the
invoices of the transactions are not generated from an electronic tax invoicing
system;
(d) delete the “place of effective management” as a determinant of
residency for the purposes of determining tax liability for a non-resident;
(e) provide new rates for presumptive tax for commercial passenger
carrying vehicles;
(f) provide clarification on the entitlement to claim capital allowances in
respect of leased assets;
(g) extend the 40 % tax rate on taxable income above K10 billion to all
companies;
(h) clarify that the concessional tax rate on investment of pension funds
applies to the returns on the investment;
(i) amend the rates for Pay As You Earn;
(j) clarify that the withholding tax on payment for any supplies to traders
and institutions in respect of foodstuff applies to edible farm produce in their
raw state;
(k) extend the final withholding tax rate of 1% that applies to commissions
for insurance agents and individual banking agents to also apply to individual
agents recruited by an e-money service provider;
(l) reduce the withholding tax on interest realised from investment of life
assurance premiums and pension contributions to 15%;

B. No. 3
4 Taxation (Amendment)

(m) amend the requirement for a tax clearance certificate on purchase of

explosives to apply to issuance of an explosives licence or permit under the
Explosives Act (Cap. 14:09) by the Malawi Police Service; and
(n) introduce the requirement for a tax clearance certificate on issuance of
a minerals export permit and application and renewal of industrial rebate
licence.
T. CHAKAKA-NYIRENDA
Attorney General

B. No. 3