BDO Chartered Accountants - Malawi

How TAA 2021 converts 2025 tax amendments into strategic risk part 3?

Published: 26 May 2026
By Kudakwashe Chima, Partner at BDO

Self-assessment becomes direct liability: MAT 0.5% of turnover
MAT applies to companies with turnover above K5 billion and older than 3 years, even in loss-making periods. Under TAA 2021, your tax return is treated as a self-assessment. That means declaring the wrong turnover figure does not wait for an MRA audit, penalties and interest attach automatically from filing. MRA already has a declared liability to act on.

Self-assessment becomes direct liability: VAT rate 17.5%
From 30 Dec 2025, the VAT rate rises from 16.5% to 17.5%. If your POS or invoicing system still issues invoices at 16.5% after that date, each invoice is a false self-assessment under TAA. Penalties apply per transaction, not per VAT return.

Rulings are your shield: EIS rollout 1 May 2026
TAA provides that MRA public rulings are binding on MRA. EIS will replace EFD, but grey areas remain for instance credit notes, exempt supplies, and offline mode transactions. If you process these incorrectly, TAA treats it as a false self-assessment, even if MRA hasn’t issued guidance.

Withholding agent scope: Money Transfer levy 0.05%
The levy applies to bank and mobile money transfers above K100,000. Banks collect it, but TAA withholding agent rules are broad. MRA can deem a business handling bulk transfers to be an agent. If you miscalculate, you owe the levy plus penalties.

Restraint powers: MAT plus Supernormal Tax 40% above K5 billion
TAA s.73-77 lets MRA freeze bank accounts and seize assets without a court order for unpaid tax. MAT creates a tax debt even in loss years. Missing one MAT installment means MRA can restrain your accounts.

“Manager” widely defined: Transfer Pricing s.127A rewrite
TAA defines a “manager” to include anyone the entity is “accustomed to act” under. TP now covers “other arrangements between related parties.” That means shadow directors, group CFOs, or family members can be held personally liable for TP adjustments.

30-day objection clock: All 2025 changes effective 30 December 2025
MRA will issue adjusted assessments for 2025/26 using the new rates. Under TAA, that is a “tax decision.” You have 30 days to object or it becomes final even if MRA used the wrong MAT calculation.

TIN & data sharing: Nonresident digital services VAT
TAA requires a TIN to do business. MRA will data-match foreign supplier payments against VAT returns. If you pay for online services such as Facebook or Google without local VAT and no supplier TIN, MRA deems you liable under reverse charge. Confidentiality is limited. MRA can share data with foreign tax authorities under treaties.

TAA overrides other Acts: Capital gains exemption scrapped
The old Taxation Act exempted shares held >1 year. TAA 2021 overrides other acts on administration. So even if the old law said “exempt,” TAA self-assessment plus the 2025 amendment means you must pay. “It was exempt last year” is not a defense.

TCC as operating permit: 5-year loss carry forward limit
TAA states no TCC is issued unless returns are filed and tax paid. If old losses expire under the new 5-year rule and you suddenly owe tax, MRA can withhold your TCC. No TCC means no customs clearance, no tenders, no license renewals.

Disclaimer: This article summarizes key provisions of the Tax Administration Act 2021 assented in 2025 for general information. It is not tax advice. Consult our tax professionals for advice on your specific circumstances.

Malawi’s Tax Administration Act (TAA): The effects of the 2025 Mid-term tax measures Part 2
Published: 16 May 2026 | By Kudakwashe Chima, Partner at BDO

The 2025/2026 amendments, effective 30 December 2025, introduced new tax liabilities under the TAA 2021. How these taxes are assessed, collected, and enforced means tax risk now directly impacts cash, operations, and directors.

Key changes and actions

Minimum Alternative Tax – 0.5% on turnover
Companies with turnover over K5bn and 3+ years in operation pay 0.5% of turnover regardless of profit. Under TAA s.40 turnover is self-assessed; if wrong or unpaid, TAA s.73 allows MRA to freeze accounts.
Action: Review turnover calculations, keep supporting schedules, and treat MAT as a cash flow item.

VAT 17.5% and mandatory EIS from 1 May 2026
EIS gives MRA real-time invoice data. Each invoice issued at 16.5% after 30 Dec 2025 is a separate offence under TAA Part X. Non-EIS invoices are invalid, and TAA s.48 allows MRA to enter premises and seize systems.
Action: Complete EIS onboarding before 1 May 2026, audit invoicing processes, and train teams on the new rate.

Money Transfer Levy – 0.05%
TAA s.2 broadly defines “withholding agent”. MRA can deem corporates as agents for bulk payments, making under-deduction the corporate’s liability.
Action: Map bulk payment flows, confirm withholding obligations, and update systems/contracts.

Transfer Pricing – s.127A rewrite
Scope now covers “other arrangements between related parties”. With the expanded “manager” definition, directors face personal exposure for TP adjustments.
Action: Review all related-party arrangements, update documentation, and ensure board oversight.

CGT exemption removed and 5-year loss limit
TAA overrides older acts with no grandfathering. Capital gains are taxable and losses expire after 5 years. Under TAA s.70, no Tax Clearance Certificate is issued until all tax due is paid, halting tenders and customs clearance.
Action: Review deferred tax assets and loss schedules, model the cash impact, and engage MRA early on settlements.

Practical steps
Treat returns as final self-assessments; errors create immediate liability.
Assume MRA has real-time EIS visibility.
Elevate tax decisions to board level due to director exposure.
Track the 30-day objection window to prevent assessments becoming final.

The enforcement tools are unchanged but faster and broader. Companies that manage tax as a real-time strategic risk will protect cash flow and operations.

Disclaimer: This article summarises the 2025 mid-term tax measures under the TAA 2021 for general information only and is not tax advice. Consult a tax professional for your circumstances.

Tax is no longer just compliance: The Strategic imperative of Malawi’s Tax Administration Act 2021 Part 1
Published:10 May 2026

Introduction: The shift from tax forms to the Boardroom

When the Tax Administration Act 2021 (TAA) was assented to in 2025, it quietly rewired how tax works in Malawi. Paired with the 2025/2026 fiscal amendments such as MAT, EIS, VAT 17.5%, Money Transfer Levy — the message is clear: tax has moved from the back office to the board agenda.

Under TAA 2021, tax is no longer a matter of filing returns on time. It is a strategic risk area governed by self-assessment liability, real-time enforcement, and personal accountability for directors. For taxpayers, the cost of getting it wrong is now operational, financial, and reputational.

TAA 2021: The framework that changed the Malawi Tax Rules

The TAA 2021 is the “constitution” for all other tax laws in Malawi. It overrides the VAT Act, Taxation Act, and Customs Act on matters of administration, powers, penalties, and taxpayer rights.

Key structural shifts every taxpayer must understand:

Self-assessment = Legal liability: Under s.40-42, filing a return is a legal determination of tax.

An error is not an “honest mistake” — it is a breach attracting penalties under Part X, even before MRA audits.

Sweeping MRA powers: s.48-50 and s.73-77 empower tax officers to enter premises, seize assets, restrain bank accounts, and compel documents. Obstruction is a criminal offence.

“Manager” and “Arrangement” defined broadly: s.2 means directors, shadow directors, partners, or anyone the entity is “accustomed to act” under can be pursued personally.

Verbal understandings are “arrangements” MRA can assess.
30-day objection clock: s.56 makes any MRA “tax decision” final if not objected to within 30 days. Silence is consent.

Rulings as protection: s.8 allows taxpayers to request private rulings. A valid ruling binds MRA and is the only safe harbor when law is unclear.

Disclaimer: This article summarizes key provisions of the Tax Administration Act 2021 assented in 2025 for general information. It is not tax advice. Consult our tax professionals for advice on your specific circumstances.

Happy International Mothers Day.

There are no results without labour. Happy Labour Day — enjoy your rest.

Check out more on the latest Transfer Pricing edition:

BDO Transfer Pricing News Issue 54 - March 2026 The 54th issue of BDO’s Transfer Pricing Newsletter focuses on international developments as well as recent developments in Canada, Colombia, European Union, Georgia, and many more

As you focus on hope, renewal, and joy of new beginnings, spring, and the resurrection of Jesus Christ. We wish you and your loved ones a peaceful and joy-filled Easter season.

Tax penalties – Malawi context

Why do tax-compliant businesses still get provisional tax penalties in Malawi?

- Often the provisional estimate submitted during the year was too low. Malawi’s provisional tax rules require each instalment to be based on a realistic estimate of annual taxable income—usually by reference to the prior year or current-year projections. If the year-end assessment shows the estimate was significantly below actual taxable income, the Malawi Revenue Authority (MRA) imposes an under-estimation penalty.
- The penalty typically applies when the provisional tax paid is less than the required threshold (e.g., 90% of the final tax liability or the statutory basic amount). Even if returns are filed and taxes are paid on time, an understated estimate triggers extra charges.
- Better mid-year tax estimates—reviewing actual performance and adjusting before the second provisional payment—can reduce surprises and avoid penalties.

BDO helps evaluate how provisional tax is planned in Malawi, checking estimates against MRA provisions, prior assessments, and cash-flow forecasts to keep businesses tax compliant and penalty-free.

Celebrating Eid! ☪️🌙

In the spirit of elevating the quality of our relationships, we wish all our colleagues, clients, suppliers, friends and family, the very best for the festival of Eid al-Fitr.

Malawi's VAT landscape is changing, and businesses need to stay on top of it. The Malawi Revenue Authority (MRA) is introducing the Electronic Invoicing System (EIS) for VAT, set to become mandatory on 1 May 2026. The new system will replace Electronic Fiscal Devices (EFDs) and aims to improve VAT compliance, reduce invoice suppression, and enhance audit trails.

However, with stricter checks and real-time data capture, even small data errors can delay VAT refunds, affecting cash flow and making planning harder for businesses. VAT delays are no longer just an inconvenience. They can affect cash flow, highlighting the importance of getting VAT management right.

At BDO, we are offering expertise to elevate VAT management, ensuring cash flow stays steady and help businesses transition smoothly.

Key takeaways
- EIS mandatory effective 1 May 2026
- EFDs will no longer be accepted after 30 April 2026
- VAT delays can tie up cash and affect business cashflow planning

Contact our Team at [email protected] to know more about preparing your business for EIS or managing VAT compliance?
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