Unmasking the Malawi Taxation System

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Unmasking The Malawi Taxation System Report

UNMASKING THE MALAWI

TAXATION SYSTEM

CONSULTANCY REPORT

BYCollins V.P. Magalasi, BA, MS!, MLB, " Ho#s$ K%&l'# S!&ola#(

P.O. Bo) X*

C#oss#oa+sLilong'

-o#

Malai E!onoi! /0s$i!' N'$o#1C'n$#' Ho0s' A#!a+'

P.O. Bo) 23456Lilong'

April 2009

"The subject of every State ought to contribute towards the support of the government, asnearly as possible, in proportion to their respective abilities; that is, in proportion to the

revenue which they respectively enjoy under the protection of the State."

Adam Smith, 1776




TABLE O- CONTENTS

Ta7l' o8 Con$'n$s 99999999999999999999..999.9 2

A!#on:s 999999999999999999999999999.9. 5

4. E)'!0$i;' S0a#: 99999999999999999999... <

2. Ba!1g#o0n+ an+ Mo$i;a$ion $o $&' Assign'n$ 99999..9.9 *

2.1 Background ………………………………………………………….… 7

2.2 Motivation ……………………………………………………………… 7

2.3 !p"ct"d #utcom"$ ………………………………………………..… %

5. T&' Malai Ta) R'gi' 9999999999999999999 =

3.1 &ntroduction ……………………………………………………………. 9

3.2 '(p"$ o) 'a!"$ in Mala*i …………………………………………... 10

3.2.1 +"$cription ( -orm …………………………………….… 103.2.2 +"$cription ( M"thod o) oll"cting ta! ………………... 11

3.2.3 +"$cription ( ont"nt …………………………………... 1/

3.3 'a! &nc"ntiv"$ )or &nv"$tor$ in Mala*i …………………………… 2

3. +oul" 'a! tr"ati"$ …………………………………………….…… 26

3./ &nv"$tm"nt romotion and prot"ction Agr""m"nt$ &A$ ……. 26

<. >'signing an+ ain$aining a $a) #'gi' 99999999999 2*

.1 +"at"$ ………………………………………………………………. 27

.2 Stak"hold"r$ in 'a!ation …………………………………………… 27

6. Iss0's in $a)'s an+ #'!o'n+a$ions99999999999... 5<

/.1 Small ta! a$" ……………………………………………………..…3

/.2 'a!ation o) th" in)ormal $"ctor …………………………………….. 3

/.3 'a! pa("r ducation ………………………………………………… 3/

/. Slo* pac" o) impl"m"ntation o) programm"$ that "n")it th" poor.. 3/

/./ omplianc", 'a! Avoidanc" and va$ion ………………………... 36

/.6 Micro)inanc" &n$titution$ in Mala*i ………………………………… 36

/.7 4ack o) coh"r"nc" "t*""n mini$tri"$5d"partm"nt$ …………….. 37

/.% Monitoring o) -u"l 4"vi"$ …………………………………………… 37

/.9 'a!"$ coll"ct"d ( it(, 'o*n and +i$trict A$$"mli"$ …….…….37

/.10 ropoor 'a! ……………………………………………………...… 3%

?. Rol' o8 Ci;il So!i'$: in Ta)a$ion 99999999999999... <3

*. Con!l0sion 999999.99999999999999999..... <4

Ann') 2 @ Bi7liog#a&: 99999999999999999999.9... <2

Ann') 4 @ Lis$ o8 P'ol' In$'#;i''+ 9999999999999999 <5

En+ No$'s 9999999999999999999999999...9...9 <5




ACRONYMS

-S "ntr" -or Social onc"rn

#MSA ommon Mark"t )or a$t"rn and South"rn A)rica

S# ivil Soci"t( #rgani$ation

AMA conomic$ A$$ociation o) Mala*i

!port roc"$$ing on"

&8A &ncom" 8"n"rating Activit(

MA+- Mala*i ural +"v"lopm"nt -und

M& Mala*i on)"d"ration o) ham"r$ o) omm"rc" and &ndu$tr(

M:; Mala*i conomic :u$tic" ;"t*ork

M+ Mini$tr( o) conomic lanning and +"v"lopm"ntMA Mala*i n"rg( r"gulator( Authorit(

M&'S+ Mini$tr( o) &ndu$tr(, trad" and rivat" S"ctor +"v"lopm"nt

Mo- Mini$tr( o) -inanc"

MA Mala*i "v"nu" Authorit(

SA+ South"rn A)rica +"v"lopm"nt ommunit(

SM$ Small and M"dium nt"rpri$"$

S#AM Soci"t( o) Accountant$ in Mala*i

<A' <alu" Add"d 'a!




4. E)'!0$i;' S0a#:

&t i$ tru". 'a!ation i$ a cont"ntiou$ i$$u". 'a! can " impo$"d on almo$t an(thing*h"th"r it i$ incom", or incom" gain$, prop"rt(, good$ or $"rvic"$. 'a! liailit()all$ upon individual$, compani"$, tru$t$ or an( oth"r l"gal p"r$on. ="t ta! r"gim"

allo*$ $om" "!"mption$. +i$cu$$ion$ on ta!"$ hav" al*a($ ""n la"ll"dm($t"riou$ and $"cr"t ( man( pot"ntial $tak"hold"r$ "ith"r "cau$" it i$ $""na$ th" pr"$"rv" o) th" "!"cutiv" arm o) th" gov"rnm"nt or a$ a )i"ld $o t"chnicalthat ordinar( citi>"n$ cannot compr"h"nd. 'hi$ r"port d"m($ti)i"$ ta!ation inMala*i in ord"r to "ncourag" all $tak"hold"r$ to tak" part in i$$u"$ ta!"$.

'h"r" ar" )our main r"a$on$ *h( p"r$on$ pa( ta!"$. 'h" Mala*i "v"nu" Authorit( MA partl( an$*"r$ thi$ ?u"$tion through th"ir motto$ o) “Pay taes!uild #our $ation% and “&oin the 'ivilised Society, Pay your taes voluntarily.%'a!"$ ar" coll"ct"d )or r"a$on$ o) r"v"nu", r"di$triution, r"alignm"nt andr"pr"$"ntation.

S"v"ral i$$u"$ hang around ta!ation in Mala*i. Among th" man(, thi$ r"portid"nti)i"$ th" )ollo*ing i$$u"$ and mak"$ r"comm"ndation$@

Small ta base ( #n" o) th" chall"ng"$ that Mala*i ta!ation$ $($t"m )ac"$ i$ th"n""d to "!pand th" ta! a$" i.". $ourc"$ *h"r" to coll"ct ta!"$. &) Mala*i canhav" mor" p"opl" pa(ing ta!"$, ta! rat"$ *ill go do*n. n)ortunat"l( in Mala*ith"r" ar" v"r( )"* p"opl" that pa( ta!, h"nc" th"ir rat"$ r"main v"r( high. 'h"r"hav" ""n call$ )or th" gov"rnm"nt to rai$" th" minimum thr"$hold that i$ >"rorat"d 9,000 to rat"$ around 1/,000 or 20,000. But *hat thi$ m"an$ inr"alit( i$ that th" mov" *ill r"duc" th" num"r o) ta! pa("r$ ( t"n$5hundr"d$ o)thou$and$ o) p"opl" unl"$$ th" incom" o) th" maCorit( lo*l( paid incr"a$"$ D a

pro$p"ct that i$ almo$t onl( a dr"am in th" )ac" o) oviou$ r"$ultant in)lation.v"ntuall(, c"t"ri$ pariu$, rai$ing th" minimum thr"$hold amount put$ pr"$$ur"on th" )"* r"maining ta! pa("r$ *ho ma( hav" to pa( mor" than th" 30E th"(ar" pa(ing curr"ntl(. 'h" alt"rnativ" i$ )or th" gov"rnm"nt to introduc" oth"rta!"$ that *ill comp"n$at" th" Flo$tG r"v"nu". 'h" oth"r chall"ng" i$ that Mala*ido"$ not hav" dataa$" that $ho*$ th" ta!pa("r$. 'hi$ mak"$ con$id"ration$ o)ta! $*ap$ di))icult.

Taation of the informal sector ( Anoth"r $ugg"$tion i$ to ta! th" in)ormal $"ctor.'hi$ ho*"v"r i$ not "a$( to impl"m"nt a$ )ir$tl( th" in)ormal $"ctor i$ v"r( di))icultto trac", $"condl( mo$t o) th"m do not hav" "?uipm"nt $uch a$ ca$h machin"$

*ith *hich (ou can v"ri)( tran$action$, and thirdl( th" MA it$"l) do"$ not hav"th" machin"r( to impl"m"nt $"l"ctiv" ta! admini$tration in th" $"ctor.Sugg"$t"dl(, th" in)ormal $"ctor can " ta!"d through a )lat rat". &n)ormal $"ctorpla("r$ can " r"?uir"d to pa(, $a( 2./E o) th"ir $al"$ to th" gov"rnm"nt a$ ta!.Som" countri"$ $uch a$ 'an>ania hav" impl"m"nt"d thi$ )lat ta!, $av" )or th")act that complianc" and hon"$t( in d"claring th" tru" total $al"$ i$ a prol"mthat Mala*i ma( hav" to plan in advanc".

Ta payer education ( Mo$t o) th" u$in"$$ p"r$on$ in th" countr( do not hav" a)ull pictur" o) th" ta! r"gim" in th" countr(. Man( cro$$ ord"r trad"r$ hav" in th"pa$t told th" Mala*i conomic :u$tic" ;"t*ork1 and partn"r$ that that th"( hav"

had to pa( a ri" to MA o))icial$ in ord"r to hav" th"ir good$ duti"d l"$$. Anal($i$ o) th" good$ $o trad"d, ho*"v"r, $ho*$ that mo$t o) th" good$ ar"




"ith"r ta! "!"mpt"d or >"ro rat"d. 'hu$, $om" corrupt MA o))icial$ hav" tak"n)inancial advantag" o) th" unin)orm"d u$in"$$ p"r$on$. &) th"r" *a$ $u))ici"ntta! pa("r "ducation don", trad"r$ could not hav" ""n pa(ing pric" )or good$that th"( ar" not $uppo$"d to pa( )or.

Slow pace of implementation of programmes that benefit the poor ( MA i$

accu$"d o) )avouring and "ing cont"nt *ith ig ta! pa("r$. iting "!ampl"$,r"$pond"nt$ $tat"d th"( ar" not convinc"d that &llovo, *hich MA rag$ i$ th"high"$t ta! pa("r, pa($ th" tru" amount o) ta!"$. MA do"$ not )ollo* up on$uch ig u$in"$$"$ ut in$t"ad pound on $truggling u$in"$$"$, and $u))ocat"th"m *ith unr"ali$tic ta! a$$"$$m"nt d"mand$ that th"( do not do *ith igu$in"$$"$. 'h" $tor( o) cro$$ ord"r trad"r$ i$ r"v"aling. A coupl" o) ("ar$hav" pa$$"d $inc" th" introduction o) th" Simpli)i"d 'rad" "gim" S' proC"ctund"r #MSA. S' i$ aim"d at $upporting cro$$ ord"r trad"r$ *ith dut()r""r"gim". M"m"r countri"$ agr"" on good$ that can " trad"d dut( )r"" and al$oproc"$$ ( *hich onl( ?uali)(ing $mall $cal" cro$$ ord"r trad"r$ "n")it )rom th"proC"ct. amia alr"ad( d"v"lop"d it$ li$t and $($t"m o) dut()r"" cro$$ord"r

trad" o))"r *ith Mala*i ut Mala*i i$ $aid to " Flacking )und$G to do th" $am" )orit$ cro$$ ord"r trad"r$, including $"n$iti$ing th" cro$$ord"r trad"r$ on th"initiativ". &t i$ high tim" that MA and Mala*i in g"n"ral chang"d )rom th" m(opiao) $lo* mov"r$.

'ompliance, ta avoidance and evasion ( M"dia and oth"r $ourc"$ hav" r"port"dthat $om" $hop o*n"r$, "$p"ciall( o) A$ian and ;ig"rian origin, a$k cu$tom"r$*h"th"r th"( *ant a r"c"ipt. 'h" trad"r$ in)orm th" cu$tom"r$ that i) th"( in$i$ton g"tting a r"c"ipt, th"( *ould " charg"d <A'. 'hi$ d"v"lopm"nt i$ di$turinga$ it m"an$ that th" conc"rn"d trad"r$ ar" "vading ta! and not "mitting <A' andoth"r ta!"$ to MA. &n addition, it "g$ mor" ?u"$tion$ in that ( giving a choic"

to cu$tom"r$ *h"th"r to " charg"d <A', th" trad"r$ ar" a$$um"d to "a$oring th" input <A' D ut thi$ i$ oviou$l( unr"ali$tic and not th" ca$". Hhatit m"an$ i$ that th" trad"r$ th"m$"lv"$ do not pa( ta!"$ on input$. Additionall(th" trad"r$ do not d"clar" all th" incom" 5 pro)it that th"( mak".

)icrofinance *nstitutions in )alawi ( 'hr"" i$$u"$ ari$" on micro)inanc"in$titution$ that provid" cr"dit to th" Funankal" groupG in th" countr(. 1 'hatth"( ar" v"r( )"*, 2 that th"( ar" di$criminator( and 3 that th"( o))"r too littl"r"$ourc"$. omm"rcial ank$ provid" loan$ on condition$ o) $u))ici"nt $ur"t(, ar"?uir"m"nt that poor p"opl" do not m""t. 'h"r" ar" 21 in$titution$ that provid"cr"dit to SM$ in Mala*i. Io*"v"r, apart )rom on" m"m"r th" Mala*i ural

+"v"lopm"nt -und MA+- *hich ha$ a loan port)olio o) / illion th"r"maining 20 in$titution$ hav" $mall r"$ourc"$. &n )act th"ir comin"d loanport)olio i$ not "v"n hal) th" port)olio o) MA+-J 'h" cr"dit that th"$"in$titution$ provid" i$ not "nough to tak" th"ir targ"t"d SM$ into th" incom"rack"t that *ill " al" to pa( ta!"$ on th"ir incom" 5 pro)it. 'hu$ th" in$titution$larg"l( mak" poor p"opl" u$( *ith lo*"r "conomic activiti"$ that do not hav"much impact on th"ir liv"$ and ta! "nv"lop in th" countr(. Som" o) th"in$titution$, particularl( ;8#$ ar" $aid to " di$criminator( in th"ir provi$ion o)loan$, *ith a num"r o) th"m $tating KH" provid" loan$ to *om"n onl(L or K*"$"rv" onl( th" (outh$.L

Som" comm"ntator$ hav" ?u"$tion"d th" rational" )or MA+-G$ providing$imilar $mall loan$. 'h"( $ugg"$t that MA+-, *ith it$ r"$ourc" "nv"lop $houldconc"ntrat" on th" Fmi$$ing middl"G i.". th" $"ctor o) th" $oci"t( that ar"




graduating )rom th" $mall loan$ provid"d ( micro)inanc" in$titution$ ut ar" not("t al" to g"t ig loan$ )rom comm"rcial ank$.

+ac of coherence between ministries - departments ( Bu$in"$$"$ hav"complain"d o) incon$i$t"nci"$ in $tat"m"nt$ and dir"ction$ )rom th" Mini$tr( o)-inanc", Mala*i &nv"$tm"nt romotion Ag"nc( M&A, Mala*i !port romotion

ouncil, Mini$tr( o) &ndu$tr(, 'rad" and rivat" S"ctor +"v"lopm"nt and th"Mala*i "v"nu" Authorit(. Appar"ntl( M&A, )or "!ampl", promi$"d lo*"r rat"$and incr"a$"d inc"ntiv" allo*anc"$ to pot"ntial inv"$tor$ ut *h"n th" u$in"$$roll"d out, th" MA pound"d on th" u$in"$$"$ accu$ing th"m on "vading ta!"$.

)onitoring of uel +evies ( v"r( month, illion$ *orth o) r"v"nu" ar" coll"ct"dthrough )u"l l"vi"$. 'h" m"chani$m )or manag"m"nt o) th"$" l"vi"$, ho*"v"r, i$di))"r"nt )rom manag"m"nt o) r"$ourc"$ in th" national udg"t. All )u"l l"vi"$ "!c"pt th" Sa)"t( ;"t l"v( do not go into5through th" M81 account, ut $traightto r"$p"ctiv" ommi$$ion$. A$ $uch, utili$ation o) th"$" )und$ i$ out$id" th"*atch)ul "(" o) man( $tak"hold"r$ including civil $oci"t( and th" national

a$$"ml(. &t ha$ ""n all"g"d in $om" ?uart"r$ that th"$" )und$ ar" pron" toau$" or ar" au$"d ( politician$. 'h"r" i$ n""d th"r")or" )or urg"nt in$titutiono) monitoring o) th" utili$ation o) )und$ coll"ct"d through )u"l l"vi"$.

Taes collected by 'ity, Town and /istrict 0ssemblies ( 4ocal a$$"mli"$ charg"ta!"$ applical" to op"rating in th" r"$p"ctiv" a$$"mli"$. "$ultantl( th" t(p"$and rat"$ o) ta!"$ pa(al" di))"r )rom on" a$$"ml( to anoth"r. Som" o) th"ta!"$ pa(al" in a$$"mli"$ ar" parking )""$, u$in"$$ lic"nc"$, and r"ntal$, Cu$tto m"ntion a )"*. #n" charact"ri$tic, though, o) a$$"ml( ta!"$ i$ $har"d ( all Dthat th" mon"( coll"ct"d do"$ ;#' go to th" c"ntral gov"rnm"nt account, and $oaccountailit( o) th"$" r"$ourc"$ li"$ *ith th" a$$"mli"$ th"m$"lv"$ and th"

diplomatic "(" o) th" Mini$tr( o) 4ocal 8ov"rnm"nt and th" 4ocal 8ov"rnm"nt-inanc" ommitt"". ivil $oci"t( in r"$p"ctiv" a$$"mli"$ ma( hav" to tak" onmonitoring th" utili$ation o) th" r"$ourc"$ in a$$"mli"$. A$ *a$ th" ca$" in )u"ll"vi"$, grap"vin" ha$ $ugg"$t"d that )und$ in a$$"mli"$ ar" pron" to or ar"au$"d ( $"nior a$$"ml( $ta)) and politician$. 'h" $"rvic" provid"d (a$$"mli"$ ha$ ""n "moan"d to not r")l"ct th" amount o) ta!"$ that p"opl"pa( to th" a$$"mli"$.

O#ganisa$ion o8 $&' #'o#$

'h" r"port i$ organi$"d in th" )ollo*ing *a(. -ir$t, it giv"$ th" ackground to th"

a$$ignm"nt, including th" motivation and "!p"ct"d outcom"$. 'h" r"port th"nlook$ at th" 'a! "gim" that i$ at pla( in Mala*i, "!i$ting t(p"$ and )orm$ o)ta!"$ and m"thod$ o) coll"cting ta!"$. 'h" $am" chapt"r id"nti)i"$ k"( inc"ntiv"$to inv"$tor$ in Mala*i and &nv"$tm"nt rot"ction and romotion Agr""m"nt$. H"th"n look at roc"$$"$ and $tak"hold"r$ involv"d in ta!ation d"at", d"$ign andmaint"nanc". hapt"r / i$ d"dicat"d to i$$u"$ *ith ta!ation in Mala*i and r"lat"dr"comm"ndation$. &n hapt"r 6 *" di$cu$$ th" rol" that civil $oci"t( can pla( inta!ation and in chapt"r % *" provid" th" conclu$ion to th" r"port.




2. Ba!1g#o0n+ an+ Mo$i;a$ion $o $&' Assign'n$

2.4 Ba!1g#o0n+

-or clo$" to a d"cad" no*, civil $oci"t( in Mala*i, *ith guidanc" )rom th"Mala*i conomic :u$tic" ;"t*ork $"cr"tariat, hav" "ngag"d th" nationaludg"t proc"$$. 'hi$ "ngag"m"nt ha$, ho*"v"r, ""n mor" on "!p"nditur"$id" and l"$$ on r"v"nu" $id". 'h" "ngag"m"nt on r"v"nu" ha$ ""n ia$"dto*ard$ grant$ and loan$ that th" gov"rnm"nt g"t$, than ta!"$ ("t ta!"$con$titut" 60E o) th" national udg"t and h"nc")orth th" importanc" o)"ngaging th" ta! proc"$$"$ cannot " ov"r"mpha$i$"d. M:; con$id"r$"ngaging thi$ dom"$tic r"v"nu" a$ an important part o) participator(accountal" gov"rnanc".

'h" Mala*i conomic :u$tic" ;"t*ork commi$$ion"d th" apprai$al o) th" ta!

$($t"m in Mala*i in ord"r to in)orm citi>"n$ and guid" th" M:; $"cr"tariat init$ coordinating th" monitoring o) r"v"nu" a$ part o) it$ longtim" "$tali$h"dudg"t *ork. 'h" Mala*i conomic :u$tic" ;"t*ork i$ a civil $oci"t( hu o) Cu$t and accountal" "conomic gov"rnanc", and ha$ ""n taking l"ad"r$hipin civil $oci"t( "ngag"m"nt o) udg"t proc"$$"$.

'h" apprai$al ha$ ""n in)orm"d ( contriution$ o) variou$ $tak"hold"r$ inta!ation, among th"m th" Mini$tr( o) -inanc", Mala*i "v"nu" Authorit(MA, Mini$tr( o) &ndu$tr(, 'rad" and rivat" S"ctor +"v"lopm"nt, Mala*i&nv"$tm"nt romotion Ag"nc( M&A, th" Soci"t( o) Accountant$ in Mala*iS#AM, Mala*i on)"d"ration o) ham"r$ o) omm"rc" and &ndu$tr(

M&, ;ational A$$ociation o) Bu$in"$$ Hom"n ;ABH, th" Horld Bank,th" conomic$ A$$ociation o) Mala*i AMA and th" ro$$Bord"r 'rad"r$ A$$ociation, Cu$t to m"ntion a )"*. A d"tail"d li$t i$ in ann"! A.

2.2 Mo$i;a$ion

'a! polic( and admini$tration hav" $u$tantial "aring on man( o) S#G$conc"rn$, ranging )rom "n$uring th" availailit( o) )und$ )or important $ocialprogramm"$ to narro*ing th" gap "t*""n rich and poor. ivil Soci"t(kno*ing th" ta! $($t"m op"n$ up th"ir dut( to "n$ur" ad"?uat" $ourc"$ o)

)unding )or important antipov"rt( programm"$ improv" th" di$triution o)incom" and *"alth promot" "conomic gro*th that can "n")it all citi>"n$and "nhanc" gov"rnm"nt tran$par"nc( and accountailit(. 'h" u$uall($tat"dgoal$ )or ta!ation ar" to rai$" )und$ )or $ocial $"rvic"$ and pulic good$, andto r"di$triut" incom". 'a! $($t"m$ ar" th"r")or" d"$ign"d to achi"v" th"$"goal$ in th" mo$t "))ici"nt and "))"ctiv" *a(.

'h" Mala*i conomic :u$tic" ;"t*ork commi$$ion"d th" a$$ignm"nt o)d"m($ti)(ing th" ta!ation $($t"m in Mala*i. 'h" motivation o) th" d"ci$ion i$that not onl( do"$ ta! unma$king h"lp $"ttl" th" mind$ o) citi>"n$ a$

ta!pa("r$ and "ncourag" and )acilitat" complianc" and mak" doingu$in"$$pr"dictal", it mor" importantl( "ncourag"$ tran$par"nc( and accountailit(




o) gov"rnm"nt. 'a!"$ con$titut" ov"r 60E o) th" national udg"t r"v"nu"$,a$ $uch, it i$ imp"rativ" that citi>"n$ hav" th"ir "("$ on thi$ important $ourc"o) r"v"nu".

'a!"$ ar" th" larg"$t $ourc"$ o) th" Mala*i gov"rnm"nt r"v"nu". iti>"n$pa( th" ulk o) thi$ r"v"nu" through dir"ct and indir"ct ta!"$ $uch a$mplo(m"nt &ncom" 'a!, <alu" Add"d 'a!, u$tom$ dut( and 4"vi"$. 'h"un)ortunat" r"alit( i$ that th" citi>"n$ o) Mala*i ar" not involv"d in th"d"$igning o) th" ta!ation $($t"m n"ith"r ar" th"( involv"d in tracking th"r"v"nu" )rom ta!"$. &nt"r"$t $o )ar $ho*n i$ onl( in tracking mon"( )rom"!t"rnal $ourc"$ i.". )or"ign loan$ and grant$. Man( ta! pa("r$ do not kno*ho* much ta!"$ th"( contriut" to th" gov"rnm"nt. ;o *ond"r, th"r")or", thatmo$t p"opl" d"mand accountailit( on grant$ and loan$, at th" "!p"n$" o)dom"$tic $ourc"$ o) )inanc", larg"l( ta!"$.

'a! d"at"$ in Mala*i, ho*"v"r, ar" dominat"d ( u$in"$$"$ and *"alth(

individual$ *ho o)t"n do not hav" th" $am" conc"rn$ a$ civil $oci"t(. 'h" civil$oci"t( can h"lp road"n th" d"at" and ring a n"* )ocu$ on )airn"$$ andth" n""d$ o) th" di$advantag"d to th" di$cu$$ion o) ta! polic(. &t i$ imp"rativ",th"r")or", that th" civil $oci"t( "ngag" and o))"r it$ p"r$p"ctiv" on th"countr(G$ ta! polici"$ $o that that it can in)lu"nc" th"$" polici"$ and th" impactth"( hav" on th" *"l)ar" o) all citi>"n$. ivil Soci"t( contriution i$ mandator(to th" d"at" around ta!ation o) con$umption v"r$u$ ta!ation o) incom"ta!ation o) import$ v"r$u$ dom"$tic product$ ta!ation )or "?uit( v"r$u$"))ici"nc(, Cu$t to m"ntion a )"*.

2.5 E)'!$'+ o0$!o's

-undam"ntall(, thi$ r"port o) th" a$$ignm"nt i$ "!p"ct"d to d"liv"r th")ollo*ing outcom"$@

• 'h" )inding$ and r"comm"ndation$ th"r"o) *ill op"n up th" ta!

$tructur" and d"at" to ordinar( citi>"n$ in Mala*i. 'hi$ *ill not onl("ncourag" ta! pa("r$ to m""t th"ir pa(m"nt oligation$, ut *ill al$oh"lp incr"a$" d"mand )or accountailit( ( citi>"n$.

• A$ vot"r$ "ngag" th"ir pot"ntial l"ad"r$ in th" )orthcoming r"$id"ntial

and arliam"ntar( "l"ction$ campaign, th" apprai$al r"port *ill "?uipciti>"n$ to ?u"$tion on th" $ourc"$ o) )inanc" )or th" campaignpromi$"$. 'hi$ i$ good not onl( )or dr(ing up o) "mpt( promi$"$ thathav" charact"ri$"d Mala*iG$ "l"ction campaign$, ut *ill la( a road)oundation )or accountal" gov"rnanc"

• &n th" a)or"m"ntion"d r"gard, th" r"port *ill "?uip citi>"n$ to activ"l(

"ngag" th" in"vital" r"vi"* o) $ourc"$ o) gov"rnm"nt Ndom"$ticO)inanc". &mm"diat"l( a)t"r "l"ction$, th" n"* gov"rnm"nt *ill c"rtainl(r"vi"* it$ $ourc"$ o) )inanc", including ta! $($t"m.

• 'h" r"port *ill a"t civil $oci"t(G$ in)orm"d "ngag"m"nt o) th"

200952010 national udg"t

• 'h" r"port *ill $"rv" a$ a$ic $coping )or M:;G$ longt"rm

"$tali$hm"nt o) participator( "conomic gov"rnanc" on th" r"v"nu"$id"




5. THE MALAWI TAX REGIME

5.4 In$#o+0!$ion

A 'a! can " d")in"d a$ a l"gall( impo$"d )inancial contriution to th"

gov"rnm"nt r"v"nu"$. 'a! can " impo$"d on almo$t an(thing *h"th"r it i$incom", or incom" gain$, prop"rt(, good$ or $"rvic"$. 'a! liailit( )all$ uponindividual$, compani"$, tru$t$ or an( oth"r l"gal p"r$on.

'a!"$ o) Mala*i ar" guid"d ( hapt"r 1@01 o) th" 4a*$ o) Mala*i.

'h"r" ar" )our main r"a$on$ *h( p"r$on$ pa( ta!"$. 'h" Mala*i "v"nu" Authorit( MA partl( an$*"r$ thi$ ?u"$tion through th" motto it run$@ “Paytaes!uild #our $ation% and th" “&oin the 'ivilised Society, Pay your taesvoluntarily.% 'a!ation ha$ )our main purpo$"$ or "))"ct$, *hich g"n"ral ta!lit"ratur" r")"r$ to a$ th" KL$@ "v"nu", "di$triution, "alignm"nt, and"pr"$"ntation.

'h" main purpo$" i$ revenue@ ta!"$ rai$" mon"( to $p"nd on pulic$"rvic"$ $uch a$ th" provi$ion o) h"alth $"rvic"$ $o a$ to hav" ah"alth( nation th" provi$ion o) "ducation $o a$ to "radicat" ignoranc"th" provi$ion o) d")"nc", $"curit(, la* and ord"r in ord"r to cr"at" an"naling "nvironm"nt )or th" cr"ation o) *"alth through u$in"$$"$ (compani"$ and individual$ $o a$ to all"viat" pov"rt( and th" provi$iono) th" n"c"$$ar( in)ra$tructur" $o a$ to d"v"lop th" countr("conomicall(+

A $"cond i$ redistribution. ;ormall(, thi$ m"an$ tran$)"rring *"alth)rom th" rich"r $"ction$ o) $oci"t( to poor"r $"ction$.

A third purpo$" o) ta!ation i$ realignment . 'a!"$ ar" l"vi"d to addr"$$"!t"rnaliti"$@ -or "!ampl", toacco i$ ta!"d to di$courag" $moking,and man( p"opl" advocat" polici"$ $uch a$ impl"m"nting a caronta!. #r ( r"ducing or r"moving ta!"$ on ig u$"$, th" gov"rnm"nt*ant$ to hav" igg"r u$$"$ op"rating in th" countr(.

A )ourth, con$"?u"ntial "))"ct o) ta!ation in it$ hi$torical $"tting ha$

""n representation. 'h" Am"rican r"volutionar( $logan Pno ta!ation*ithout r"pr"$"ntationP impli"d thi$@ rul"r$ ta! citi>"n$, and citi>"n$d"mand accountailit( )rom th"ir rul"r$ a$ th" oth"r part o) thi$argain.2 S"v"ral $tudi"$ hav" $ho*n that dir"ct ta!ation $uch a$incom" ta!"$ g"n"rat"$ th" gr"at"$t d"gr"" o) accountailit( and"tt"r gov"rnanc", *hil" indir"ct ta!ation t"nd$ to hav" $mall"r"))"ct$.3

#n" o) th" mo$t important d"ci$ion$ )acing th" Mini$t"r o) -inanc" i$ that o)d"t"rmining *hat comination o) ta!"$ to "mplo( in th" udg"t in ord"r torai$" th" giv"n amount o) mon"( r"?uir"d to m""t th" udg"t"d gov"rnm"nt

"!p"nditur" )or th" coming )inancial ("ar.




5.2 T:'s o8 Ta)'s in Malai

'a! t(pologi"$ var( d"p"nding on th" )orm, m"thod o) coll"ction or $ourc"u$"d. Hhat"v"r th" d"$cription, th"r" ar" oth +ir"ct and &ndir"ct ta!"$ andar" impo$"d on good$ and $"rvic"$. "opl" pa( ta!"$ nationall(, ut th"(

al$o pa( ta!"$ pr"$cri"d ( th" cit( or di$trict a$$"ml( in *hich th"(op"rat". Anoth"r $ourc" o) ta!"$ that ar" "coming )a$hional" i$ l"vi"$ on)u"l.

Mala*i coll"ct$ ta!"$ through m"thod$ o) a( A$ =ou arn A=,rovi$ional 'a! and Hithholding 'a!. &t mu$t " not"d that A= i$ ;#' ata!, ut a m"thod o) coll"cting "mplo(m"nt ta!.

5.2.4 >'s!#i$ion 7: 8o#

a( >i#'!$ Ta)'s

&n th" collo?uial $"n$", a dir"ct ta! i$ on" paid dir"ctl( to th" gov"rnm"nt (th" p"r$on$ *h"th"r natural or l"gal on *hom it i$ impo$"d. &n oth"r *ord$,a dir"ct ta! i$ on" that cannot " $hi)t"d ( th" ta!pa("r to $om"on" "l$",*h"r"a$ an indir"ct ta! can. !ampl"$ includ" "mplo(m"nt incom" ta!,u$in"$$ pro)it ta!, capital incom" ta! and $om" pa$$iv" incom" ta!. &ng"n"ral, dir"ct ta! i$ l"vi"d on incom" and i$ charg"d at $ourc", i.". *h"r" th"mon"( i$ "arn"d. +ir"ct ta!"$ ar" gov"rn"d ( th" 'a!ation Act chapt"r

1@01 o) th" 4a*$ o) Mala*i.

7( In+i#'!$ Ta)'s

&n contra$t to th" dir"ct ta!, an indir"ct ta! i$ a Pcoll"ct"dP ta!, i.". a ta! *hichi$ coll"ct"d ( int"rm"diari"$ *ho turn ov"r th" proc""d$ to th" gov"rnm"ntand )il" th" r"lat"d ta! r"turn.

&ndir"ct ta!"$ ar" ta!"$ on "!p"nditur" $uch a$ cu$tom$ and "!ci$" duti"$and <alu" Add"d 'a! <A'. 'h"( ar" normall( l"vi"d on trad"r$ $uch a$import"r$ and "!port"r$, *hol"$al"r$ and r"tail"r$ on *hom th" liailit( o) th"

ta! )all$. &ndir"ct ta!"$ ar" gov"rn"d ( th" u$tom$ and !ci$" Act hapt"r 2@01 o) th" 4a*$ o) Mala*i.

nlik" dir"ct ta!"$, th" incid"nc" o) th" ta! can " tran$)"rr"d to th" )inalcon$um"r ( th" trad"r ( $impl( r"cov"ring th" ta! paid in th" )orm o)cu$tom$ and "!ci$" dut( or <alu" Add"d 'a! <A' )rom th" con$um"r (incr"a$ing th" commodit( pric" to includ" $uch dut( or <alu" Add"d 'a!<A'. &n thi$ *a(, th" liailit( and th" incid"nc" o) an indir"ct ta! do not )allon th" $am" p"r$on "cau$" in r"alit( th" ta! i$ indir"ctl( paid ( th" )inalcon$um"r *ithout kno*ing ho* much h" i$ pa(ing ( *a( o) ta! through th"incr"a$" in pric" d"t"rmin"d ( th" trad"r *ho "ar$ th" impact o) th" ta! in

th" )ir$t plac".




:u$t lik" in man( d"v"loping countri"$, &ndir"ct ta!"$ ar" th" maincontriutor$ o) th" Mala*i c"ntral gov"rnm"nt r"v"nu". But *h"r"a$ th"incid"nc" o) dir"ct ta!"$ a))"ct$ particular individual$ and compani"$ *homa( avoid or "vad" th" ta!"$, th" incid"nc" o) indir"ct ta!"$ on con$um"r$cannot " avoid"d or "vad"d "v"n *h"r" th" trad"r ha$ "vad"d th" impact o)th" ta! ( "vading th" pa(m"nt o) dut(. 'hi$ th"r")or" m"an$ that a )ailur" toimprov" ta!pa("r complianc" )or dir"ct ta!"$ $uch a$ incom" ta! l"ad$ toin"vital" incr"a$"$ in indir"ct ta!"$ in ord"r to alanc" th" total ta!r"?uir"m"nt "?uation, *hich th" con$um"r$ or th" g"n"ral pulic cannot runa*a( )rom, in th" )orm o) pric" incr"a$"$ )or oth "$$"ntial and non "$$"ntialcommoditi"$ and *hich ultimat"l( l"ad$ into high in)lation i) it i$ not controll"dthrough )i$cal and or mon"tar( polici"$.

5.2.2 >'s!#i$ion 7: M'$&o+ o8 Coll'!$ing Ta)

'a!"$ ar" at tim"$ d"$cri"d ( th" m"thod through *hich th"( ar" coll"ct"d.opular m"thod$ u$"d ( th" Mala*i "v"nu" Authorit( ar" mplo(m"ntincom" 'a!, -ring" "n")it$ 'a!, rovi$ional 'a!, A$$"$$m"nt 'a!,Hithholding 'a!, and ;onr"$id"nt 'a!.

A. Elo:'n$ In!o' $a)

Som"tim"$, thi$ i$ call"d a( oll 'a!. A$ th" nam" $ugg"$t$, ta!"$ ar"l"vi"d on incom". &ncom" includ"$ th" total amount in ca$h or kind r"c"iv"d( or accru"d to a p"r$on )rom $ourc"$ *ithin Mala*i, or d""m"d to " *ithin

Mala*i.

mplo(m"nt incom" ta! i$ a ta! admini$tration $ch"m" *h"r"( th" "mplo("ri$ charg"d *ith th" r"$pon$iilit( o) d"duction o) th" corr"ct amount o) ta!)rom th" *""kl( or monthl( "molum"nt$ o) hi$ "mplo(""$ and th" r"mittanc"and accountailit( o) th" $am" *ithin th" pr"$cri"d p"riod to th" Mala*ir"v"nu" Authorit(.

mplo(m"nt &ncom" ta! i$ l"vi"d on th" principl"$ that 1 it i$ not too much todi$courag" p"opl" )rom complianc" and 2 it do"$ not ov"rurd"n p"opl"that "arn lo* incom" i.". th" mor" (ou "arn, th" mor" (ou pa(. urr"ntl(, i)on" "arn$ &ncom" )rom 1 D 9,000 p"r month, h" pa($ 0E ta! &ncom" )rom9,001 D 12,000 attract$ 1/E and *ith incom" "(ond 12,001 p"r month,h" pa($ 30E ta!.

v"r( p"r$on in Mala*i *ho ha$ an "mplo("" or "mplo(""$ "arning"molum"nt$ o) mor" than 9,000.00 p"r month i$ olig"d und"r $"ction1022a o) th" ta!ation Act to r"gi$t"r )or "mplo(m"nt incom" ta! Sch"m"*ith th" MA. mplo(m"nt incom" ta! i$ pa(al" *ithin 1 da($ o) th" "nd o)th" month in *hich it i$ d"duct"d. &) an "mplo("r )ail$ to pa( a$ pr"$cri"d,p"nalti"$ appl( a$ )ollo*$@ 1/E o) th" amount o) ta! and a )urth"r /E p"r

month or part th"r"o).




mplo(m"nt &ncom" 'a! account$ )or aout 22E o) th" total annual ta!coll"ction ( th" MA. &n 20075% )inancial ("ar, MA coll"ct"d A= o)21,39,2/0,10

'h" "mplo(m"nt incom" ta! $ch"m" i$ $o "))ici"nt in Mala*i that it mak"$a$$"$$m"nt$ at th" "nd o) th" ("ar virtuall( unn"c"$$ar(. &t ha$ th"advantag" o) "naling th" ta!pa("r to pa( th" ta! a$ h" "arn$ hi$"molum"nt$ th"r"( $aving him )rom th" troul" o) pa(ing a lump $um o) th"annual ta! at th" "nd o) th" ta! ("ar *h"n th" mon"( i$ alr"ad( $p"nt. Mor"importantl( it "nal"$ th" gov"rnm"nt to r"c"iv" th" ta! r"v"nu"$ "v"nl(throughout th" ta! ("ar th"r"( )acilitating th" ca$h udg"t planning andimpl"m"ntation on a monthl( a$i$ "cau$" it "n$ur"$ a r"gular )lo* o)*""kl( or monthl( ta! r"v"nu".

B. -#ing' 7'n'8i$s $a)

-ring" "n")it$ ar" ta!al", and ar" pa(al" ( "v"r( "mplo("r oth"r than th"8ov"rnm"nt, *ho provid"$ )ring" "n")it$ to an( o) hi$ "mplo(""$. 'h" ta! i$calculat"d on th" total ta!al" valu" o) $uch )ring" "n")it$ a$ outlin"d inS"ction 9A o) 'a!ation Act at rat"$ $p"ci)i"d in th" "l"v"nth $ch"dul"$uC"ct to th" &n)ormation and a(m"nt "gulation$ mad" und"r $"ction 16o) th" $am".

-ring" "n")it$ ta! i$ al$o pa(al" on $o)t loan$ that "mplo("r$ provid" toth"ir "mplo(""$ at an int"r"$t rat" lo*"r than th" comm"rcial rat". Hh"r" thathapp"n$, th" la* r"cogni$"$ th" r"$ulting int"r"$t di))"r"nc" $aving a$ a

)ring" "n")it and i$ ta!al" at th" lo*"$t rat" ruling on th" )ormal mark"t )orloan$ in th" middl" o) "ach ?uart"r 1/th da( o) th" $"cond month o) "ach?uart"r. &n th" curr"nt ca$", th" lo*"$t rat" that *a$ ruling on 1/th -"ruar(2009 *a$ 22./E.

-ring" B"n")it 'a! contriut"$ aout 1.2E o) th" total annual incom" ta!. 'h"'a! ar" paid in ?uart"rl( in$talm"nt$ not lat"r than 1 da($ a)t"r th" "nd o)"ach ?uart"r o) th" ("ar o) a$$"$$m"nt.

An "mplo("r *ho )ail$ to r"gi$t"r in accordanc" *ith th" r"gulation$ or )ail$ topa( th" -ring" B"n")it$ 'a! i$ lial" to a p"nalt( o) 20E o) th" -ring" B"n")it$

'a! du" in addition to th" )ring" "n")it ta! du".

C. P#o;isional Ta)

rovi$ional ta! i$ an advanc" ta!, and i$ guid"d ( $"ction %A o) th"'a!ation Act and S"ction 16o) 'a!ation rovi$ional ta! &n)ormation"gulation$. rovi$ional 'a! i$ th" "$timat"d total amount o) incom" ta!pa(al" ( "v"r( u$in"$$p"r$on charg"al" *ith incom" ta! in r"$p"ct o)an( ("ar o) a$$"$$m"nt.

rovi$ional ta! i$ "$timat"d ( th" ta!pa("r at th" "ginning o) th" ("ar o)a$$"$$m"nt and pa(al" in ?uart"rl( in$talm"nt$ *ithin 1 da($ a)t"r th" "nd




o) "ach ?uart"r o) that ("ar o) a$$"$$m"nt. rovi$ional ta! contriut"$ aout9E o) total annual incom" ta! r"v"nu" and provid"$ th" r"v"nu" *ith a?uart"rl( in)lo* to gov"rnm"nt.

>. Ass'ss'n$ Ta)

A$$"$$m"nt ta! appli"$ to limit"d compani"$, $ol" trad"r$ and partn"r$ inu$in"$$, and i$ d"t"rmin"d ( *a( o) ta! a$$"$$m"nt$ mad" a)t"r th" "nd o)th" ("ar o) A$$"$$m"nt on p"r$on$ in u$in"$$ to $ho* th" alanc" o) ta!pa(al" a)t"r cr"diting on that notic" o) a$$"$$m"nt advanc" ta!"$ $uch a$provi$ional ta!, *ithholding ta!, a( roll ta!, "tc.

'h" alanc" o) ta! pa(al" mu$t " paid at th" tim" o) $umitting th" ta!r"turn, *h"r" thi$ i$ not don", an( alanc" i$ paid tog"th"r *ith a p"nalt( o)up to 30E o) th" unpaid amount *h"r" it ari$"$ imm"diat"l( th" a$$"$$m"nti$ i$$u"d to th" ta!pa("r. 'h" alanc" and th" p"nalt( $o d"t"rmin"d ar" paid

to th" ta! d"partm"nt imm"diat"l( oth"r*i$" int"r"$t on ov"rdu" ta! "com"$du". a(m"nt i$ mad" ( ca$h or ch"?u". Hh"r" a ch"?u" ha$ ""n mad"P")"r to +ra*"rP ( th" ank, onl( ca$h or a ank c"rti)i"d ch"?u" i$acc"pt"d )or pa(m"nt o) th" ta! tog"th"r *ith a p"nalt( o) 30E o) th" amounto) th" 5+ ch"?u".

A$$"$$m"nt ta! contriut"$ aout /.3E o) th" total annual incom" ta!, that i$a)t"r cr"diting th" advanc" or *ithholding ta!"$.

E. Wi$&&ol+ing Ta)

Hithholding ta! i$ an advanc" ta! d"duct"d )rom an( pa(m"nt $p"ci)i"d in th"-ourt""nth Sch"dul" in accordanc" *ith th" rat"$ $p"ci)i"d in that $ch"dul".4arg"l(, *ithholding ta! i$ appli"d on p"r$on$ l"gal or natural that cannot "trac"d a)t"r th"( hav" r"c"iv"d pa(m"nt.

Hithholding ta! i$ applical" to th" )ollo*ing pa(m"nt$@

• 1oyalties ( at 234

• 1ents5( at 634

• Payment of over 783,333 for any supplies to traders and institutionsunder Tender or any other contract. oodstuff attracts 94 ta whileothers is 634

• 'ommissions : ecluding commissions on which P0# is being

operated; and technical and management fees relating toreimbursement of epenses : at 234

• Payment for carriage and haulage <refers to movement of goods only=

: at 634




• Payment to contractors and sub(contractors in the building and other

products : at >4

• Payments for Public ntertainment i.e. payments made to musicians,

athletes, T? and 1adio artists, Theatre Starts, theatre stars and

comedians : <this does not include admission fees to places of publicand private entertainment, accommodation and meal charges= : at234

• Payment of over 7 @33 labour or casual services : at 234

• an interest of over 763,333 : at 234

• ees : at 634

l"a$" not" that th" Hithholding 'a! rat"$ hav" not chang"d )or th" pa$tthr"" ("ar$ d"$pit" $om" chang"$ in A= *hich go"$ along *ith incom" ta!"cau$" "$$"ntiall(, th"( ar" provid"d )or in di))"r"nt $ch"dul"$

Hh"r" th" r"cipi"nt produc"$ a valid Hithholding 'a! !"mption "rti)icat"*ithholding ta! i$ not d"duct"d. 'h"r" ar" no "!"mption c"rti)icat"$ in r"$p"cto) a Bank int"r"$t, "nt c o(alti"$ " ommi$$ion$, ) a(m"nt o)ca$ual laour, and g a(m"nt to contractor$

An( individual, partn"r$hip, tru$t, a$$ociation, compan(, clu, $tatutor( od(,council, gov"rnm"nt mini$tr( or d"partm"nt, r"ligiou$ or an( organi>ation

making an( o) th" aov" pa(m"nt$ i$ lial" to op"rat" Hithholding 'a!."r$on$ op"rating Hithholding 'a! $hould k""p Hithholding 'a! "rti)icat"HI' 1 and Hithholding 'a! Summar( -orm )or r"mittanc" purpo$"$H'-2.

A)t"r making th" d"duction th" p"r$on making th" pa(m"nt a pr"par"$ aHithholding 'a! "rti)icat" in triplicat" i$$u"$ th" p"r$on )rom *ho$"pa(m"nt Hithholding 'a! ha$ ""n d"duct"d *ith th" B cop( o) th"Hithholding 'a! "rti)icat" and c $"nd$ th" mon"( d"duct"d to MAtog"th"r *ith th" A cop( o) th" Hithholding 'a! "rti)icat" H'-1 prop"rl($ummari>"d on Hithholding 'a! Summar( -orm H'-2

Hithholding ta! mu$t " r"mitt"d to th" MA *ithin 1 da($ )rom th" "nd o)th" month in *hich $uch d"duction *a$ mad".

-ailur" to d"duct *ithholding ta! pur$uant to th" pr"$cri"d mann"r mak"$th" r"$pon$il" p"r$on p"r$onall( lial" to pa( th" MA th" amount o) an(*ithholding ta! *hich h" ha$ )ail"d to d"duct, plu$ additional $um o) 20Eo)th" amount.

Hithholding ta! account$ )or aout /E o) th" total annual incom" ta! r"v"nu"and it al$o provid"$ th" gov"rnm"nt *ith a con$tant or r"gular )lo* o) ta!

r"v"nu"$.




-. Non R'si+'n$ Ta)

;on r"$id"nt ta! i$ d"$cri"d in S"ction 76A o) th" 'a!ation Act a$ th" )inalta! pa(al" ( p"r$on$ not r"$id"nt in Mala*i on an( incom" ari$ing )rom a$ourc" *ithin Mala*i *hich i$ not attriutal" to a p"rman"nt "$tali$hm"nt o)

that p"r$on in Mala*i.

;on r"$id"nt ta! i$ pa(al" at th" rat" o) 0./E o) th" gro$$ mount o) $uchincom" and upon accrual o) th" amount to $uch p"r$on or pa(m"nt o) th"amount to $uch p"r$on *h"th"r dir"ctl( to him or to hi$ account in or out$id"Mala*i or r"mittanc" o) th" amount to $uch p"r$on or cr"diting o) th"amount or o) th" valu" th"r"o) in )avour o) $uch p"r$on. &t i$ th" r"$pon$iilit(o) th" p"r$on )rom *hom th" amount i$ du" to d"duct th" ta! and r"mit it)orth*ith to th" MA.

;on r"$id"nt ta! i$ not pa(al" on an( p"n$ion or annuit( pa(m"nt. &t i$ al$o

not pa(al" on incom" and oth"r amount$ "!"mpt )rom ta! und"r th"provi$ion$ o) th" -ir$t Sch"dul". &n addition, ;on "$id"nt 'a! i$ not cov"r"d( th" "!"mption provi$ion$ o) th" 'a! 'r"ati"$ *hich Mala*i conclud"d *ithoth"r countri"$ on doul" ta!ation $uch a$ th" nit"d ingdom *hich onl(appl( to ta!"$ on incom" a$ d")in"d in S"ction && and *ho$" a$i$ )or ta!ationin th" $aid ta! tr"ati"$ i$ P"rman"nt $tali$hm"nt.P S"" $"ction on +oul"'a! 'r"ati"$

5.2.5>'s!#i$ion 7: Con$'n$

A. B0sin'ss P#o8i$ Ta)

Bu$in"$$"$ pa( ta!"$ on pro)it$ not ca$h )lo*. Hh"r" a u$in"$$ mak"$ alo$$, th" la* allo*$ carr( )or*ard o) th" lo$$, to " claim"d *h"n u$in"$$mak"$ pro)it. An( u$in"$$ op"rating in Mala*i, organi$"d )or gain or pro)it,and making at l"a$t a pro)it o) 10%,000 annuall( )rom all th"ir activiti"$, i$$uC"ct to thi$ ta!.

Bu$in"$$ pro)it ta!"$ ar" calculat"d a)t"r d"duction o) allo*al" "!p"n$"$$uch a$ utiliti"$, inc"ntiv"$ to $p"ci)ic $"ctor$ $uch a$ "!port allo*anc" "tc a$

$tipulat"d in th" la*. &t i$ v"r( di))icult to d"t"rmin" ho* much i$ g"nuin"l(allo*al", and man( u$in"$$"$ avoid ta!"$ ( ov"r$tating th"ir "!p"n$"$$uch Fmanag"m"nt )""$.G But i) )ound, th"r" ar" tough p"nalti"$ )orov"r"$timating allo*al" "!p"n$"$ or an( oth"r contrav"ntion or r"ach o)th" provi$ion$ $tipulat"d in th" 'a!ation Act a$ $p"ci)i"d )rom S"ction 112through $"ction 11. 'h" MA in$titut"$ audit$ to a$$"$ i) th" "!p"n$"$ ar"r"all( valid. 'h"r" ar" d"$k audit$ a$ *"ll a$ )i"ld Audit$. -urth"rmor", MAha$ a ta! inv"$tigation divi$ion that compr"h"n$iv"l( inv"$tigat"$ ca$"$ o) ta!"va$ion and ta! )raud$ *ith th" purpo$" o) "n$uring that corr"ct amount o)ta!"$ ar" dul( paid.

MA acc"pt$ allo*al" "!p"n$"$ onl(. -or )urth"r d"tail$ on "!"mption$ on&ncom" 'a!, pl"a$" r")"r to th" -ir$t Sch"dul" o) th" 'a!ation Act. ag" %3




o) th" 200% am"nd"d "dition. 'h"r" ar" al$o oth"r "!c"ption$ *ith r"gard toth" rat" and d"t"rmination o) ta!al" incom" a$ )ollo*$@

• &nv"$tm"nt in priorit( ar"a$ "l"v"nth $ch"dul" $"ction c

• Sp"cial trad"$ D )arm"r, coop"rativ" $oci"ti"$ A' &<, $"ction /%

6/

•4i)" A$$uranc"$ &n$uranc" l"v"nth $ch"dul" d

• &nv"$tm"nt allo*anc" D S"cond Sch"dul", paragraph

Bu$in"$$ pro)it ta!"$ ar" to " paid to MA ( m"an$ o) *ithholding.Bu$in"$$ pro)it$ ar" ta!"d at th" rat" o) 1%E. 'hi$ rat" i$ $aid to " on" o) th"high"$t in th" r"gion, a$ "num"rat"d ( th" -inancial S"ctor Apprai$al that*a$ conduct"d ( th" Horld Bank.

B. Cai$al In!o'

A capital incom" ta! i$ a ta! charg"d on capital gain$, i.". th" pro)it r"ali>"don th" $al" o) a noninv"ntor( a$$"t that *a$ purcha$"d at a lo*"r pric". &npulic "conomic$ th" conv"ntional *i$dom i$ that ta!"$ on capital incom"g"n"rat" high "))ici"nc( co$t$ *ith )"* o))$"tting "n")it$ i.". comparativ"l(gov"rnm"nt coll"ct$ v"r( littl" r"v"nu" )rom thi$. Av"rag" ta! rat"$ on th"r"turn to capital ar" $aid to " v"r( high, a$ ar" marginal ta! rat"$ on $aving$and inv"$tm"nt.

'hat i$ *h( apital gain$ in Mala*i ar" ta!"d at 1E rat" compani"$ andindividual$ to th" "!t"nt o) 100 p"rc"nt o) th" gain. 'h"r" i$ al$o a provi$ion

)or in)lation adCu$tm"nt. apital gain$ r"ali>"d ( an individual on th" di$po$alo) p"r$onal and dom"$tic a$$"t$ not u$"d in conn"ction *ith an( trad" ar"ta!)r"". apital gain$ on tran$)"r$ "t*""n $pou$"$ and on di$po$al o) anindividualG$ principal p"r$onal d*"lling hou$" ar" al$o ta!"!"mpt. apitalgain$ )rom th" $al" o) $har"$ trad"d on th" $tock "!chang" ar" ta!"!"mptonl( i) th" ta!pa("r hold$ tho$" $har"$ )or not l"$$ than on" ("ar.

Hh"n capital incom" ta!"$ ar" high th"( hav" important "))"ct$ on th" rat" o)corporat" inv"$tm"nt, on th" allocation o) capital acro$$ u$"$, on *h"th"rpro)it$ ar" r"port"d in Mala*i or aroad, and on corporat" and p"r$onal)inancial d"ci$ion$.

C. Passi;' In!o' $a)

'hi$ i$ ta! that i$ l"vi"d on incom" )rom pa(m"nt on u$in"$$"$ $uch a$prop"rt( r"nt$, ank int"r"$t, ro(alti"$, commi$$ion$, ca$ual laour and oth"r$a$ $tipulat"d in -ourt""nth $ch"dul".

a$$iv" incom" ta! ha$ $p"cial )"atur"$ in that larg"l( th" Fta!pa("r$G in thi$cat"gor( ar" a$$um"d to " Fnontrac"al"G incom" "arn"r$, and th" ta! i$

l"vi"d on F$al"$G and not pro)it. a$$iv" incom" ta! rat"$ t"nd to " lo*"r. &naddition, "cau$" individual$ in Mala*i do not )il" ta! r"turn$ *ith th" MA,

http://en.wikipedia.org/wiki/Tax

http://en.wikipedia.org/wiki/Capital_gain

http://en.wikipedia.org/wiki/Asset

http://en.wikipedia.org/wiki/Tax

http://en.wikipedia.org/wiki/Capital_gain

http://en.wikipedia.org/wiki/Asset




and that it i$ v"r( di))icult )or MA to coll"ct ta!"$ a)t"r th"$" ta!pa("r$ hav"alr"ad( r"c"iv"d th"ir incom", th"$" t(p"$ o) ta!"$ ar" coll"ct"d throughwithholding m"thod d"$cri"d aov". 'h" ta! pa("r th"n )il"$ to MA tor"concil" th" pa(m"nt$ mad". &) th" ta! paid i$ mor" than *hat th" ta!pa("r$hould hav" paid on pro)it, $h" th"n claim$ ack th" Fov"rpa(m"ntG.

&nt"r"$t incom" o) r"$id"nt ta!pa("r$ i$ ta!"d at th" ordinar( ta! rat"$.Io*"v"r, int"r"$t incom" i$ $uC"ct to a *ithholding ta! o) / p"rc"nt gro$$ at$ourc" 0./ p"rc"nt )or nonr"$id"nt$. 'h" ta! *ithh"ld i$ cr"dit"d again$t th")inal incom" ta! liailit( o) r"$id"nt$. &nt"r"$t o) up to 10,000 p"r ("arr"c"iv"d ( an individual )rom a r"gi$t"r"d ank, uilding $oci"t( or ongov"rnm"nt $tock, ond$ or promi$$or( not"$ i$ ta!"d at 20E.

+ivid"nd incom" i$ $uC"ct to a *ithholding ta! at $ourc" o) 10 p"rc"nt. 'h"*ithholding ta! r"pr"$"nt$ th" )inal liailit(. A$ a r"$ult, thi$ incom" i$"!clud"d )rom ta!al" incom" *h"n d"t"rmining th" progr"$$iv" incom" ta!

rat" applical".

H"alth, inh"ritanc" and gi)t ta!"$ ar" not applical" in Mala*i. Io*"v"r,d"c"a$"d "$tat"$ ar" $uC"ct to "$tat" dut(.

>. C0s$os >0$:

'h"$" ar" ta!"$ on good$ that ar" import"d into or "!port"d )rom th" countr(and th"( includ" &mport +ut(, !ci$" +ut( and <alu" Add"d 'a! <A'.'h"$" duti"$ ar" l"vi"d d"p"nding on th" charact"ri$tic o) th" good$. A$ th"

nam" $ugg"$t$, &mport dut( i$ a ta! on import$, *hil" !ci$" dut( i$ ta! ongood$ that hav" an "!t"rnalit( "))"ct, di$r"garding *h"th"r th"( ar" import"dinto, manu)actur"d, or produc"d in Mala*i. !ampl"$ includ" )u"l, v"hicl"$and alcoholic drink$. <alu" Add"d 'a! <A' on th" oth"r hand appli"$ toalmo$t all good$ that ar" import"d into, or manu)actur"d in Mala*i, and al$o$p"ci)i"d $"rvic"$ $uppli"d in Mala*i. !"mption$ "!i$t.

A$ u$ual, th"$" ta!"$ ar" *atch"d )rom tim" to tim" and $hould varianc"app"ar larg", adCu$tm"nt$ ar" mad" in ord"r to maintain th" ov"rall r"v"nu"proC"ction$. -or "!ampl", in th" 200%59 ("ar, 8ov"rnm"nt o$"rv"d that th"r"*a$ $muggling and "va$ion o) import and "!ci$" dut( on moil" phon"hand$"t$ and $o it r"mov"d th" a)or"$aid duti"$ and in$t"ad impo$"d 10E"!ci$" ta! on airtim".

Quali)ication$ )or th" aov" ta!"$ ar" outlin"d in S'#M#+S #+S .

C0s$os +'!la#a$ion

8ood$ that ar" import"d into Mala*i ar" d"clar"d on th" Mala*i u$tom$+"claration -orm 12. 'hi$ )orm i$ d"$ign"d a$"d on th" ommon Mark"t )or

a$t"rn and South"rn A)rica #MSA cu$tom$ docum"nt. 'h" )ormr"plac"d th" 13 )orm$ that *"r" "ing u$"d )or cl"aranc" o) good$ *h"th"r




import$, "!port$, *ar"hou$ing "tc. All th" r"?uir"m"nt$ )or th"$" hav" ""nincorporat"d into -orm 12. Io*"v"r cl"aranc" o) good$ that ar" in tran$itthrough Mala*i, ".g. )rom M*an>a to hipond" ar" $till don" on th" -orm 30.

'h" onl( "!c"ption$ to th" aov" r"?uir"m"nt ar" on ;onm"rchandi$" i.".p"r$onal "))"ct$ import"d in trav"ll"rG$ aggag" M"rchandi$" i.".comm"rcial good$ *ith a valu" not "!c""ding M30,000.00 and al$o o$talimport$.

E. Io#$ >0$:

nd"r r"gional trad" oligation$ to #MSA, th" 8ov"rnm"nt o) Mala*ir"mov"d import duti"$ in r"$p"ct o) all good$ originating )rom #MSAM"m"r Stat"$ on a r"ciprocal a$i$ *ith "))"ct )rom 31 #cto"r. 2000. 'h"

"))"ct o) th" r"moval o) th" import dut( rat"$ on all good$ originating )rom th"#MSA M"m"r Stat"$ o) +Ciouti, g(pt, "n(a, Madaga$car, Mauritiu$,Sudan, amia and ima*" i$ that th"ir good$ ?uali)( )or dut( )r""importation on production o) a valid #MSA "rti)icat" o) #rigin dul( $ign"dand $tamp"d ( an authori>"d $ignator(. Io*"v"r, !ci$", <alu" Add"d 'a!<A' and oth"r ta!"$ $till hav" to " paid *h"r"v"r applical". A$ )or th" r"$to) import$ )rom th" #MSA m"m"r countri"$ that did not r"ciprocat" th"r"moval o) import duti"$, import$ )rom Angola, Burundi, omoro, +"mocratic"p o) ongo, ritr"a, thiopia, ;amiia, *anda, S"(ch"ll"$, S*a>iland,and ganda $till attract appl(.

'h" $am" oligation$ "!i$t und"r SA+ 'rad" protocol, *hich cr"at"d a -r""'rad" Ar"a *ith th" $igning in Ma$"ru, 4"$otho on 2 Augu$t, 1996 (Bot$*ana, 4"$otho, Mala*i, Mauritiu$, Mo>ami?u", ;amiia, South A)rica,S*a>iland, 'an>ania, amia and ima*" SA+ no* ha$ 1 m"m"r$including th" +"mocratic "pulic o) ongo and S"(ch"ll"$. Mala*i i$ not$uppo$"d to charg" import dut( on good$ originating )rom SA+ countri"$.

-. E)!is' >0$:

!ci$" dut( i$ ta! l"vi"d on good$ that g"n"rall( hav" a n"gativ" "!t"rnalit("))"ct $uch a$ cigar"tt"$, and5or good$ and $"rvic"$ that hav" incom""la$ticit( o) mor" than 1 lu!ur( good$ and $"rvic" $uch a$ ta! on moil"phon" airtim". !ci$" dut( i$ l"vi"d di$r"garding *h"th"r th"( ar" import"dinto, manu)actur"d, or produc"d in Mala*i. &t i$ thu$ a ta! on th" production or$al" o) a good. Adam Smith onc" $aid, "The motive for the implementation ofecise should be nothing more than to curb the pursuit of goods and servicesharmful to our health and morals.% >

!ci$" ta! i$ l"vi"d )or variou$ r"a$on$. Among th"m




• $o #o$'!$ 'ol' )rom harming th"ir h"alth ( au$ing $u$tanc"$

$uch a$ toacco and alcohol and )rom harming th"m$"lv"$ and oth"r$indir"ctl( and morall( ( "ngaging in activiti"$ $uch a$ gamling thu$making "!ci$" a kind o) sin ta and )rom harming tho$" around th"mand th" g"n"ral "nvironm"nt, oth )rom ov"ru$" o) th" aov"

m"ntion"d $u$tanc"$, and including curing activiti"$ contriuting topollution. 8amling )or "!ampl" attract$ 10E o) th" amount "t or$tak"d.

• $o #o;i+' oni's n''+'+ D )or th" "!tra h"althcar" and oth"r pulic

"!p"nditur"$ *hich *ill " n""d"d a$ a dir"ct or indir"ct r"$ult o)"!ci$al" activiti"$, $uch a$ lung canc"r )rom $moking or roadaccid"nt$ r"$ulting )rom drinkdriving and

• $o 0nis& D $uch a$ $ta(ing too much on moil" phon"$. Airtim" ha$10E "!ci$" ta! to it, "))"ctiv" 1$t :un" 200%. 'h" -inanc" Mini$t"r, Ion8oodall 8ond*" $aid *h"n d"liv"ring th" ta! chang" m"$$ag" inarliam"nt Purr"ntl( airtim" i$ $o ch"ap and p"opl" talk a lot o)

irr"l"vant $tu)) on th" phon". But no* p"opl" *ill hav" to rationali$"u$" o) airtim" and u$" it "conomicall(.P

G. Val0' A++'+ Ta) VAT(

<A' i$ an indir"ct ta!, and a$ $uch unlik" dir"ct ta!"$, on" can avoid <A' (not con$uming th" good$ 5 $"rvic"$. <A' i$ paid on valu" add"d and appli"$to oth dom"$tic and )or"ign mad" good$ and $"rvic"$ th"r")or" it i$ notcon$id"r"d a arri"r to trad".

#n" charact"ri$tic i$ that <A' i$ paid ( th" )inal con$um"r. &n )act <A' Cu$t passes through th" u$in"$$. Hh"n a u$in"$$ procur"$ input$ that hav"input <A' and proc"$$"$ good$ )or $al" to a u("r, th" u$in"$$ charg"$<A' on th" good5$"rvic" "ing $old and pa( to MA onl( th" di))"r"nc" in<A' cr"at"d. -or "!ampl", i) compan( R procur"d input$ at 100, it paid )or<A' o) 16./0 16./E. A)t"r proc"$$ing th" good$ th" compan( $"ll$ th"good$ at 300, it l"vi"$ <A' o) 9./0 16./E o) $"lling pric". 'h" compan(th"n pa($ MA onl( th" 33.00 that *a$ cr"at"d ( th" valu" addition.ompani"$ cannot, th"r")or", complain that <A' i$ killing th"ir u$in"$$"$ a$th"( do not pa(J &) an(thing, <A' onl( m"$$"$ up th"( ca$h )lo*.

&n 20075%, <A' *a$ r"duc"d )rom 17./E to 16./E. 'h" Mini$tr( o) -inanc"indicat"d in Ma( 200% that thi$ 1E r"duction *a$ an imm"diat" lo$$ inr"v"nu" "?uival"nt to 2 illion./ A )"* month$ lat"r, th" gov"rnm"nt ha$con)irm"d that actuall( th" r"$ult *a$ a ph"nom"nal incr"a$" in total r"v"nu")rom <A'J 'hi$ con)irm$ that *h"n ta!"$ ar" lo*"r, complianc" incr"a$"$.

<A' i$ th" $ingl" igg"$t $ourc" o) r"v"nu" )or gov"rnm"nt contriuting aout30E o) th" r"v"nu" "v"r( month. &n 20075% )inancial ("ar alon", MAcoll"ct"d <A' *orth( 1,%1,17%,260. <A' run$ on *hat i$ call"d a positive

list i.". "v"r(thing i$ <A'al" "!c"pt tho$" outlin"d in th" $ch"dul".




G.1 VAT Exempted goods and Services

'h"r" ar" $om" good$ and $"rvic"$ that ar" outlin"d in th" $ch"dul" a$ "ing"!"mpt"d )rom <A'. &n $"lling "!"mpt"d good$ and $"rvic"$, th" $"ll"r do"$;#' charg" <A' to th" u("r. A$ $uch th" <A' do"$ not pa$$ through, and$o n"ith"r can th"( pa( onl( th" di))"r"nc".

Io*"v"r, th" "!"mption i$ onl( on th" )inal product D th" manu)actur"r paid<A' on inputJ 'hu$ th" <A' i$ conv"rt"d into an "!p"n$" and charg"d to th"con$um"r, in th" proc"$$ making th" )inal $"lling pric" high"r than normal.

G.2 Zero rated goods and Services

'hi$ appli"$ to $p"ci)i"d $"ctor$ $uch a$ con$truction in 'ouri$m. I"r", a$ au$in"$$, (ou g"t a r")und )rom MA on <A' that (ou paid at input$."$ultantl(, compar"d to "!"mpt"d good$ and $"rvic"$, >"ro rat"d good$

and $"rvic"$ t"nd to " ch"ap"r. Anoth"r advantag" o) "ro rating i$ that itdo"$ not di$rupt much ) (our ca$h )lo* a$ "rorat"$ do not n""d to *ait )orth" "nd o) th" ("ar 5 u$" o) machin"r( )or (ou to claim )rom MA.

*magine a $hop that $"ll$ good$ and $"rvic"$ $om" o) *hich ar" <A' ta!al",oth"r$ ar" <A' "!"mpt"d, *hil" oth"r$ $till ar" >"ro rat"dJ

A num"r o) $tak"hold"r$ hav" "!pr"$$"d *ond"r *h( and ho* $om"u$in"$$m"n, "$p"ciall( Mala*ian$ o) A$ian origin or ;ig"rian$ a$kcu$tom"r$ *h"th"r th"( *ant a r"c"ipt or not, *ith th" lat"r impl(ing <A'charg"d. Hhat thi$ m"an$ i$ that th" u$in"$$ p"r$on ar" "vading ta!, and (

d"duction, th"( th"m$"lv"$ did not pa( input <A' D "cau$" i) th"( did, th"r"i$ no *a( th"( *ould choo$" to a$or into th"ir u$in"$$ th" <A' that th"(*ould l"gall( hav" pa$$"d on to th" cu$tom"r. 'hi$ un)ortunat" r"alit( onl($ho*$ that th"r" i$ a d""p"r n"t*ork o) nonpa("r$ right )rom th" input$provid"r$.

G.5 Han+ling o8 VAT

A$ it ha$ ""n $tat"d aov", <alu" Add"d 'a! <A' i$ a ta! charg"d onc"rtain u$in"$$ tran$action$, import$ and locall( produc"d good$ and$"rvic"$. An(on" that mak"$ $al"$ turnov"r o) at l"a$t 72 million per year i$

$uppo$"d to r"gi$t"r *ith MA. "gi$tration i$ mandator(. &) th" p"r$on in th"particular ("ar mak"$ turnov"r o) l"$$ that th" 2 million, h" i$ $uppo$"d toin)orm MA on th" $am". &) a p"r$on i$ Cu$t taking ov"r a u$in"$$ )rom ap"r$on alr"ad( r"gi$t"r"d, h" mu$t tak" account o) th" l"v"l o) ta!al"turnov"r und"r th" pr"viou$ o*n"r.

A ta!pa("r *ho )ail$ to r"mit or tak"$ $t"p$ l"ading to )raudul"nt "va$ion o)<A' pa(al" ( him or h"r or an( oth"r p"r$on commit$ an o))"nc" and i$lial" on conviction to a )in" not "!c""ding t*"nt( tim"$ th" amount o) <A'"vad"d and to impri$onm"nt )or )iv" ("ar$. l"a$" not" that oth"r p"nalti"$conc"rning <A' ar" $tipulat"d in A' R&& $"ction / through 61 o) th" <A' Act o) 200/.




At th" "nd o) "ach month a li$t o) non)il"r$ i$ compil"d and d")ault advic" i$$"nt to non)il"r$ on -orm S49. 'rad"r$ *ho )ail to )il" th"ir <alu" Add"d 'a!r"turn$ "v"n a)t"r a d")ault advic" i$ $"nt to th"m ar" $uC"ct"d to th")ollo*ing inv"$tigation$ that ma( "v"ntuall( r"$ult into l"gal action "ingtak"n@

a. "a$on )or not $umitting r"turn and pa(ing <A'. 'otal <alu" Add"d 'a! du" and additional <A'

c. $timat" valu" o) hi$ a$$"t$ and trad" good$ in $tock.

v"r( r"gi$t"r"d trad"r i$ r"?uir"d to $umit to MA a <A' r"turn on apr"$cri"d -orm S'3, tog"th"r *ith th" amount o) <alu" Add"d 'a! du" (th" 20th o) th" month *hich )ollo*$ th" "nd o) "ach o) hi$ $p"ci)i"d <A'p"riod.

'h" <alu" Add"d 'a! r"turn$ S'3 )orm includ"$ th" )ollo*ing d"tail$@

• ;am" and r"gi$tration num"r o) th" r"gi$t"r"d p"r$on• 'h" total valu" and output <alu" Add"d 'a! charg"d ( th" r"gi$trant

to hi$ cu$tom"r$ during th" p"riod )or th" $uppli"$ at "ach rat" o) <A'

• 'h" valu" o) an( "!"mpt $uppli"$

• 'h" total valu" and input <A' invoic"d to th" r"gi$trant ( oth"rr"gi$t"r"d p"r$on$. &n ca$" o) import"d good$ valu" and <A' $ho*non ill$o)"ntr( during th" p"riod

• 'h" n"t alanc" o) th" input and output <A' )igur"$ r"$ulting in th"

amount to " paid or to " carri"d )or*ard

• <ariou$ oth"r d"tail$ including a d"claration ( th" r"gi$t"r"d p"r$on.

-rom tim" to tim" <A' o))ic"r$ vi$it r"gi$t"r"d p"opl" to "!amin" th"ir ook$and r"cord$ to v"ri)( th" accurac( o) <alu" Add"d 'a! r"turn$ and to $"" thatth" ook$ "tc ar" "ing prop"rl( maintain"d.

Hh"r" und"rpa(m"nt o) <alu" Add"d 'a! i$ di$cov"r"d, th" r"gi$t"r"dp"r$on i$ noti)i"d on -orm S'%. Additional <A' i$ a$$"$$"d on th" amount$o) <A' und"rpaid and it i$ calculat"d )rom th" dat" *h"n th" corr"ct amount$hould hav" ""n paid up to *h"n th" und"rpaid <A' *a$ di$cov"r"d

Hh"r" nil r"turn i$ r"c"iv"d, inv"$tigation$ ar" conduct"d to "$tali$h th"r"a$on$ )or $uch a r"turn and n"c"$$ar( action i$ tak"n d"p"nding on th"outcom" o) th" inv"$tigation$.

&) a r"gi$t"r"d p"r$on $umit$ "!c"$$ r"turn$ )or thr"" con$"cutiv" month$, av"ri)ication vi$it i$ mad" imm"diat"l(.

An "!c"$$ r"turn i$ g"nuin" *h"r" it can " v"ri)i"d that@




• 'h" r"gi$t"r"d p"r$on $uppli"d a larg" ?uantit( o) good$ *hich had

""n produc"d )rom ta!al" mat"rial• Hh"r" a r"gi$t"r"d p"r$on$ output ta! i$ r"gularl( l"$$ than hi$ input

ta! ".g. "cau$" h" r"gularl( "!port$ ta!al" good$

Hh"r" th"r" i$ no "vid"nc" a$ "!plain"d aov", an ind"pth v"ri)ication i$mad" until th" matt"r i$ r"$olv"d. #th"r*i$", th" "!c"$$ <alu" Add"d 'a! i$r")und"d upon r"c"ipt o) application )rom th" trad"r on -orm S'11.

H. Ta)'s on -0'l an+ -0'l L';i's

-u"l i$ $uC"ct to &mport dut( and !ci$" dut( *hil" <A' i$ "!"mpt"d. A$di$cu$$"d aov", <A' "!"mption m"an$ that th" )u"l import"r a$or$ th"<A' a$ hi$ "!p"n$" $inc" h" cannot claim )rom MA. &n addition to th"a)or"m"ntion"d ta!"$, th"r" ar" a num"r o) l"vi"$ and allo*al" pro)itmargin$ that ar" charg"d on )u"l. A$ $uch, *h"n a cu$tom"r u($ )u"l, h"

pa($ )or a th" pric" o) )u"l it$"l), l"vi"$, c ta!"$ and d margin$.

4"vi"$ con$titut" a v"r( important $ourc" o) r"v"nu" )or d"v"lopm"ntprogramm"$ in th" countr( and th"( ar" "a$( to coll"ct. &t mu$t " $tat"d,ho*"v"r, that )u"l l"vi"$ do ;#' n"c"$$aril( go into c"ntral gov"rnm"ntco))"r$ a$ th"( go $traight into $p"ci)ic in$titution$ )or th"ir u$".

H.4 -0'l L';i's

At pr"$"nt, th" l"vi"$ on )u"l ar" a$ )ollo*$@ oad 4"v(, pric"Staili$ation -und 4"v(, ural l"ctri)ication 4"v(, r"gulator( 4"v(,

Mala*i Bur"au o) Standard$ 4"v(, and Sa)"t( ;"t 4"v(.

o Roa+ L';:

A$ th" nam" $ugg"$t$, thi$ l"v( i$ )or con$truction and maint"nanc" o)road$ in th" countr( and i$ l"vi"d on di"$"l and p"trol onl( D and not onpara))in. Mon"( coll"ct"d go"$ $traight to th" ;ational oad -und. 'h"mon"( i$ ho*"v"r r")l"ct"d in th" udg"t a$ d"$ignat"d )und$ )or th"$ak" o) donor$ that $upport road con$truction and maint"nanc" inMala*i $uch a$ th" urop"an nion ut in practic" th" mon"(coll"ct"d do"$ not go to M81 account. 'h" urop"an nioncontriut"$ t*"nt( 20 tim"$ *hat"v"r mon"( i$ coll"ct"d through th"road l"v(. oad l"v( i$ 2%.705litr" o) p"trol and 23.705litr" o) di"$"l

o P#i!' S$a7ilisa$ion -0n+ L';:

S- l"v( i$ manag"d ( th" import"r a$ cu$hion on pric")luctuation$. u$hioning i$ v"r( important a$ it allo*$pr"dictailit( in pric"$ o) )u"l. Hh"n )u"l pric"$ incr"a$" at$ourc", S- i$ u$"d to m""t th" di))"r"nc" "t*""n actual pric"and *hat con$um"r$ pa(. Hh"n )u"l pric"$ )all at $ourc", mor"

S- i$ coll"ct"d and $tock"d )or )utur" u$". 'h" amountcoll"ct"d thu$ vari"$ th"( u$" ad vol"r"m )ormula 6 i.". it i$ a




p"rc"ntag" and d"p"nd$ on landing pric" o) )u"l it$"l) m"a$ur"dagain$t th" plan. -rom :un" 200% to -"ruar( 2009, S- 4"v(*a$ 9%.95litr" o) p"trol, %2.3%5litr" o) di"$"l and 6./% 5 litr"o) para))in. But )rom -" 2009, th" l"v( i$ a$ )ollo*$@ 2/.%25litr"o) p"trol, 1/.735litr" o) di"$"l and 0.6 5 litr" o) para))in.

o R0#al El'!$#i8i!a$ion l';:

'hi$ l"v( )und$ in$tallation and "!t"n$ion o) "l"ctricit( in ruralar"a$. #ut o) "v"r( litr" o) p"trol and di"$"l purcha$"dcontriut"$ 9.61 and %.975litr" r"$p"ctiv"l( to th" urall"ctri)ication -und. ara))in contriut"$ /.9/5litr". "c"ntl(,mon"( amounting to 2 illion *a$ r"l"a$"d ( th" urall"ctri)ication )und to r"hailitat" S#MG$ po*"r $tation$.

o R'g0la$o#: L';:

#ut o) "v"r( litr" o) )u"l purcha$"d, 1 tamala, 37 tamala and29 tamala o) p"trol, di"$"l and para))in r"$p"ctiv"l( go"$ to th"Mala*i n"rg( "gulator( Authorit( MA )or th"irop"ration$.

o Malai B0#'a0 o8 S$an+a#+s L';:

MBS g"t$ 1/ tamala, 16 tamala and 17 tamala out o) "v"r(litr" o) p"trol, di"$"l and para))in r"$p"ctiv"l(. MBS i$r"$pon$il" )or c"rti)ication o) )u"l in th" countr(.

o Sa8'$: n'$s L';:

'hi$ i$ th" onl( )u"l l"v( that go"$ through th" gov"rnm"ntG$M81 account, and i$ dul( r")l"ct"d in th" national udg"t. 'hu$,th" "!"cutiv" Mini$tr( o) -inanc" account$ )or thi$ mon"( Cu$tlik" an( oth"r mon"( in udg"t. Sa)"t( n"t l"v( i$ charg"d at75litr" o) p"trol, 75litr" o) di"$"l, and 5litr" o) para))in.

H.2 P#o8i$ Ma#gins

-u"l i$ a prot"ct"d and r"gulat"d commodit( "cau$" it ha$ $"riou$rami)ication$ *h"n it "com"$ $carc". on$"?u"ntl(, th" Mala*in"rg( "gulator( Authorit( MA $"t$ allo*al" pro)it$ to $"ll"r$ o))u"l. A$ pr"$"nt +i$triution pro)it margin i$ at 2.335litr" o) p"trol,$am" *ith di"$"l and para))in "tail margin i$ at 12.0%5litr" o) p"trol,11.2%5litr" o) di"$"l and 7.9/5litr o) para))in.

'h" )ollo*ing tal" giv"$ d"tail$ o) *hat con$titut"$ pric" o) )u"l.

PETROLEUM PRICE BUIL>UP IN MALAWI

effective 6st ebruary, 233A




gi;'n in $a7ala '# li$#'( PETROL >IESEL PARA--IN

>'''+ >'''+ >'''+

-#B 630.6/ 6902.32 713.0

A&4A8 71.97 72.% 176.0

#A+ -&8I' 1270.6/ 1222.1 103/.09

&;S5IA;+4&;8 %7.60 %/.37 /%.694#SSS /1.0 /2.91 9./0

&B4 7912.27 %33/./% %/.17

;8= 84A'#'= 4<= 1.00 37.00 29.00

#A+ 4<= 2%70.00 2370.00 0.00

MBS SS 1/.%2 16.67 16.91

A4 4'&-&A'&#; 4<= 961.00 %97.00 /9/.00

SA-'= ;' 4<= 700.00 700.00 00.00

& S'AB&4&SA'&#; -;+ 2/%2.1% 1/73.2% /.6

+'= - & 1/0%2.27 13929./3 9/0.72

+'= 791.23 %33./6 22.71

R&S +'= 2/2.01 27/0.7 1331./3

+'= A&+ & 1%397./2 17/13.%3 1129.96

+&S&B'&#; MA8&; 233.00 233.00 233.00

8#SS MA8&; 1/11.%1 10/.% %96.66

HI#4SA4 & 2012.33 1%%01.67 122.62

'A&4 MA8&; 1207.67 112%.33 79/.3%

M & in tamala 213/0.00 19930.00 13220.00

P0 P#i!' '# li$#' in Ka!&a 245.63 4==.53 452.23

5.5 Ta) In!'n$i;'s 8o# In;'s$o#s in Malai

'h" 8ov"rnm"nt o) Mala*i aim$ to tran$)orm th" "conom( )rom apr"dominantl( importing and con$uming nation to on" that i$ a pr"dominantl(producing and "!porting. &n ord"r to do thi$, it i$ imp"rativ" that Mala*i $hould" attractiv" inv"$tor$.

'h" 8ov"rnm"nt o) Mala*i $""k$ to "ncourag" th" privat" $"ctor to a$$um"th" l"ading rol" in d"v"loping th" national "conom(. 'h" inv"$tm"nt polic(allo*$ inv"$tor$ oth local and )or"ign to inv"$t in an( $"ctor o) th" "conom(*ithout r"$triction$ on o*n"r$hip, $i>" o) inv"$tm"nt, $ourc" o) )und$ or*h"th"r th" product i$ d"$tin"d )or )or"ign or dom"$tic mark"t$.

&n addition, $p"cial m"a$ur"$ hav" ""n tak"n to d"r"gulat" th" "conom(*ith an aim o) cr"ating a conduciv" inv"$tm"nt climat" hav" ""nimpl"m"nt"d including "limination o) pric" control$, t"rmination o) importr"$triction$ and th" accompan(ing n""d )or import lic"nc"$, and div"$titur" o)$tat" o*n"d compani"$.




'h" 8ov"rnm"nt ha$ prioriti$"d $i! Kprioriti"$ *ithin th" prioriti"$L o) th"Mala*i 8ro*th and +"v"lopm"nt Strat"g( a$ trigg"r$ to th" a)or"m"ntion"dvi$ion. 'h" $"ctor$ ar" Manu)acturing, 'ouri$m, Mining, Agricultur" andhorticultur", &n)ra$tructural d"v"lopm"nt and &n)ormation t"chnolog(.-ollo*ing ar" $om" o) th" g"n"ral indu$tr($p"ci)ic inc"ntiv" $ch"m"$availal" at pr"$"nt@

• Manufacturing @ dut( )r"" importation o) capital "?uipm"nt and ra*

mat"rial and ta! allo*anc"$ on "!p"nditur"$ on oth n"* and u$"dcapital "?uipm"nt. 'h"r" ar" $p"cial inc"ntiv"$ )or capital "?uipm"ntu$"d in "l"ctricit(, t"l"communication and *at"r utiliti"$ th" miningindu$tr( and dail( indu$tr(. Al$o in ord"r to promot" valu" addition toMala*iG$ gold D 'oacco D gov"rnm"nt ha$ )rom :un" 200% r"duc"d"!ci$" dut( on cigar"tt"$ that contain at l"a$t 70E o) Mala*i toacco.

• Tourism@ dut( )r"" importation o) ?uali)(ing capital "?uipm"nt )or th"

touri$m $"ctor.

• Mining Sector @ dut( )r"" importation o) ?uali)(ing capital "?uipm"nt )orth" mining $"ctor.

• orticulture Sector @ dut( )r"" importation on ?uali)(ing capital

"?uipm"nt

• Agriculture and orticulture Sector @ dut( )r"" importation o)

irrigation "?uipm"nt and dut( )r"" importation o) ?uali)(ing capital"?uipm"nt.

• !T and Telecommunication@ dut( )r"" importation on ?uali)(ing capital

"?uipm"nt and dut( )r"" importation o) comput"r$.

-a!ili$a$ion o8 in;'s$'n$ in Malai

&nv"$ting in Mala*i i$ )acilitat"d ( th" Mala*i &nv"$tm"nt romotion Ag"nc(M&A. M&A )acilitat"$ ta! inc"ntiv"$ a$ "n$hrin"d in th" main ta!l"gi$lation$ that includ" th" u$tom$ and !ci$" Act, th" &ncom" Act and th"!port roc"$$ing on"$ Act, to "ncourag" inv"$tm"nt.

'h" inc"ntiv"$ appl( "?uall( to oth dom"$tic and )or"ign inv"$tor$. 'h"8ov"rnm"ntG$ aim on inv"$tm"nt inc"ntiv"$ i$ to "ncourag" d"v"lopm"nt that*ill "nhanc" gro$$ dom"$tic product, " o) n"t "n")it to th" nationG$ )or"ign"!chang" r"$"rv"$ and "!pand "mplo(m"nt opportuniti"$. 'h" main thru$t o)

inv"$tm"nt inc"ntiv"$ com"$ through th" ta! $($t"m, dir"ctl( and indir"ctl(.

+ir"ct ta! conc"$$ion$ tak"$ th" )orm o) acc"l"rat"d d"pr"ciation, outrightd"duction o) c"rtain capital co$t$, ind")init" carr( )or*ard o) r"$ultant ta!lo$$"$ and "!"mpting o) a proportion o) "!port r"v"nu"$. &ndir"ct ta!conc"$$ion$ can cov"r pr")"r"ntial tari)) rat"$ )or ra* mat"rial, tari))"!"mption )or capital good$ import"d and valu" add"d ta! and import dut("!"mption$ ar" grant"d.

'h" )ollo*ing ar" "!i$ting ta! inc"ntiv"$ to inv"$tor$@

8"n"ral &nc"ntiv"$@




• 100 p"rc"nt inv"$tm"nt allo*anc" on ?uali)(ing "!p"nditur" )or n"*

uilding and machin"r(

• Allo*anc" up to 0 p"rc"nt )or u$"d uilding$ and machin"r(

• /0 p"rc"nt allo*anc" )or ?uali)(ing training co$t$

• Allo*anc" )or manu)acturing compani"$ to d"duct all op"rating

"!p"n$"$ incurr"d up to 2/ month$ prior to th" $tart o) op"ration$

• "ro dut( on ra* mat"rial$ u$"d in manu)acturing

• 4o$$ carr( )or*ard o) up to $"v"n ("ar$, "naling compani"$ to tak"

advantag" o) allo*anc"$

• Additional 1/ p"rc"nt allo*anc" )or inv"$tm"nt in d"$ignat"d ar"a$ o)

th" countr(

• +ut()r"" importation o) u$"$ *ith a $"ating capacit( o) / p"r$on$

including driv"r and aov"

• +ut()r"" dir"ct importation o) uilding mat"rial$ )or )actori"$ and

*ar"hou$"$

• +ut()r"" dir"ct importation o) good$ u$"d in th" touri$m indu$tr(,

*hich includ"$ uilding mat"rial$, cat"ring and r"lat"d "?uipm"nt, and*at"r $port "?uipm"nt

• -r"" r"patriation o) divid"nd$, pro)it$, and ro(alti"$.

-or "!port"r$ op"rating in an !port roc"$$ing on" , 8ov"rnm"ntprovid"$ th" )ollo*ing inc"ntiv"$@

• "ro corporat" ta! rat"

• ;o *ithholding ta! on divid"nd$

• ;o dut( on capital "?uipm"nt and ra* mat"rial$

• ;o "!ci$" ta!"$ on purcha$"$ o) ra* mat"rial$ and packaging

mat"rial$ mad" in Mala*i.

• ;o <alu" Add"d 'a! <A'

&n addition, Mala*i allo*$ )or carr( )or*ard o) lo$$"$. S"ction 2 o) th"'a!ation Act $tat"$ that manu)acturing, agricultural and mining indu$tri"$ can

carr( )or*ard lo$$"$ a$ long a$ th"( can *hil" an( oth"r u$in"$$ oth"r thanth" a)or"m"ntion"d, can onl( carr( )or*ard lo$$"$ )or a p"riod up to $i! ("ar$.




5.< >o07l' Ta) T#'a$i's

Bu$in"$$"$ progr"$$ in an "nvironm"nt that i$ pr"dictal". 'a!"$ can " k"(ar"a o) *orr( to )or"ign inv"$tor$, a$ $om" countri"$ ta! at $ourc", $om" ta!

at r"$id"nc" o) u$in"$$, *hil" oth"r$ $till ta! *orld*id" incom". &n ord"r togiv" con)id"nc" to countri"$G ta!ation $($t"m, countri"$ $ign +oul" 'a!tr"ati"$. Mala*i ta!"$ at $ourc" unlik" th" nit"d Stat"$ )or "!ampl" thatta!"$ *orld*id" incom" on it$ citi>"n$.

Mala*i $ign"d +oul" 'a! 'r"ati"$ *ith th" nit"d ingdom, Mo>ami?u",Bot$*ana, S*"d"n, +"nmark, S*it>"rland, -ranc", nit"d Stat"$ o) Am"rica,;"th"rland$, and "n(a. 'h" +'A *ith South A)rica i$ a*aiting ratification (South A)rica. rogr"$$ i$ at advanc"d $tag" on tr"ati"$ *ith ;or*a(, amia,g(pt, S"(ch"ll"$, Mauritiu$, "pulic o) hina, amia and ima*"

A ta! cr"dit i$ giv"n up to th" amount o) Mala*i ta! on $uch )or"ign incom"ta!"d in th" aov" )or"ign countri"$. &n th" a$"nc" o) a tr"at(, r"li") i$provid"d )or in dom"$tic la* )or )or"ign ta!"$ paid on )or"ign incom" up to th"amount o) Mala*i ta!.

5.6 In;'s$'n$ P#oo$ion an+ #o$'!$ion Ag#'''n$s IPPAs(

Mala*i ha$ )"* &A$ $uch a$ *ith # -und )or +"v"lopm"nt, &tal(,;"th"rland$, ima*" and 4i(a. 'h" &A *ith 4i(a *a$ $ign"d in 1999ut it i$ an odd on", in that it al$o cov"r$ ta!ation i$$u"$ apart )rom th"inv"$tm"nt prot"ction and promotion i$$u"$. Sp"ci)icall( th" &A giv"$4i(an inv"$tor$ and inv"$tm"nt$ ta! "!"mption$.

Man( mor" &A$ ar" taking too long to conclud". 'h"$" includ" 8"rman(,Mo>ami?u", 'an>ania, "n(a, S*it>"rland, B"lgium, nit"d ingdom, Southand -ranc".




<. >ESIGNING AN> MAINTAINING A TAX REGIME

<.4 >'7a$'s

&n d"$igning and maintaining a ta! $($t"m, th"r" i$ al*a($ d"at" on )orm

and $tructur" o) ta!"$. 'h"r" ar" comp"ting and con)licting d"mand$ andth"ori"$ around ta!ation, *ith th" gov"rnm"nt *anting to coll"ct a$ much a$po$$il" in ord"r to m""t th" )inancial and "conomic n""d$ o) th" countr(and ta! pa("r$ *anting to pa( a$ littl" i) an( in ord"r to $av" and inv"$t. #n*h"r" to ta!, d"at" "volv"$ around th" ta!ation o) incom" r"lativ" to that o)con$umption and und"r con$umption, th" ta!ation o) import$ v"r$u$ th"ta!ation o) dom"$tic con$umption. Both "))ici"nc( *h"th"r th" ta! "nhanc"$or dimini$h"$ th" ov"rall *"l)ar" o) tho$" *ho ar" ta!"d and "?uit( *h"th"rth" ta! i$ )air to "v"r(od( ar" c"ntral to th" anal($i$. 'h"r" ar" al$o i$$u"$*ith *h"th"r to road"n th" ta! pa("r$ a$" D in th" proc"$$ ta!ing "v"n th"poor, or ta! mor" th" o) rich D in th" proc"$$ "ating do*n th"ir $aving$ *hich

*ould " r"inv"$t"d and g"n"rat" mor" )utur" ta!"$. A)t"r all th" nonpoorar" v"r( )"* and conc"ntrating on ta!ing th"m automaticall( m"an$ th" rat"$*ould " v"r( high. Almo$t "v"r( ("ar *i$h"$ hav" ""n "!pr"$$"d on ta!ingth" in)ormal $"ctor ut putting thi$ into practic" i$ almo$t a toll ord"r a$ th"in)ormal $"ctor i$ unorgani$"d and tracing th"m i$ v"r( di))icult.

ivil $oci"t(, privat" $"ctor, donor$ and gov"rnm"nt o)t"n hav" di))"r"ntint"r"$t$ in th" d"at". 'h" un)ortunat" )act i$ that citi>"n$ ar" almo$t al*a($out$id" th" di$cu$$ion, larg"l( du" to th" p"rc"iv"d compl"!it( o) i$$u"$ to do*ith ta!ation, or th" p"rc"iv"d lo* l"v"l o) in)lu"nc" that th"( hav". 'h" )actr"main$ though that ta!"$ "ing mandator(, it i$ th" $am" citi>"n$ that pa(

dir"ctl( or indir"ctl(.

<.2 STAKEHOL>ERS IN TAXATION

<.2.4 T&' Minis$#: o8 -inan!'

v"r( ("ar ")or" th" udg"t $"$$ion, th" Mini$tr( o) -inanc" conduct$con$ultation$ *ith variou$ $tak"hold"r$, including traditional chi")$, )aitha$"d l"ad"r$, civil $oci"t( organi$ation$, and privat" $"ctor to g"t th"ir vi"*$on th" coming udg"t. Mo$t tim"$, $tak"hold"r$ $uch a$ th" Mala*iconomic :u$tic" ;"t*ork M:;, conomic$ A$$ociation o) Mala*iAMA, Soci"t( o) Accountant$ S#AM, and th" Mala*i on)"d"ration o)ham"r$ o) omm"rc" and &ndu$tr( M& mak" *ritt"n $umi$$ion$ toth" Mini$t"r o) -inanc" r"lating to cont"nt and proc"$$"$ on r"v"nu" ta!"$,grant$ and loan$ and *h"r" to $p"nd.

'h" mini$tr( al$o r"c"iv"$ $umi$$ion$ )rom oth"r $tak"hold"r$ that ma(hav" ""n mi$$"d in th" )ormal con$ultation$. 'h" mini$tr( ha$ a t"am thatr"vi"*$ all th" $umi$$ion$ and advi$" th" Mini$t"r o) -inanc" accordingl(.-or "!ampl", ta! chang"$ on )i$hing trout$, h"$$ian $ack$ "tc cam" )rom civil$oci"t( and u$in"$$ $umi$$ion$. All th"$" $umi$$ion$ ar" r"vi"*"d and

*"igh"d again$t th" targ"t"d r"$ourc" "nv"lop in ord"r to d"t"rmin" th" ta!




r"gim" that *ill appl( in th" ("ar coming. 'h" r"?u"$t )rom th" mini$tr( i$Kl"a$" com" *ith cl"ar, convincing and *"ll argu"d ca$" and *" *ill $""L.

'h" !"cutiv" arm o) gov"rnm"nt, through th" Mini$tr( o) -inanc", i$ th"cu$todian o) ta! polic(. S"ction .2) o) th" MA Act $a($ th" MA p"r)orm$)unction$ in r"lation to r"v"nu" a$ th" Mini$t"r ma( dir"ct.

<.2.2 O$&'# Go;'#n'n$ Minis$#i's an+ >'a#$'n$s

'h" Mini$tr( o) -inanc" collaorat"$ *ith oth"r mini$tri"$, d"partm"nt$ andin$titution$ in d"t"rmination o) ta! r"gim" )or th" countr(. Among th"m ar" th"Mini$tr( o) conomic lanning and +"v"lopm"nt )or proC"ction$ o) r"$ourc""nv"lop, th" Mini$tr( o) &ndu$tr(, 'rad" and rivat" S"ctor +"v"lopm"nt )oru$in"$$ and trad" )acilitation, S"ctoral mini$tri"$ )or $"ctor $p"ci)ic ta!r"lation$ and trigg"r$, donor$ particularl( th" &nt"rnational Mon"tar( -und )orth" macro"conomic )ram"*ork, th" "$"rv" Bank o) Mala*i )or th" Mon"tar(

polic( manag"m"nt, Mala*i &nv"$tm"nt romotion Ag"nc( )or th" n""d$ toattract and r"tain inv"$tor$, Mala*i !port romotion ouncil )or n""d$ o)"!port"r$, ;ational Stati$tic$ #))ic" )or pov"rt( di$triution and oth"r data,civil $oci"t( organi$ation$ )or $ugg"$tion$ on *h"r" to $p"nd th" mon"(coll"ct"d )rom ta!"$, u$in"$$"$ through th" Mala*i on)"d"ration o)ham"r$ o) omm"rc" and &ndu$tr( )ro th" voic" o) th" privat" $"ctor, andman( oth"r$.

'h" Mala*i "v"nu" Authorit( $tudi"$ r"v"nu" la*$ and id"nti)i"$am"ndm"nt$ *hich ma( " mad" to an( la* )or th" purpo$" o) improving th"admini$tration o) and complianc" *ith, r"v"nu" la*$. MA coll"ct$ and

proc"$$"$ $tati$tic$ n""d"d to provid" )or"ca$t$ o) r"v"nu" r"c"ipt$ and th""))"ct on (i"ld o) an( propo$al$ )or chang"$ in th" r"v"nu" la*$. MA al$o$tudi"$ th" admini$trativ" co$t$, complianc" co$t$ and th" op"rational impacto) int"nd"d l"gi$lativ" chang"$. MA th"n advi$"$ th" Mini$t"r accordingl( a$h" l"ad$ th" proc"$$ o) putting tog"th"r th" "))"ctiv" ta!"$.

<.2.5 Pa#lia'n$

A ta! i$ a la*, h"nc" mandator( and contrav"ning thi$ la* i$ puni$hal"und"r th" 4a*$ o) Mala*i. 'a!"$ "ing part o) r"v"nu", *hich i$ )urth"r parto) th" national udg"t, g"t approv"d ( th" ;ational A$$"ml(.

&t mu$t " point"d out ho*"v"r that, in practic", ta!"$ ar" approv"dFautomaticall(G ( th" ;ational A$$"ml(. M"m"r$ o) arliam"nt do notd"at" and cau$" to chang" th" ta!"$ that th" Mini$t"r o) -inanc" ring$ toth" ham"r. &t i$ almo$t a traditional "!p"ctation that th" Mini$t"r o) -inanc"*ill "v"ntuall( $a( “the taes are with effect from mid night tonight.% 'hu$ th"po*"r 5 control that m"m"r$ o) parliam"nt hav" on ta!"$ i$ almo$t >"ro, andit can in "))"ct " $a)"l( $aid that arliam"nt di$cu$$"$ th" "!p"nditur" andnot th" *hol" udg"t a$ pr"ach"d.




<.2.< Malai R';'n0' A0$&o#i$:

'h" Mala*i "v"nu" Authorit( MA i$ th" r"$pon$il" admini$t"ring ag"nc(o) ta!"$ in Mala*i. MA, an Ag"nc( o) th" 8ov"rnm"nt o) Mala*i "$tali$h"d( MA Act o) 199%, *a$ )orm"d to improv" on th" )unction$ pr"viou$l(carri"d out ( +"partm"nt$ o) u$tom$ and !ci$", and &ncom" 'a!. MA i$r"$pon$il" )or a$$"$$m"nt, coll"ction and accounting )or ta! r"v"nu"$. MAi$ accountal" to and op"rat" und"r th" g"n"ral $up"rvi$ion o) th" Mini$t"r o)-inanc"

-ollo*ing ar" )unction$ o) th" Mala*i "v"nu" Authorit(@

a. to admini$t"r and "n)orc" th" la*$ or th" $p"ci)i"d provi$ion$ o) th"la*$ $"t out in th" Sch"dul"

. to promot" voluntar( ta! complianc" to th" high"$t d"gr"" po$$il"c. to tak" $uch m"a$ur"$ a$ ma( " r"?uir"d to improv" th" $tandard$ o)

$"rvic" giv"n to ta!pa("r$ *ith a vi"* to improving "))ici"nc( and"))"ctiv"n"$$ and ma!imi>ing r"v"nu" coll"ction

d. to tak" $uch m"a$ur"$ a$ ma( " r"?uir"d to count"ract ta! )raud andoth"r )orm$ o) )i$cal "va$ion

". to advi$" th" Mini$t"r on matt"r$ o) r"v"nu" polic( and matt"r$ r"latingto th" admini$tration and coll"ction o) r"v"nu" und"r th" la*$ li$t"d inth" Sch"dul" and

). to p"r)orm $uch oth"r )unction$ in r"lation to r"v"nu" a$ th" Mini$t"rma( dir"ct.

g. 'h" Mini$t"r ma(, ( notic" puli$h"d in th" 8a>"tt", am"nd th"Sch"dul".

'h" MA coll"ct$ &ncom" 'a!, ;on"$id"nt 'a!, -ring" B"n")it 'a!, &mport+ut(, !ci$" +ut( and <alu" Add"d 'a! <A', among oth"r$. &t i$ notr"$pon$il" )or coll"ction o) cit( or local council rat"$.

<.2.6 Malai In;'s$'n$ P#oo$ion Ag'n!: MIPA(

Mala*i &nv"$tm"nt romotion Ag"nc( M&A *a$ "$tali$h"d through an Acto) arliam"nt in 1991 *ith a mandat" to promot", attract, $upport,"ncourag" and )acilitat" oth dom"$tic and )or"ign inv"$tm"nt$ in Mala*i.

M&A a$$i$t$ inv"$tor$ ( providing court"$( $"rvic"$ to vi$iting inv"$tor$,$uppl(ing in)ormation aout Mala*i, id"nti)(ing Coint v"ntur" partn"r$*h"n r"?u"$t"d, making introduction to )inancial communit(, providingpro)"$$ional and u$in"$$ $"rvic"$ and )acilitating all a$p"ct$ o) th"inv"$tm"nt proc"$$ including r"lation$hip *ith 8ov"rnm"nt. M&Aop"rat"$ a$ a #n"Stop &nv"$tm"nt "ntr" and a$ $uch all p"rmit$ andlic"nc"$ ar" proc"$$"d and grant"d *ithin M&A through an &nv"$tm"nt Approval ommitt"".

<.2.? >ono#s




+onor$ to Mala*i pla( an in)lu"ntial rol" in ta!"$. +onor$ contriut" aout0E o) gov"rnm"nt annual r"v"nu", a$ $uch "v"r( propo$"d udg"t ha$ tohav" input o) donor$, *a( ")or" th" udg"t propo$al go"$ ")or" parliam"nt.&) donor$ r"duc" th"ir contriution, )or "!ampl", gov"rnm"nt ha$ to "ith"rr"duc" th" plann"d "!p"nditur"$ or ta! it$ citi>"n$ mor".

Som" donor$, $uch a$ th" urop"an nion, giv" th"ir $upport to particular$"ctor$ d"p"nding on ho* much th" gov"rnm"nt coll"ct$ )rom it$ dom"$ticta!"$. !ampl"$ includ" mon"( to th" oad )und *h"r" th" pa($ 20 tim"$*hat"v"r gov"rnm"nt coll"ct$ )rom )u"l road l"v(.

+onor$ hav" th" &nt"rnational Mon"tar( -und &M- a$ th"ir gat" k""p"r.Hh"n th" -und giv"$ a nod on th" propo$"d udg"t )ram"*ork, th" Mini$tr(o) -inanc" i$ a$$ur"d that almo$t all th" donor$ *ill $upport th" udg"t, ta!"$inclu$iv".

8"n"rall(, donor$ do not pa( ta!"$. 'h"( "nCo( ta! "!"mption$ on th"und"r$tanding that th"( alr"ad( contriut" much r"v"nu" to th" gov"rnm"nt"nv"lop through th"ir udg"t $upport and oth"r )orm$ o) a$$i$tanc".!patriat" $ta)) in donor in$titution$ in Mala*i do not th"m$"lv"$ pa( ta!"$,including on "mplo(m"nt incom". &n addition, th"r" ar" no $p"cialr"?uir"m"nt$ upon th"ir l"aving th" countr(, "!c"pt )or a ta! cl"aranc"c"rti)icat" *hich i$ r"?uir"d in ord"r to "!t"rnali>" p"r$onal "))"ct$ andalanc" o) "arning$.

<.2.* Ci;il So!i'$:

'a! polic( and admini$tration hav" $u$tantial "aring on man( o) S#G$conc"rn$, ranging )rom "n$uring th" availailit( o) )und$ )or important $ocialprogramm"$ to narro*ing th" gap "t*""n rich and poor. ivil Soci"t(kno*ing th" ta! $($t"m op"n$ up th"ir dut( to "n$ur" ad"?uat" $ourc"$ o))unding )or important antipov"rt( programm"$ improv" th" di$triution o)incom" and *"alth promot" "conomic gro*th that can "n")it all citi>"n$and "nhanc" gov"rnm"nt tran$par"nc( and accountailit(. 'h" u$uall($tat"dgoal$ )or ta!ation ar" to rai$" )und$ )or $ocial $"rvic"$ and pulic good$, andto r"di$triut" incom". 'a! $($t"m$ ar" th"r")or" d"$ign"d to achi"v" th"$"goal$ in th" mo$t "))ici"nt and "))"ctiv" *a(.

'a! d"at"$ in Mala*i, ho*"v"r, ar" dominat"d ( u$in"$$"$ and *"alth(individual$, *ho o)t"n do not hav" th" $am" conc"rn$ a$ civil $oci"t(. 'hr""?uart"r$ o) civil $oci"t( in$titution$ that *"r" con$ult"d in th" *rit"up o) thi$r"port $tat"d that th"( $umitt"d at l"a$t onc" conc"rn$ on ov"rta!ation toth" gov"rnm"nt. Io*"v"r, onl( th" Society of 0ccountants in )alawi<SB'0)= and th" conomists 0ssociation of )alawi <'0)0= $tat"d th"(hav" programm"$ on ta!ation. &n)act S#AM ha$ a committ"" on 'a!ationand conomic &$$u"$ and ha$ $inc" ("ar 2002 ""n making )ormal$umi$$ion$ to th" gov"rnm"nt on ta!ation. &t i$ *orth( noting though thatoth S#AM and AMA ar" pro)"$$ional and $p"ciali$"d odi"$ o)

Accountant$ and conomi$t$ r"$p"ctiv"l(.




#n th" $id" o) non"pro)"$$ional civil $oci"t( organi$ation$, *" )ind th"'entre for Social 'oncern <'S'= and $ational Smallholder armers 0ssociation of )alawi <$0S0)= a$ $hining "!ampl"$. -S i$ a )aith a$"dorgani$ation *hil" ;AS-AM i$ a )arm"r$G organi$ation.

'entre for Social 'oncern i$ guid"d ( th" vi$ion o) a $oci"t( *h"r" )aithpromot"$ Cu$tic" )or all in "v"r( $ph"r" o) li)", "$p"ciall( )or th" poor. So *h"nth"( "ngag" gov"rnm"nt "conomic polici"$, th"( champion ta! polici"$ thatdo not urd"n th" poor $uch a$ rai$ing th" minimum thr"$hold )rom 9,000p"r month to 2/,000 p"r month. 4at"l(, th" -S ha$ commi$$ion"d a$tud( to d"t"rmin" a ropoor ta!ation r"gim".

$0S0) on th" oth"r hand, through it$ "$tali$h"d olic( d"partm"nt, ha$$ucc"$$)ull( loi"d th" Mini$tr( o) -inanc" to )r""ing th" urd"n o)*ithholding ta!"$ on )arm"r$. -orm 200%59 )i$cal ("ar, h"$$ian $ack$ can "import"d dut( )r"" and th"r" i$ no mor" import dut( and <A' on )i$hing

tra*l"r$ and $p"ciali$t )i$h "?uipm"nt. &n addition th"r" i$ no dut( on a)loto!int"$ting "?uipm"nt, and no cu$tom duti"$ on all in$"cticid"$, )ungicid"$,h"ricid"$ and p"$ticid"$. ;AS-AM ha$ clo$"r *orking r"lation$hip *ith th"parliam"ntar( committ"" on agricultur".

&n conclu$ion, th" civil $oci"t( can h"lp road"n th" d"at" and ring a n"*)ocu$ on )airn"$$ and th" n""d$ o) th" di$advantag"d to th" di$cu$$ion o) ta!polic(. &t i$ imp"rativ", th"r")or", that th" civil $oci"t( "ngag" and o))"r it$p"r$p"ctiv" on th" countr(G$ ta! polici"$ $o that that it can in)lu"nc" th"$"polici"$ and th" impact th"( hav" on th" *"l)ar" o) all citi>"n$. ivil Soci"t(contriution i$ mandator( to th" d"at" around ta!ation o) con$umption

v"r$u$ ta!ation o) incom" ta!ation o) import$ v"r$u$ dom"$tic product$ta!ation )or "?uit( v"r$u$ "))ici"nc(, Cu$t to m"ntion a )"*.

<.2.D P#i;a$' S'!$o#

'h" privat" $"ctor "ngag"$ th" ta! d"at" larg"l( through th" Mala*ion)"d"ration o) ham"r$ o) omm"rc" and &ndu$tr( M&. M&con$ult$ *ith it$ m"m"r$ and "ngag"$ th" gov"rnm"nt Mini$tr( o) -inanc",Mala*i "v"nu" Authorit(, Mini$tr( o) &ndu$tr(, trad" and privat" S"ctor+"v"lopm"nt and oth"r$ on ta! and r"lat"d i$$u"$. 'h" privat" $"ctor ha$al*a($ contriut"d to th" pr"udg"t con$ultation$ call"d ( th" Mini$tr( o)

-inanc".

rivat" $"ctor hav" contriut"d a lot to th" ta! r"gim" o) Mala*i. A$ m"m"r$o) th" ;ational Action 8roup ;A8, privat" $"ctor *"r" involv"d in th""$tali$hm"nt o) th" Mala*i "v"nu" Authorit( it$"l).

Sinc" 200 th" M& carri"$ out Bu$in"$$ limat" Surv"($ "v"r( ("ar. 'h"$urv"( docum"nt$ ho* inv"$tor$ p"rc"iv" th" u$in"$$ "nvironm"nt inMala*i. 'h" $urv"( $ampl"$ p"rc"ption$ )rom "conomic $"ctor$ o)agricultur", manu)acturing, trading, touri$m, tran$port and communication,)inancial and pro)"$$ional $"rvic"$, mining, con$truction, "l"ctricit(, ga$ and*at"r and r"al "$tat". 'h" p"rc"ption$ ar" rat"d on a $cal" o) 1 to 10, *ith




o$tacl"$ rat"d "t*""n 1 and / "ing minor, tho$" "t*""n / and 7 "ingmod"rat" and tho$" aov" 7 con$id"r"d a$ maCor o$tacl"$.

&t i$ int"r"$ting to not" that $o )ar, ta!ation ha$ not rank"d an( high to ?uali)(a$ maCor o$tacl" to doing u$in"$$ in Mala*i. &n 200%, u$tom$ r"gulation$,proc"dur"$ and ur"aucrac( rank"d 6.%, 'rad" tari))$ and cu$tom charg"$ at/.% and 'a! admini$tration at /.%. 'hu$ according to M& th" i$$u" i$ notr"all( on ta! rat"$ in Mala*i ar" too high, ut ho* ta!"$ ar" impl"m"nt"d.7

M& no* ho$t$ a ulic rivat" +ialogu" + *hich among oth"r$ ha$r"vi"*"d "conomic polici"$ and la*$ in Mala*i and ha$ propo$"d th"'a!ation olic( and 4a* to " among th" la*$ to " r"vi"*"d. + i$ al$o)acilitating gro*th o) SM$ and thi$ i$ "!p"ct"d to "v"ntuall( mak" th"$"SM$ into vial" ta! pa("r$.




6. ISSUES IN TAXES AN> RECOMMEN>ATIONS

'a!ation in Mala*i i$ riddl"d *ith man( prol"m$, larg"l( on th"impl"m"ntation $id". A$ "num"rat"d aov", th" u$in"$$ $"ctor do"$ not $""ta! rat"$ a$ ig prol"m, ut th" *a( th" ta!"$ ar" admini$t"r"d. "lat"d to

th" $am", th" conc"rn o) man( citi>"n$ i$ not on )igur"$ on ta!"$, ut ho* th"proc"$$"$ around th" )igur"$ and ho* th" ta!"$ coll"ct"d ar" utili$"d. 'a!"$in d"v"lop"d countri"$ lik" 8"rman(, +"nmark and th" nit"d Stat"$ o) Am"rica ar" a$ high a$ almo$t /0E o) ta! pa("r$G incom". Io*"v"r, ta!"$ar" not a ig i$$u" )or th" p"opl" th"r" "cau$" th"( can $"" *hat th"ir ta!contriution$ do to th"ir "conom(. Mala*iG$ ta! rat"$ compar" )avoural( totho$" in th" South"rn A)rica and #MSA r"gion$.

'a! admini$tration i$ th" r"$pon$iilit( o) th" Mala*i "v"nu" Authorit(MA. MA i$ an ag"nc( o) th" 8ov"rnm"nt o) Mala*i "$tali$h"d ( an Acto) arliam"nt and r"$pon$il" )or a$$"$$m"nt, coll"ction and accounting )or

ta! r"v"nu"$. MA i$ ;#' r"$pon$il" )or d"$igning or am"ndm"nt o) ta!rat"$ and polic(. 'h" gov"rnm"nt, through th" Mini$tr( o) -inanc" i$.'h"r")or", *h"r" th"r" ar" i$$u"$ p"rtaining to )orm$ and rat"$ o) ta!"$, th"r"$pon$il" in$titution i$ th" Mini$tr( o) -inanc". MA can provid" an$*"r$onl( to i$$u"$ d"aling *ith impl"m"ntation o) "!i$ting ta!"$.

".1 Small tax base

#n" o) th" chall"ng"$ that Mala*i ta!ation$ $($t"m )ac"$ i$ th" n""d to"!pand th" ta! a$" i.". $ourc"$ *h"r" to coll"ct ta!"$. &) Mala*i can hav"mor" p"opl" pa(ing ta!"$, ta! rat"$ *ill go do*n. n)ortunat"l( in Mala*i

th"r" ar" v"r( )"* p"opl" that pa( ta!, h"nc" th"ir rat"$ ar" v"r( high.mplo(m"nt &ncom" ta!, )or "!ampl", i$ a$ high a$ 30E, a rat" *hich i$"?uival"nt to *hat corporat"$ pa(. 'h"r" hav" ""n call$ )or th" gov"rnm"ntto rai$" th" minimum thr"$hold that i$ >"ro rat"d 9,000 to rat"$ around1/,000 or 20,000. But *hat thi$ m"an$ in r"alit( i$ that th" mov" *illr"duc" th" num"r o) ta! pa("r$ ( t"n$5hundr"d$ o) thou$and$ o) p"opl"unl"$$ th" incom" o) th" maCorit( lo*l( paid incr"a$"$ D a pro$p"ct that i$almo$t onl( a dr"am in th" )ac" o) looming r"$ultant in)lation. v"ntuall(,c"t"ri$ pariu$, rai$ing th" minimum thr"$hold amount put$ pr"$$ur" on th")"* r"maining ta! pa("r$ *ho ma( hav" to pa( mor" than th" 10E or 30Eth"( ar" pa(ing curr"ntl(. 'h" alt"rnativ" i$ )or th" gov"rnm"nt to introduc"oth"r ta!"$ that *ill comp"n$at" th" Flo$tG r"v"nu".

'h" oth"r chall"ng" i$ that Mala*i do"$ not hav" dataa$" that $ho*$ th"ta!pa("r$. 'hi$ mak"$ con$id"ration$ o) ta! $*ap$ di))icult.

".2 Taxation of t#e informal sector

Anoth"r $ugg"$tion i$ to ta! th" in)ormal $"ctor. 'hi$ ho*"v"r i$ not "a$( toimpl"m"nt a$ )ir$tl( th" in)ormal $"ctor i$ v"r( di))icult to trac", $"condl( mo$to) th"m do not hav" "?uipm"nt $uch a$ ca$h machin"$ *ith *hich (ou can

v"ri)( tran$action$, and thirdl( th" MA it$"l) do"$ not hav" th" machin"r( toimpl"m"nt $"l"ctiv" ta! admini$tration in th" $"ctor.




Sugg"$t"dl(, th" in)ormal $"ctor can " ta!"d through a )lat rat". &n)ormal$"ctor pla("r$ can " r"?uir"d to pa(, $a( 2./E o) th"ir $al"$ to th"gov"rnm"nt a$ ta!. Som" countri"$ $uch a$ 'an>ania ha$ impl"m"nt"d thi$)lat ta!, $av" )or th" )act that complianc" and hon"$t( in d"claring th" tru"total $al"$ i$ a prol"m that Mala*i ma( hav" to plan in advanc".

".$ Tax pa%er education

Mo$t o) th" u$in"$$ p"r$on$ that complain aout ta!"$ do not hav" a )ullpictur" o) th" ta! r"gim" in th" countr(. Man( cro$$ord"r trad"r$ hav" in th"pa$t told th" Mala*i conomic :u$tic" ;"t*ork% and partn"r$ that that th"(hav" had to pa( a ri" to MA o))icial$ in ord"r to hav" th"ir good$ duti"dl"$$. Anal($i$ o) th" good$ $o trad"d, ho*"v"r, $ho*$ that mo$t o) th" good$ar" "ith"r ta! "!"mpt"d or >"ro rat"d. 'hu$, $om" corrupt MA o))icial$ hav"tak"n )inancial advantag" o) th" unin)orm"d u$in"$$ p"r$on$. &) th"r" *a$

$u))ici"nt ta! pa("r "ducation don", trad"r$ could hav" ""n pa(ing pric" )orth" good$ that th"( ar" not $uppo$"d to pa( )or.

MA ha$ a ta! pa("r "ducation d"partm"nt. 'h" d"partm"nt carri"$ out )ourt(p"$ o) "ducation programm"$ nam"l(

• Sector specific education programme D ".g. m""ting$ *ith Banking and

-inancial S"ctor, or on$truction $"ctor.

• Public rallies and general awareness programme D *h"r" MA

int"ract$ *ith con$um"r$ and $mall $cal" u$in"$$ p"r$on$ *ithd"v"lopm"nt$ in ta!"$

• Schools, colleges and other education institutions D *h"r" MA

di$cu$$"$ *ith l"ctur"r$ and curriculum d"$ign"r$ $uch a$ Mala*i&n$titut" o) ducation and Bu$in"$$ School$ o))"ring cour$"$ $uch a$Shipping and l"aring.

• )edia )10 forum D *h"r" MA po$t$ in)ormation in pap"r$ ".g. th"

MA -orum, adio, '"l"vi$ion and th" MA *"$it".

MA ha$ ""n accu$"d, though o) "ing $lo* and not taking initiativ"$ in ta!pa("r "ducation. -or "!ampl" th" cro$$ord"r trad"r$ hav" had to look )orr"$ourc"$ and invit" MA o))icial$ to "ducat" th"m on cu$tom$ duti"$. MAi$ $aid not to tak" initiativ" or )ollo* up on pr"viou$ "ducation provid"d.

".& Slo' pace of implementation of programmes t#at benefit t#e poor

MA i$ accu$"d o) )avouring and "ing cont"nt *ith ig ta! pa("r$. iting"!ampl"$, r"$pond"nt$ $tat"d th"( ar" not convinc"d that &llovo, *hich MArag$ i$ th" high"$t ta! pa("r, pa($ th" tru" amount o) ta!"$. MA do"$ not)ollo* up on $uch ig u$in"$$"$ ut in$t"ad pound on $truggling u$in"$$"$,and $u))ocat" th"m *ith unr"ali$tic ta! a$$"$$m"nt d"mand$ that th"( do notdo *ith in$titution$ lik" llovo.

'h" $tor( o) cro$$ord"r trad"r$ i$ r"v"aling. A )"* ("ar$ hav" pa$$"d $inc"

th" introduction o) th" Simpli)i"d 'rad" "gim" S' proC"ct und"r#MSA. S' i$ aim"d at $upporting cro$$ ord"r trad"r$. M"m"r




countri"$ agr"" on good$ that can " trad"d dut( )r"" and al$o proc"$$*h"r"( onl( $mall $cal" cro$$ord"r trad"r$ "n")it )rom th" proC"ct. amiaalr"ad( d"v"lop"d it$ li$t and $($t"m o) dut()r"" cro$$ord"r trad" o))"r *ithMala*i ut Mala*i i$ $aid to " Flacking )und$G to do th" $am" )or it$cro$$ord"r trad"r$, including $"n$iti$ing th" cro$$ord"r trad"r$ on th"initiativ". &t i$ high tim" that MA and Mala*i in g"n"ral chang"d )rom th"m(opia o) $lo* mov"r$.

Anoth"r ca$" i$ impl"m"ntation o) *aiv"r$ )or ;8#$ and oth"r$. 'h" la*allo*$ ;8#$ to u( 2 v"hicl"$ dut( )r"" "v"r( / ("ar$. Io*"v"r, th"proc"$$"$ at MA ar" proving v"r( co$tl( a$ it can tak" month$ or "v"n ("ar$)or th" v"hicl"$ to " cl"ar"d )or u$" ( th" ;8#$.

"." (ompliance) tax avoidance and evasion

M"dia and oth"r $ourc"$ hav" r"port"d that $om" $hop o*n"r$, "$p"ciall( o)

A$ian and ;ig"rian origin, a$k cu$tom"r$ *h"th"r th"( *ant a r"c"ipt. 'h"trad"r$ in)orm th" cu$tom"r$ that i) th"( in$i$t on g"tting a r"c"ipt, th"( *ould" charg"d <A'.

'hi$ d"v"lopm"nt i$ di$turing a$ it m"an$ that th" conc"rn"d trad"r$ ar""vading ta! and not "mitting <A' to MA. &n addition, it "g$ mor" ?u"$tion$in that ( giving a choic" to cu$tom"r$ *h"th"r to " charg"d <A', th"trad"r$ ar" a$$um"d to " a$oring th" input <A' Dut thi$ i$ oviou$l(unr"ali$tic and not th" ca$". Hhat it m"an$ i$ that th" trad"r$ th"m$"lv"$ donot pa( ta!"$ on input$.

'h" Mala*i "v"nu" Authorit( con)irm"d *ith th" author that th"( ar" a*ar"o) th"$" d"v"lopm"nt$ o) ta! "va$ion. 'o cur thi$ "haviour, MA ha$in$titut"d th" )ollo*ing programm"$@

1. “Test(buying% D *h"r"( MA o))icial$ go imp"r$onat" FnormalGcu$tom"r$ and go to u( good$ and $"rvic"$ in $ampl"d $hop$. Hh"nth"( "!p"ri"nc" an anomal(, MA o))icial$ tak" th" n"c"$$ar( action.

2. “Sit(*ns% D MA o))icial$ go in, $it and *atch tran$action$ in cho$"n$hop$ )rom th" tim" op"ning to clo$ing. #p"ning alanc"$ ar"compar"d *ith clo$ing alanc"$ to "$timat" th" ta!"$ du", and th"$am" mirror"d *ith th" pa$t da($ to d"t"rmin" complianc".

3. “'omparison% D *h"r" u$in"$$"$ o) $imilar natur" and5or in $am"

location ar" compar"d.. “Public education% D to in)orm th" pulic on th" un*ant"d "haviour

and "ncourag" th"m to r"port to MA an( incid"nc" o) ta! "va$ion thath"( $"" or $u$p"ct.

".* Microfinance !nstitutions in Mala'i

'hr"" i$$u"$ ari$" on micro)inanc" in$titution$ that provid" cr"dit to th"Funankal" groupG in th" countr(. 'h" "$"rv" Bank o) Mala*i "$timat"$that onl( 19E o) th" population in Mala*i ank$ 9. 1 'hat th"( ar" v"r( )"*,2 that th"( ar" di$criminator( and 3 that th"( o))"r too littl" r"$ourc"$.omm"rcial ank$ provid" loan$ on condition$ o) $u))ici"nt $ur"t(, ar"?uir"m"nt that poor p"opl" do not m""t.




'h"r" ar" 21 in$titution$ that provid" cr"dit to SM$ in Mala*i. Io*"v"r,apart )rom on" m"m"r th" Mala*i ural +"v"lopm"nt -und MA+-*hich ha$ a loan port)olio o) / illion th" r"maining 20 in$titution$ hav"$mall r"$ourc"$. &n )act th"ir comin"d loan port)olio i$ not "v"n hal) th"port)olio o) MA+-J 'h" cr"dit that th"$" in$titution$ provid" i$ not "noughto tak" th"ir targ"t"d SM$ into th" incom" rack"t that *ill " al" to pa(ta!"$ on th"ir incom". 'hu$ th" in$titution$ larg"l( mak" poor p"opl" u$(*ith lo*"r "conomic activiti"$ that do not hav" much impact on th"ir liv"$ andta! "nv"lop in th" countr(. Som" o) th" in$titution$, particularl( ;8#$ ar"$aid to " di$criminator( in th"ir provi$ion o) loan$, *ith a num"r o) th"m$tating KH" provid" loan$ to *om"n onl(L or K*" $"rv" onl( th" (outh$.L

Som" comm"ntator$ hav" ?u"$tion"d th" rational" )or MA+-G$ providing$imilar $mall loan$. 'h"( $ugg"$t that MA+-, *ith it$ r"$ourc" "nv"lop$hould conc"ntrat" on th" Fmi$$ing middl"G i.". th" $"ctor o) th" $oci"t( that

ar" graduating )rom th" $mall loan$ provid"d ( micro)inanc" in$titution$ utar" not ("t al" to g"t ig loan$ )rom comm"rcial ank$.

".+ ,ac- of co#erence bet'een ministries departments

Bu$in"$$"$ hav" complain"d o) incon$i$t"nci"$ in $tat"m"nt$ and dir"ction$)rom th" Mini$tr( o) -inanc", Mala*i &nv"$tm"nt romotion Ag"nc( M&A,Mala*i !port romotion ouncil, Mini$tr( o) &ndu$tr(, 'rad" and rivat"S"ctor +"v"lopm"nt and th" Mala*i "v"nu" Authorit(. Appar"ntl( M&A, )or"!ampl", promi$"d lo*"r rat"$ and incr"a$"d inc"ntiv" allo*anc"$ topot"ntial inv"$tor$ ut *h"n th" u$in"$$ roll"d out, th" MA pound"d on th"

u$in"$$"$ accu$ing th"m on "vading ta!"$.

"./ Monitoring of 0uel ,evies

v"r( month, illion$ *orth o) r"v"nu" ar" coll"ct"d through )u"l l"vi"$. 'h"m"chani$m )or manag"m"nt o) th"$" l"vi"$, ho*"v"r, i$ di))"r"nt )rommanag"m"nt o) r"$ourc"$ in th" national udg"t. All )u"l l"vi"$ "!c"pt th"Sa)"t( ;"t l"v( do not go into5through th" M81 account, ut $traight tor"$p"ctiv" ommi$$ion$. A$ $uch, utili$ation o) th"$" )und$ i$ out$id" th"*atch)ul "(" o) man( $tak"hold"r$ including civil $oci"t( and th" nationala$$"ml(.

&t ha$ ""n all"g"d in $om" ?uart"r that th"$" )und$ ar" pron" to au$" orar" au$"d ( politician$. 'h"r" i$ n""d th"r")or" )or urg"nt in$titution o)monitoring o) th" utili$ation o) )und$ coll"ct"d through )u"l l"vi"$.

". Taxes collected b% (it%) To'n and istrict Assemblies

4ocal a$$"mli"$ charg" ta!"$ applical" to op"rating in th" r"$p"ctiv"a$$"mli"$. "$ultantl( th" t(p"$ and rat"$ o) ta!"$ pa(al" di))"r )rom on"a$$"ml( to anoth"r. Som" o) th" ta!"$ pa(al" in a$$"mli"$ ar" parking)""$, u$in"$$ lic"nc"$, and r"ntal$, Cu$t to m"ntion a )"*. #n" charact"ri$tic,though, o) a$$"ml( ta!"$ i$ $har"d ( all D that th" mon"( coll"ct"d do"$;#' go to th" c"ntral gov"rnm"nt account, and $o accountailit( o) th"$"




r"$ourc"$ li"$ *ith th" a$$"mli"$ th"m$"lv"$ and th" diplomatic "(" o) th"Mini$tr( o) 4ocal 8ov"rnm"nt and th" 4ocal 8ov"rnm"nt -inanc" ommitt"".ivil $oci"t( in r"$p"ctiv" a$$"mli"$ ma( hav" to tak" on monitoring th"utili$ation o) th" r"$ourc"$ in a$$"mli"$. A$ *a$ th" ca$" in )u"l l"vi"$,grap"vin" ha$ $ugg"$t"d that )und$ in a$$"mli"$ ar" pron" to or ar" au$"d( $"nior a$$"ml( $ta)) and politician$. 'h" $"rvic" provid"d ( a$$"mli"$ha$ ""n "moan"d to not r")l"ct th" amount o) ta!"$ that p"opl" pa( to th"a$$"mli"$.

".13 4ro5poor Tax

'h"r" i$ no agr""m"nt on *hat $hould con$titut" propoor ta! r"gim". All o)th" $tak"hold"r$ int"rvi"*"d "!pr"$$"d conviction on th" n""d to hav" a propoor ta! r"gim", ut non" o) th"m ha$ mad" $p"ci)ic propo$al on d"tail$ o)th" r"gim". Io*"v"r, th" )ollo*ing $ummari$" th" )"atur"$ that r"$pond"nt$gav" on propoor ta! r"gim"@

• A r"gim" *h"r" ta! coll"ction do"$ not urd"n th" poor

• A r"gim" *h"r"( gov"rnm"nt coll"ct$ mor" ta!"$ )rom th" rich

compar"d to th" poor

• A r"gim" that allo*$ mor" mon"( in poor p"opl"G$ pock"t$

• A r"gim" that "ncourag"$ $aving$

• A r"gim" *h"r" ta!"$ coll"ct"d ar" $p"nt mo$tl( on $"rvic"$ "n")iting

th" poor mo$t.

• A r"gim" that i$ g"ar"d at inc"ntivi$ing th" $mall op"rator$ SM$ to

gro* and " al" to pa( ta!"$.

riticall( looking at th" aov", on" dra*$ v"r( thin lin" *ith *hat AdamSmith10 $aid *"r" charact"ri$tic$ o) good ta!@

6. "The subject of every State ought to contribute towards the supportof the government, as nearly as possible, in proportion to theirrespective abilities; that is, in proportion to the revenue which theyrespectively enjoy under the protection of the State."

2. "The ta each individual is bound to pay ought to be certain, and notarbitrary. The time of payment, the manner of payment, and theCuantity to be paid, ought all to be clear and plain to the contributor,

and to ever other person."

D. "very ta ought to be levied at the time, or in the manner in which itis most liely to be convenient for the contributor to pay it."

>. "very ta ought to be so contrived as both to tae out and to eepout of the pocets of the people as little as possible, over and abovewhat it brings into the public treasury of the State.

Hhat"v"r th" d")inition, propoor ta! i$ d"$ign"d )or th" "n")it o) poorp"opl". &t n"v"rth"l"$$ impli"$ $om"on" pa(ing mor" than th" poor p"opl",

and that th" poor "n")it )rom th" pa(m"nt.




'o d"t"rmin" ho* propoor a ta! r"gim" i$, th" author $ugg"$t$ th" )ollo*ing@

• 4ook at th" monthl( minimum a$k"t o) n""d$ D $uch a$ th" on"

produc"d ( th" "ntr" -or Social onc"rn compar" th" minimumr"?uir"d incom" to th" on" that an av"rag" incom" "arn"r, $uch a$ at"ach"r, g"t$. &) th" latt"rG$ incom" cannot a))ord th" a$ic a$k"t o)

n""d$ and ("t pa($ ta!"$, th" ta! r"gim" i$ not propoor.• $ing <A', *" can d"t"rmin" ho* propoor a ta! r"gim" i$, ( looking

at *hat $p"ci)ic good$ and $"rvic"$ ar" >"rorat"d 5 "!"mpt"d andal$o *hat good$ and $"rvic"$ $o "!"mpt"d 5>"rorat"d ar" )or th"av"rag" poor p"r$on.

• H" can al$o look at ta! $tructur"$ o) oth"r commoditi"$ $uch a$

para))in and utiliti"$ and d"t"rmin" *h"th"r oth"r ta!"$ $uch a$ l"vi"$or "!ci$" ta! can " r"mov"d to mak" th" commodit( ch"ap"r.

• -rom a u$in"$$ angl", *" can compar" ta!"$ that SM$ pa( to tho$"

that ig u$in"$$"$ pa(. Hh"r" ig u$in"$$"$ ar" giv"n ta! holida($that $mall u$in"$$"$ do not hav" acc"$$ to, th"n *" can conclud" th"

ta! r"gim" i$ not propoor.• 'a!"$ on donation$, chariti"$, nongov"rnm"ntal *ork and oth"r$

aim"d at $"rving th" poor, ma( $ho* that th" ta! r"gim" i$ not propoor.




?. Rol' o8 Ci;il So!i'$: in Ta)a$ion

'h"r" ar" man( rol"$ that civil $oci"t( can pla( in ta!ation. 'h" rol"$ can "group"d into advocac( and $"rvic" d"liv"r(.

8.6 0dvocacy5

ivil $oci"t( ha$ "$tali$h"d th"m$"lv"$ a$ polic( advocat"$ and lo(i$t$that hav" $u))ici"nt int"r"$t in th" *"l)ar" o) poor p"opl". ivil $oci"t( ha$ an"!t"n$iv" n"t*ork o) pla("r$ that ring up "vid"nc" )rom practic", that $p"akto d"ci$ion mak"r$ and oth"r pla("r$, that o))"r alt"rnativ"$ to tradition, andcontinuou$l( monitor ho* particular polici"$ ar" "ing impl"m"nt"d andimpacting on th" liv"$ o) poor p"opl".

ivil $oci"t( can conduct ta! "ducation to th" Mala*i nation. 'h" "ducationcan " aim"d at d"m($ti)(ing ta!ation in Mala*i to )"llo* citi>"n$ in)orm

pot"ntial $mall$cal" u$in"$$ p"opl" on corr"ct ta!"$, )ormula$ and"!"mption$5"n")it$ that ar" availal" )or "!ploitation th"r"o) th" importanc"o) pa(ing ta!"$ and "ngag" gov"rnm"nt on impl"m"ntation o) th" ta! r"gim".

ivil $oci"t( can al$o conduct r"$"arch and ring "vid"nc" to gov"rnm"ntand MA on th" impact o) variou$ ta! provi$ion$ on th" liv"$ o) poor p"opl"in Mala*i. 'hu$ u$ing th" "!i$ting and n"* monitoring tool$, civil $oci"t( can" an important hu o) in)ormation on ta!"$ in Mala*i. 'hi$ *ould mak" th"ircontriution$ 5 $umi$$ion$ on ta!"$ impo$$il" to " di$r"gard"d ( th"gov"rnm"nt and oth"r pla("r$.

Anoth"r k"( ar"a o) int"rv"ntion ( civil $oci"t( i$ monitoring coll"ction andutili$ation o) ta! r"v"nu", particularl( tho$" that do not go into M81 account.-or "!ampl", r"v"nu" coll"ct"d on l"vi"$ on -u"l go"$ $traight to r"$p"ctiv"commi$$ion$ and ar" not account"d to an(on" ut th"ir o*n int"rnal oard$.ivil $oci"t( can th"r")or" monitor utili$ation o) mon"( that go"$ to th")ollo*ing in$titution$@ th" "gulator( -und MA, th" ric" Staili$ation-und, th" oad -und, th" Sa)"t( ;"t -und, th" Mala*i Bur"au o) Standard$,ural l"ctri)ication -und, and th" Mala*i "v"nu" Authorit( it$"l).

8.2 /irect Service delivery5

Man( civil $oci"t( organi$ation$ ar" involv"d in "mpo*"rm"nt programm"$,includ" &ncom" 8"n"rating Activiti"$ &8A$ to targ"t"d communiti"$. 'h"$am" programm"$ can " "nhanc"d to tran$)orm th" poor communiti"$ intor"lial" ta! pa("r$. 'hi$, ho*"v"r, call$ )or chang" o) th" *a( mo$t civil$oci"t( organi$ation$ provid" th" "mpo*"rm"nt programm"$. 'ran$)ormingpoor p"opl" into ta! pa("r$ call$ )or r"al incr"a$"$ in amount$ that civil$oci"t( organi$ation$ provid" to th"$" p"opl". &t al$o call$ )or tran$)ormationo) th" communit( )rom con$umption to a cultur" o) "ntr"pr"n"urial $hip.




*. Con!l0sion

A$ *" hav" $""n aov", ta!"$ hav" $"riou$ implication$ on pov"rt("radication programm"$ in th" countr(. 'a! polic( and admini$tration al$ohav" $u$tantial "aring on man( o) S#G$ conc"rn$, ranging )rom "n$uring

th" availailit( o) )und$ )or important $ocial programm"$ to narro*ing th" gap"t*""n rich and poor. +"$pit" th" hug" "ngag"m"nt pot"ntial that "!i$t$ inta! r"gim"$, ho*"v"r, man( $tak"hold"r$ hav" not "ngag"d th" proc"$$"$larg"l( )or )"ar o) th" unkno*n or th" p"rc"iv"d compl"!it( o) th" $uC"ct. 'hi$r"port ha$ att"mpt"d to d"m($ti)( ta!ation in Mala*i and outlin"d *hatpo$$il" rol"$ can " tak"n ( variou$ $tak"hold"r$.

ivil $oci"t( ha$ a v"r( ig rol" to pla( in "n$uring that ta!"$ do not hurt, utpo$itiv"l( aid, th" poor. But in ord"r )or th"m to pla( that rol", th"( n""d toinv"$t in th"ir o*n und"r$tanding o) th" $uC"ct and conduct ta! "ducation tooth"r$. ivil Soci"t( kno*ing th" ta! $($t"m op"n$ up th"ir dut( to "n$ur"

ad"?uat" $ourc"$ o) )unding )or important antipov"rt( programm"$ improv"th" di$triution o) incom" and *"alth promot" "conomic gro*th that can"n")it all citi>"n$ and "nhanc" gov"rnm"nt tran$par"nc( and accountailit(.'h"r" i$ n""d )or "nhanc"d monitoring o) proc"$$"$, proc""d$, and utili$ationo) r"v"nu" coll"ct"d )rom ta!"$. ivil $oci"t( can al$o h"lp r"duc" ta!urd"n$ )or pa("r$ ( Fmaking mor" ta! pa("r$G i.". ( inv"$ting in $mall $cal"u$in"$$"$ to gro* into vial" ta! pa("r$.

A$ thi$ r"port *a$ onl( m"ant to unma$k th" topic, it i$ hop"d that th" Mala*iconomic :u$tic" ;"t*ork *ill $oon d"$ign programm"$ that *ill "!amin")urth"r $p"ci)ic ar"a$ uncov"r"d and d"v"lop programm"$ that *ill addr"$$

th" i$$u"$ uncov"r"d.




Ann"! 1@ Bi7liog#a&:

1. Adam Smith, 0n *nCuiry into the $ature and 'auses of the Eealth of $ations,1776

2. Barill"au!, (an :. and Mark :. o>"ll. Power and Prudence5 The Presidencyof Feorge G.E. ush. oll"g" Station@ '"!a$ ATM niv"r$it( r"$$, 200.

&+ oham, Al"!. "The ta consensus has failedH" 'h" #!)ord ouncil on 8ood8ov"rnanc", 2007

. 8"org" I. H. Bu$h, K1ead my +ips5 $o $ew taes,L Acc"ptanc" $p""ch atth" Augu$t 1% 19%% "pulican ;ational onv"ntion, 19%%

/. 8ov"rnm"nt o) Mala*i, )alawi 1evenue 0uthority 0ct, 6AAI

6. 8ov"rnm"nt o) Mala*i, The +aws of )alawi, hapt"r 0@01

7. 8ov"rnm"nt o) 'an>ania, Social +"v"lopm"nt +"partm"nt, +ocalFovernment Taation 1eform in TanJania5 0 Poverty and Social *mpact 0ssessment, num"r 3900', 2006

%. :ack 8"rmond. )ad as Gell. pg. 23, 2003

9. 4"v(, "t"r B. $o $ew Taes5 ncyclopedia of the 1eagan(ush #ears.H"$tport@ 8r""n*ood r"$$, 1996.

10. Magala$i ollin$, The 1ole of Parliaments in Ta /ebates in /eveloping'ountries, in@ +ignit( o) +"v"lopm"nt ( th" "ntr" )or A)rica, 8"rman(,2009

11. Magala$i ollin$, PeopleKs 1eport on )illennium /evelopment Foals :)alawi, in@ ommon*"alth -oundation M+8 "port, 200/

12. Magala$i ollin$, The Political conomy of oreign /irect *nvestments in)alawi, <unpublished=, 2009

13. Mala*i conomic :u$tic" ;"t*ork, 'ivil Society Trade +iteracy Training)anual, 200/

1. Mala*i I"ath ?uit( ;"t*ork, The Parado of Supporters getting moreresources than Players ( 233I-A Gealth Sector udget, 2009

1/. Mala*i "v"nu" Authorit(, r"$$ "l"a$"@ ;"* M"a$ur"$ -or +om"$tic'a!"$, 2% Augu$t 200%

16. Mala*i "v"nu" Authorit(, Public $otice5 0pplicable 'ommercial 1ate orringe enefit Ta Bn mployer(Provided 'oncessional +oans or The ThirdQuart"r, :anuar( DMarch 2009

17. Mala*i "v"nu" Authorit(, 'ustoms 0nd cise Tariffs Brders, 2332 ( 233I

1%. #lm"rt, Micha"l. )iltonLs Teeth and BvidLs Mmbrella5 'uriouser N 'uriouser 0dventures in Gistory , p.1. Simon T Schu$t"r, ;"* =ork. &SB; 06%%0167, 1996

",+ o$$, Micha"l, 4. "/oes Taation +ead to 1epresentationO" . 4A+"partm"nt o) olitical Sci"nc", 2007

20. nit"d ;ation$ +"partm"nt #) conomic And Social A))air$, Eorshop1eport Bn The 'ompilation Bf *nternational )erchandise Trade Statistics, Addi$ Aaa, %11 ;ov"m"r 200

%"+ Hilliam$, Halt"r . 200%0%06. "Fovernment theft, 0merican(style" .

Horld;"t+ail(. "tr"av"d )rom http@55***.*orldn"tdail(.com5ind"!.phpUpag"&dV71/17 on 2%5115200%

http://www.worldnetdaily.com/index.php?pageId=71517







Ann') 2 Lis$ o8 'ol' in$'#;i''+

1. Mr. <ictor Mhoni D ;ational oordinator, ivil Soci"t( Agricultur";"t*ork &SA;'

2. Mr. +(orn hionga D hi") !"cutiv" #))ic"r, ;AS-AM

3. Mr. ichard "tautch"r" D olic( #))ic"r, ;AS-AM

. +r. h*ima ;thara D ountr( conomi$t, Horld Bank

/. M$. Matilda Si*">a D Mala*i &nv"$tm"nt romotion Ag"nc( M&A

6. "v. -r. :o$$ upp"n$ D +ir"ctor, "ntr" -or Social onc"rn

7. +r. ;"*( um*"m" D rincipal S"cr"tar(, Mini$tr( o) &ndu$tr(,'rad" and rivat" S"ctor +"v"lopm"nt

%. Mr. aul *"ng*"r" D conomi$t$ A$$ociation o) Mala*i AMA

9. M$. ati"nc" Ma$i D Mini$tr( o) -inanc"

10.Mr. :ohn Mpoha Mini$tr( o) -inanc"

11.Mr. 'imoth( Makama D Mini$tr( o) -inanc"

12.Mr. A hioko D hair o) 'a!ation and conomic A))air$ ommitt"",Soci"t( o) Accountant$ in Mala*i

13.M*and"(i hit$onga D '"chnical #))ic"r, Soci"t( o) Accountant$ inMala*i

1.Mr. Iop" havula D Mala*i on)"d"ration o) ham"r$ o) omm"rc"and &ndu$tr( M&

1/.Mr. . han>a D ro$$ord"r 'rad"r$ A$$ociation16.Mr. apito D ;ational A$$ociation o) Bu$in"$$ Hom"n ;ABH

17.M$. Mar( -ranc"$ Malunga D ;ational A$$ociation o) Bu$in"$$ Hom"n;ABH

1%.Mr. St"v" apoloma D Mala*i "v"nu" Authorit( MA



" Malawi Economic Justice etwork. Tra/e 0eather Stations !rogramme% Ross. Michael. 1+ 2%--)3-"3%)4+ "Does Taxation Lead to Representation?". UCLA Department of Political Science+

http:55www+polisci+ucla+e/u5#aculty5ross5taxrep+p/#+ Retrie6e/ on "'5-$5%--,+& Co7ham. 8lex 2%--)3-"4+ "The tax consensus has failed!". The xford Council on ood oernance+

http:55www+ox#or/go6ernance+org5#ilea/min5!u7lications5ER--*+p/#+ Retrie6e/ on "'5-$5%--,+$ 8/am Smith. 8n 9nuiry into the ature an/ Causes o# the 0ealth o# ations. "))(' ;oo/all ;on/we. Minister o# Finance. %--*+%--, Bu/get Speech . ational 8ssem7ly. 1ilongwe( 8n ad alorem tax is one where the tax 7ase is the 6alue o# a goo/. ser6ice. or property+ Sales taxes. tari##s. property taxes.

inheritance taxes. an/ 6alue a//e/ taxes are /i##erent types o# a/ 6alorem tax+ 8n a/ 6alorem tax is typically impose/ at the

time o# a transaction 2sales tax or 6alue a//e/ tax 2<8T44 7ut it may 7e impose/ on an annual 7asis 2property tax4 or in

connection with another signi#icant e6ent 2inheritance tax or tari##s4+ 8n alternati6e to a/ 6alorem taxation is an excise tax.

where the tax 7ase is the uantity o# something. regar/less o# its price+) The MCCC9. The %--* Malawi Business Climate Sur6ey Report. pp+ ""3"%* Malawi Economic Justice etwork. Tra/e 0eather Stations report. %--(, <ictor M7ewe. ;o6ernor o# the Reser6e Bank o# Malawi at S=C8M 8nnual meeting. $ 8pril %--,"- 8/am Smith. 8n 9nuiry into the ature an/ Causes o# the 0ealth o# ations. "))(

Unmasking the Malawi Taxation System

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