Compliant HR, Payroll, Immigration & Tax
Malawi gained independence during 1964 and has a multiparty democratic government. The economy is predominately agricultural, with 80 % of the population living in rural areas. Malawi ranks among the worlds most densely populated countries.
Malawi is over 118,000 km2 (45,560 sq. mi). Lake Malawi was once called “The Lake of Stars” by the famed Scottish explorer David Livingstone, is the third largest lake in Africa. Also know for its extraordinary Freshwater lake.Formerly known as Nyasaland, Malawi, is a landlocked country in southeast Africa.
While Malawi has made strides in reducing the number of HIV infection in the country over the last decade, AIDS remains the number one killer in the country.
Although 80% of the population has access to an improved source of drinking water, 4 million people who still lack access to safe water as only 6 % of the population has access to an improved sanitation facility. With 53 % of its 15 million inhabitants live below the poverty line Malawi is one of the least developed and most impoverished countries on earth.
Malawi exports Tobacco and tea and is well-known for its smiling, friendly people.
Malawi Revenue Authority
31 July – 30 June
Malawi Revenue Authority
31 July – 30 June
New Year’s Day – 01 Jan
John Chilembwe Day – 15 Jan
Martyr’s Day – 04 Mar
Good Friday – 19 Apr
Holy Saturday – 20 Apr
Easter Monday – 22 Apr
Labour Day – 01 May
Kamuzu Day – 14 May
Eid al-Fitr – 4 – 5 Jun
Independence Day – 08 Jul
Mother’s Day – 15 Oct
Christmas Day – 25 Dec
Boxing Day – 26 Dec
In pursuance of arrangements made in accordance with section 5 (c) of the Act, visas are dispensed with in respect of the persons or classes of persons set out in the Second Schedule.
Examinations or tests required
- Any examination or test required by an immigration officer under section 13 of the Act may be conducted on any train, vessel, aircraft, vehicle or other conveyance or at any other place which such officer considers to be convenient for the purpose, and if necessary, affords sufficient privacy.
- The immigration officer requiring such an examination or test may, in his discretion, determine the sequence in which persons wishing to enter or re-enter
- Every person who has entered Malawi and who desires to remain in Malawi for a longer period than that stated by him at the time of his arrival in Malawi shall report in person to an immigration officer and shall submit to such examinations and tests in accordance with section 13 of the Act, as may be required notwithstanding that he is already within Malawi.
On completion of any examination or test required under section 13 of the Act, the immigration officer may make an appropriate endorsement on the person’s passport or other document of identity.
- A medical practitioner shall, where necessary and required, be present at any examination or test required under section 13 of the Act and shall indicate to an immigration officer any person who ought, in his opinion, to be medically examined. An immigration officer may require a medical practitioner to make a medical examination of any such person, and of any other person entering or found within Malawi who is required to submit to such medical examination.
- The medical examination of any such person entering or found within Malawi shall take place at such place as may be convenient and as soon as possible after the arrival or discovery of such person, and a report as to the result of such examination shall be rendered to the immigration officer and shall, if such person is found to be a prohibited immigrant, accompany that officer’s record of proceedings furnished to the Chief Immigration Officer.
Declarations by persons wishing to enter Malawi.
- The declarations which any person wishing to enter Malawi may be required to make and sign under section 13 (2) (a) of the Act shall be in Form No. 1 and shall be written in English.
- An immigration officer may require such person to make and sign such declaration in his presence, and shall satisfy himself that such person understands the declaration.
- If such person is unable to read or write or to understand the declaration, the immigration officer may question him, if necessary through an interpreter, and shall himself fill in the declaration or cause it to be filled in and shall thereupon require such person to attach his signature.
- On receipt of any such declaration an immigration officer may make an appropriate endorsement on the passport or other document of identity of the person concerned.
Turnover Tax (TOT) is tax levied on gross income from businesses. “Income from business” includes gross receipts, gross earnings, revenues, takings, yields and proceeds. In Malawi, it is covered under section 91A of the Taxation Act. TOT is applicable on all categories of income except rental income, management fees, professional fees or training fees, income of incorporated companies and any income that is subject to a final Withholding Tax.
TOT is levied at 2 percent of the gross receipts of businesses. All business entrepreneurs whose annual turnover does not exceed K6 million are supposed to register for turnover tax at the nearest Malawi Revenue Authority (MRA) Domestic Taxes Division Office. Upon registration, taxpayers are issued with a registration certificate. However, registration for TOT is optional. Taxpayers whose turnover falls within the K6 million bracket may choose not to register for TOT.
Taxpayers who are eligible for TOT but choose not to register for it must apply to the Commissioner General for exemption. Upon approval, such taxpayers are assessed under the normal income tax system which requires submission annual returns and accounts. When the income of a business registered under TOT exceeds K6 million in any year of assessment, the taxpayer should notify the Commissioner General of the change in status within one month.
When satisfied, the Commissioner General may approve the change of status which becomes effective from the first day of the month following the month during which the turnover exceeded MK6 million. When approved, such businesses follow the formal tax system of preparing tax returns and accounts.
Taxpayers under TOT system are required to systematically maintain records of their daily sales, both cash and credit. These records shall be inspected by MRA officers upon notification to verify that the correct tax is being paid. It is an offence not to maintain these records.
The TOT return should be submitted to MRA on or before 20th day of the month following the end of the tax period. For example, a return for the month of May 2014 should be submitted to MRA on or before 20th June 2014. Failure to submit a return attracts a penalty of K5 000 per return not submitted plus K250 each day the return is delayed.
Taxpayers who fail to pay TOT due or part thereof shall be liable to pay an additional 20 percent of the amount of tax which he or she shall have failed to pay in the first month plus an additional 5 percent per any additional month or part thereof for the period during which the tax remains unpaid.
Tax in Malawi
A challenging aspect of working in Malawi is compliance and their tax system. Regardless of being a contractor or a permanent employee, you have to pay tax on all of your earnings whilst you are working in Malawi. In addition to paying tax in Malawi, you may still be eligible to pay tax in your home country. Understanding the legislation behind this can be a challenge. Does your home country have a double taxation agreement with Malawi? Understanding the basics of income tax in Malawi and your options helps you work out the best way to organise your affairs.
Paying Income Tax in Malawi through Your Employer
If you’re working in Malawi under a permanent contract, many employers will handle your tax under the PAYE (Pay-As-You-Earn) system. This means that they calculate and process your taxes in Malawi for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in Malawi, but contractors may not be offered this service because of their short stay with each employer.
Working Out Income Tax in Malawi Yourself
Anybody who cannot pay their tax in Malawi through the PAYE system is left with the prospect of filing a tax return. This can be an onerous task, if you do not have the understanding of the system. Does Malawi have a tax treaty with your home country? You will need to find out or find someone who can provide assurance, whist this takes time and effort.
Using Employ Africa for Income Tax in Malawi
Contractors and Companies in Malawi are faced with masses of paperwork and numerous wasted hours filing returns unless they find an alternative option. Employ Africa can act as your employer during your stay in the country whilst still allowing you the freedom to work. The only difference is that you submit your timesheets to Employ Africa; calculate and pay your taxes as you earn, and then you receive a net wage (as well as compliant documentation for your records). Employ Africa are experts in Malawi taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Malawian tax office or tax department directly.
We assist in a wide range of sectors Petrochemical, Mining, Power Generation, Water Technology Oil and Gas, software developers, IT Project Managers, testers, business analysts and telecommunications for whom we get tax efficient payments and sponsorship for their Malawi work permit. Our advice is 100 percent free, and it comes with no obligations. You will be paying taxes in Malawi but without the overhead of directly dealing with the Malawian tax authorities. Get in touch with us today for some reliable advice on tax in Malawi!
How We Can Help You with Immigration in Malawi
Immigration and work permits are often, problematic, which can cause delays during projects. At Employ Africa we are not only in a position to provide immediate support via our immigration lawyers and practitioner’s, who are vastly experienced, we are also able to support Work Permits under our company name by sponsoring your employee. The sponsored work permits assist when you have been awarded a local contract but are not yet ready to open a local office.
Contracts of employments such as :
- an employment contract for unspecified period of time;
- an employment contract for a specified period of time; or
- an employment contract for a specific task.
Parties may agree on the duration of a probation period in a contract of employment in respect of a skilled worker.
The period should not exceed twelve months.
A contract of employment may during a probationary period be terminated at any time by either party without notice.
An employee, “skilled worker” means an undertaking who has special ability to do something which ability is gained through acquisition, programmed or otherwise, of knowledge, attitude and behaviour.
TERMINATION OF CONTRACTS
Either party may terminate a contract of employment for an unspecified period of time.
Unless it is expressly or tacitly renewed or prolonged, no notice shall be required for its termination a contract of employment for a specified period of time shall automatically terminate on the date specified for its termination.
It shall be deemed to be a contract of employment for an unspecified period of time where the purpose or effect of a contract of employment that is for a specific task and time frame is the filling on a lasting basis of a post connected with the normal and permanent activity of an undertaking.
No notice of termination shall be required of either party should a contract of employment to perform a specific task on the completion of the task be terminated
The contract of employment shall be deemed to be of an unspecified time frame, provided that in cases of ambiguity, where an employee is regularly and repeatedly employed and remunerated on completion of a quantity of work which can be completed in less than 24 hours.
NOTICE OF TERMINATION OF CONTRACTS
Either party may terminate a contract of employment for an unspecified period of time upon giving the other party the following minimum period of notice in writing–
- where the contract is to pay a salary at a monthly rate, one month’s notice;
- where the contract is to pay salary at a fortnightly rate–
- 1 fortnight’s notice where the employee has been employed for less than five years; and
- 1 months’ notice where the employee has been continuously employed for at least five years.
- a weekly rate contract is to pay wages –
- 1 weeks’ notice where the employee has been employed for less than two years;
- 1 fortnight’s notice where the employee has been continuously employed for a period of not less than two years but not exceeding five years; and
- 1 months’ notice where the employee has been continuously employed for at least five years;
- where the contract is to pay a salary at a daily or hourly rate–
- 1 days’ notice where the employee has been employed for less than six months;
- 1 weeks’ notice where the employee has been continuously employed for a period of not less than six months but not exceeding two years;
- 1 fortnight’s notice where the employee has been continuously employed for a period of not less than two years but less than five years; and
- 1 months’ notice where the employee has been continuously employed for a period of at least five years;
- Where the contract of employment for unspecified period of time is to pay wages at any rate, other than an annual rate, not provided for in subsection (1), parties may decide on the contract at the close of any day without notice.
- The minimum period of notice with regards to a contract of employment for a specified period of time shall be fourteen calendar days.
TRANSFER OF CONTRACT
No contract of employment shall be transferred from one employer to another without the consent of the employee except as provided in subsection (2).
No contract of employment shall without consent from the employee be transferred from one employer to another.
The contract of employment at the date of the disposition shall automatically be transferred to the transferee and all the rights and obligations between the employee and the transferor at the date of the transfer shall continue to apply as if they had been rights.
Any person of liability to be prosecuted for, convicted of and sentenced for any offence committed prior to the sale, transfer or disposition of the undertaking referred to in subsection (2).
By mutual agreement on termination of contract, with the employer or unilaterally by the employer, an employee shall be entitled to be paid by the employer, at the time of termination, a severance allowance to be calculated in accordance with the First Schedule.
In consultation with organizations and employers and organizations of employees, the minister may publish The First Schedule of notice in the Gazette.
The employee’s services shall not be terminated due to capacity or conduct before the employee is provided an opportunity to defend himself against the allegations made,
Termination referring to termination by reason of the insolvency or death of the employer, but does not include–
- termination of a contract of employment for a specified period of time where termination occurs at the expiration of the specified period; or
- a contract terminated once a specified task is completed;
The payment of a severance allowance under subsection (1) shall not affect the employee’s entitlement, if any, to payment in lieu of or to a compensatory or special award.
- Subsection (1) will not apply where the employee–
- is serving a probationary period as provided for;
- is dismissed for a reason related to his conduct;
- unreasonably refused to accept an offer of re-employment by the employer at the same place of work under no less favourable terms than he was employed immediately prior to the termination;
- is employed by a partnership and his employment ceases on the termination of the partnership and he enters into employment with one or more of the partners immediately after such termination or unreasonably refuses to accept an offer of employment by any such partner under no less favourable terms than he was employed immediately prior to the termination;
The severance allowance shall be paid to the surviving spouse of the deceased employee or, in the absence of such a spouse, to such other dependent relative as the labour officer may decide where the contract of employment is terminated by reason of the death of the employee.
HOURS OF WORK, WEEKLY REST AND LEAVE
MAXIMUM DAILY WORKING HOURS
No employer shall require or permit–
- a guard or shift worker to work for more than 8 hours on any day;
- an employee, other than a guard or shift worker–
- who normally works not more than 5 days during a week, to work for more than twelve hours on any day; or
- who normally works six days during a week, to work for more than 8 hours on any day.
The Minister may, by Order published in the Gazette, grant temporary exemption from any or all provisions of this Part–
- in case of accident, actual or imminent, force majeure or the need for urgent work to premises or equipment, but only in so far as may be necessary to avoid amending the ordinary working of the undertaking;
- where abnormal pressure of work due to special circumstances, in so far as the employer cannot ordinarily be expected to resort to other measures; and
- in order to prevent loss of perishable goods.
(2) Where temporary exemption is granted under subsection (1), the employees concerned shall be granted compensatory rest of a total duration of at least equivalent to that provided for in section 36 (4), and the hours worked beyond the maximum daily normal working hours shall be compensated as outlined in overtime,
- Overtime shall be paid as follows:
- time worked on a working day in exceeding the normal hours of work in the undertaking concerned – Ordinary Overtime;
- time worked by an employee on a day on which he would otherwise be off duty time off overtime; and
(c) time worked by an employee on a public holiday- holiday overtime.
the hourly rate of not less than one and one-half his wage for one hour if paid to an employee one-half his wage for one hour.
An employee shall be paid overtime for each hour of the day-off the hourly rate of no less than 2x his salary per hour but not less than twice the normal hourly rate.
Where an employer is engaged in an undertaking in which it is customary to employ some employees only at certain seasons of the year and an employee is employed for seasons, the employee shall be deemed to have been continuously employed for the aggregate of all the time he has actually performed work for the same employer for continuous seasons.
Employees, are entitled to a period of annual leave with pay of not less than–
- 18 working days if he/she works six days a week; and
- 15 working days if he /she works five days a week,
and the leave must be taken within six months of the entitlement to the leave falling due:
Where an employee’s length of service in any one year, including the period prior to the completion of the first year of continuous service, is less than the length of service required for the full entitlement set out in subsection , the employee shall be entitled to a period of annual leave with pay proportionate to his length of service during that year.
Where an employee is employed on a less than full-time basis, any day on which the employee works shall, in the computation of periods of employment, be counted as one working day.
An employee is entitled after completing 12 months’ continuous service, to at least four weeks sick leave on full pay and eight weeks sick leave on half pay during each year.
During sick leave, an employee must be paid the normal rate of wages.
An employer shall not be bound to grant sick leave unless the employee produces a certificate from a registered medical practitioner stating the nature of the employee’s incapacity.
A female employee is entitled, within every three years, to at least eight weeks maternity leave on full pay.
Normal benefits and entitlements, including her contractual rights and accumulation of seniority, shall continue uninterrupted and her period of employment will not be considered to have been interrupted, reduced or broken during the period when an employee is on maternity leave,
In the event of illness, certified by a registered medical practitioner, arising out of pregnancy or confinement, affecting the employee or her child, the employer shall grant the employee additional leave as the employer may deem fit.
Upon the expiration of her maternity leave, an employee shall have the right to return to the same job with the same benefits and entitlements as immediately before her absence, unless–
- the position has ceased to exist because of the economic, technological or organizational requirements of the undertaking; or
- she is incapable of continuing to perform the job.
The employer shall take reasonable steps to find the employee a suitable alternative job within the undertaking.
If no suitable alternative job can be found in accordance or if the employee unreasonably refuses the offer of a suitable alternative job, the employer shall be entitled to terminate her employment with notice, subject to the requirements to providing a severance allowance.
TERMINATION RELATED TO PREGNANCY
An employer who terminates the employment of an employee because the employee is pregnant or for any reason connected with her pregnancy shall be guilty of an offence and will have to prove that the employment was not terminated because of pregnancy shall be on the employer.
An employer who is convicted of an offence under subsection (1) shall be liable to a fine of K20,000 and imprisonment for five years.
In addition to imposing a penalty under subsection (2), the Court may order–
- the employer to reinstate the employee, who shall be treated in all respects as if her employment had not been terminated; and
- an award of compensation
Where reinstatement is ordered pursuant to subsection (3) (a), the employer shall be liable to pay wages to the employee for the period prior to such reinstatement.
An employer who is ordered under subsection (2) to reinstate an employee and refuses to do so shall be guilty of an offence and liable to a fine of K500 for each day during which the offence continues.
The purpose of the policy is to strengthen gender mainstreaming and women empowerment at all levels in order to facilitate attainment of gender equality and equity in Malawi. To reduce gender inequalities and enhance participation of women, men, girls and boys in socio economic development processes.