Employer Tax Contributions

Tax Type	Rate	Base
Pay-As-You-Earn (PAYE)	Progressive (0% - 35%)	Employee's taxable income
National Pension Scheme (NPS)	10% (minimum)	Employee's pensionable emoluments
Fringe Benefit Tax (FBT)	30%	Total taxable value of fringe benefits
Skills Development Levy (SDL)	1%	Total basic annual emoluments

Filing & Compliance

• PAYE and Pension contributions: Remit by the 14th day of the month following the payroll month.
• Fringe Benefit Tax: Pay in quarterly installments, no later than 14 days after the end of each quarter.
• TEVET Levy (Skills Development Levy) and Employer Data Form: Due by April 1.

In Malawi, employee tax deductions, known as Pay As You Earn (PAYE), are calculated based on a progressive tax system and include various statutory deductions.

PAYE Calculation

As of April 19, 2024, PAYE is calculated using the following tiered system:

• 0%: on the first MWK 150,000 of monthly income
• 25%: on the next MWK 350,000
• 30%: on the next MWK 2,050,000
• 35%: on any income exceeding MWK 2,550,000

Example: An employee earning MWK 3,000,000 monthly would have their PAYE calculated as follows: (150,000 * 0%) + (350,000 * 0.25) + (2,050,000 * 0.30) + (450,000 * 0.35) = MWK 860,000.

Other Deductions

• National Pension Scheme (NPS): Employees contribute a minimum of 5% of their pensionable emoluments. Employers contribute at least 10%, up to a maximum deductible contribution of 15%. These contributions are tax-deductible for the employer but not the employee. Upon retirement, benefits received, either as a lump sum or annuity, are tax-exempt.

Fringe Benefits Tax (FBT)

Employers, excluding government entities, providing fringe benefits are subject to a 30% FBT on the taxable value of the benefit. FBT is paid quarterly, within 14 days after the quarter's end. Some examples include:

• Housing: Taxable value is either 9% (unfurnished) or 12% (furnished) of the employee's salary. This value can be reduced by 50%.
• Motor Vehicles: Taxable value is 15% of the vehicle's original cost per year.
• School Fees: If paid directly by the employer, the taxable value is 50% of the cost.

Employer Obligations

Employers deducting PAYE must remit it to the Malawi Revenue Authority (MRA) by the 14th of the following month. Employers must register employees earning above MWK 150,000 monthly (MWK 1,800,000 annually) with the MRA within 21 days of hiring. Changes in employee status (e.g. resignation) must be reported within 14 days.

General Information on Taxes in Malawi

• There are no personal income tax rebates or credits in Malawi.
• Expatriates are taxed on Malawi-sourced income regardless of payment location, but may be exempt under double taxation agreements if they stay less than 183 days and are paid offshore.
• Non-resident employers must appoint a local resident agent for PAYE purposes.

This information is current as of February 5, 2025, and might change. Consulting with a tax professional is advisable for specific situations.