In spite of its recent economic improvements, Malawi still ranks as one of the world’s least-developed countries. The political climate is more stable than it has been in the past, but riots and demonstrations still occur on a regular basis, something that expats planning to work in Malawi should be aware of.
In 2011, Malawi was ranked as the 119th safest investment destination in the world in the Euromoney Country Risk rankings. Problems related to healthcare and a rapidly increasing population have been identified as factors that will slow Malawi’s economic growth within the next decade.
One third of Malawi’s GDP and 90% of its exports come from agriculture. The main agricultural products include tobacco, sugarcane, cotton, tea, corn, potatoes, sorghum, cattle, and goats. Malawi relies heavily on its tobacco exports and with the international community seeking to impose limits on production, this part of Malawi’s economy is coming under strain.
Short-term business permits can be obtained upon arrival in Malawi; this will be valid for up to 30 days and can be extended to 60 days for a fee. For expatriates planning a more permanent relocation, an application should be made with the Malawian Department of Immigration prior to arriving in Malawi.
Corporate tax is set at 30% for Malawian-registered companies, except for telecommunications companies that are taxed at 33%.
Dividends distributed by Malawian companies are taxed at 10%, unless subject to a tax treaty. Interest payments made to a non-resident are subject to a 15% withholding tax, or 20% to residents as an advance tax. Non-resident royalty payments are taxed at 15%, or 20% to residents as an advance tax.
Other taxes include stamp duty at 0.75% and a payroll tax at 1% tax-deductible levy of payroll costs.
Both residents and non-residents pay tax on income with its source in Malawi. An individual is considered a fiscal resident if he/she is present in Malawi for an aggregate of 183 days in any 12-month period, beginning or ending in the year of assessment under review. Each case will be investigated to ascertain whether the individual is eligible for a nonresident tax (15%) or whether Pay As You Earn (PAYE) tax applies. At the time of writing in 2015, the personal income tax rates were: