VAT is levied at the standard rate of 16.5% on the supply of goods and services. Certain supplies are either exempt or zero-rated.

Zero-rated Supplies Include:

Exports;
Most agricultural, horticultural and forestry machinery and fertilizer;
Motor vehicles for the transport of goods;
Salt;
Pharmaceutical products;
Machinery used in most types of manufacturing and construction;
Most goods used in the tourism sector;
Certain imported equipment for fishing, electricity, telecommunications, water utility, mining, and dairy industries;
Solar products;
Fish feed (effective 1 July 2021); and
Printed books (effective 1 July 2021).

Exempt Supplies Include:

Medical services and equipment;
Banking and insurance services;
Postal services;
Education services;
Certain animal products;
Raw vegetable products;
Non-mineral or aerated water;
Petroleum products;
Medical, surgical, or laboratory sterilizers;
Undenatured ethyl alcohol (ethanol) (effective 1 July 2021); and
Portable and other agricultural or horticultural sprayers (effective 1 July 2021).

VAT may be claimed on stock or capital goods purchased before a taxpayer was registered for VAT if:

The goods are still in the ownership and possession of the taxable person at the time of registration;
In the case of stock, the purchase or importation occurred not more than four months prior to the date of registration;
In the case of capital goods, the purchase or importation occurred not more than six months prior to the date of registration;
The taxable person is in possession of a tax invoice or the relevant customs bill of entry; and
That taxable person produces an inventory of all goods on hand on the date of registration.

Registration Threshold

Businesses providing taxable supplies of goods or services, including mining projects, are required to register for VAT if their total annual turnover meets or exceeds MWK 25 million (increased from MWK 10 million effective 1 July 2021), or if their receipt of imported services aggregates or exceeds MWK 25 million (increased from MWK 10 million per annum effective 1 July 2021) per annum.

Returns and Payments

VAT returns and payments are required to be made on a monthly basis by the 25th of the following month.

Records

The records that must be maintained by a taxpayer for the purpose of accounting for Value Added Tax (VAT) are:

A VAT account to show total output tax, total input tax and the amount of VAT due or refundable each month;
Relevant business and accounting records, including sales, purchase journals, cash books, ledgers and other subsidiary books of account;
Copies of all tax invoices issued;
Copies of tax invoices received;
Documentation relating to the importation and exportation of goods and services; and
All debit and credit notes or other documents providing evidence of any increase or decrease in the value of goods and services purchased or sold by him.

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