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TEVETA levy in Malawi
TEVETA Levy in Details
What is the TEVETA levy?
Section 20 (1) and (2) of the TEVETA Act creates a TEVETA Payroll levy into which “every employer” must pay “the sum of money equal to one per centum of the basic payroll in respect of the previous year”. This levy forms part of the TEVETA Fund that is supposed to finance programmes approved by the Board of the TEVETA Authority as defined in the TEVETA Act.
Who is supposed to pay the TEVETA levy?
The TEVETA Act enjoins upon every employer to pay 1% of basic payroll into the TEVETA Fund.
What is “basic payroll”?
The TEVETA Act defines “basic payroll” as “total basic annual emoluments paid by the employer to the employee.” The term “basic payroll” is not the same as “basic salary” but the law connects “payroll” with “emoluments” which is a much broader term than basic salary. Emoluments cover a wide range of employer’s cost in return for services rendered by the employee. These include basic Pay/Salary, gratuities & other terminal benefits; Bonuses; Overtime; Car Allowance; House Allowance; Telephone Allowance; Guard Allowance; Utilities Allowance; Settling-in Allowance; Passage/Airfare that is subject to PAYE; Children’s Fees Allowance; Risk/Hardship Allowance; Domestic Servant Allowance; Acting/Responsibility Allowance and Leave Grants.
The above list is not exhaustive and any similar payments to employees on which PAYE is assessed must also be included when computing the basis for the TEVETA Levy.
Who is an employer?
The Employment Act (2000) defines the term “Employer” as “any person, body corporate, undertaking, public authority or body of persons who or which employs an employee and includes heirs, successors and assignees of the employer.” For purposes of the TEVETA levy payment, an employer is any registered organization/company that employs people and pays them salaries/wages.
What records are employers expected to keep?
Section 25 of the TEVETA Act expects every employer to keep and maintain “at his principal place of business in Malawi” an up-to-date record of their payroll for all their employees and make that record available for inspection by an inspector authorized by the TEVETA Authority. The payroll records should be the same records that are used for PAYE tax purposes.
Section 20 (5) cites that where in any case the basic payroll of an employer cannot be ascertained with any reasonable accuracy, the Executive Director, may in writing require the employer to pay a levy of such amount as the Executive Director may specify, and the employer shall pay the levy so specified within the time specified by the Executive Director.
For which period is the TEVETA levy payable?
The TEVETA levy is payable in one year in respect of the payroll records of the previous year. In other words, the TEVETA levy for the financial year from 1st July 2015 to 30th June 2016 is based on payroll records for the period 1st July 2014 to 30th June 2015. This means TEVETA levy is assessed on previous year payroll records.
What payment method is the MRA and TEVETA encouraging?
Employers are being encouraged to do self-assessment of their payroll costs and make a payment of amounts so assessed. In self-assessment, employers are supposed to fill in an Employer Data Form (EDF) shown under separate cover.
What are the steps followed in levy payment?
- Get the Employers Data Form (EDF) from Standard Bank enquires desk, MRA district offices, MRA and TEVETA websites or through email.
- Fill the EDF in full in triplicate. The form will assist you to self-assess and determine your gross emoluments (salaries and all payroll allowances). This form will be useful when MRA/TEVETA come to verify if you are indeed paying the right amount. Send the copies of your form to MRA and also to TEVETA offices as designated on the EDF.
- After calculating the gross emoluments, calculate TEVETA Levy which is 1% of that total.
- Go to any of the banks below to deposit the Levy:
Bank Name: Standard Bank
Bank Branch: City Centre
Type of Account: Current Account (Malawi Kwacha)
Account Number: 9100004186211
Swift code: SBICMWMX
Bank Name: NBS Bank
Branch Name: Lilongwe
Type of Account: Current Account
Account Number: 18422549
Swift Code: NBSTMWMW
Bank Name: FDH Bank
Branch Name: City Centre
Type of Account: Current Account
Account Number: 1970000163627
Swift Code: FDHFMWMW
or go to any MRA Office to pay the Levy where you will get an official receipt. Make sure you get a printed receipt at either offices
What are the benefits of paying TEVETA Levy?
Section 20(6) of the TEVETA Act cites that any levy imposed and paid pursuant to this Act shall be deductible for the purpose of ascertaining the taxable income of the employer in accordance with the Taxation Act
What penalties are defined for those who breach these provisions?
Section 21 and 22 of the TEVETA Act defines stiff penalties for those who fail to pay the levy as defined. The penalties include an additional 20% charge for unpaid amounts and other civil processes at the civil courts.
For those who fail to provide correct information, the penalties extend to fines and imprisonment as the case may be determined by the courts.
For further enquiries contact:
+265 888 834 908/01 775 245 [email protected]
+265 1 827 780 / +265 998 955 028 [email protected]
All MRA and TEVETA offices
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For more information Visit https://www.TEVETA.mw/