CHAPTER 41:01
TAXATION

ARRANGEMENT OF SECTIONS

   SECTION

PART I
PRELIMINARY

   1.   Short title

   2.   Interpretation of certain general terms

   3.   Commissioner of Taxes

PART II
ADMINISTRATION

   4.   Delegation of functions by Commissioner

   5.   Report by Commissioner

   6.   Officers to observe secrecy

   7.   Forms

   8.   Service of documents

   9.   Service of oral notices

   10.   Validity of documents

PART III
INCOME

Division 1—Determination of Assessable Income

   11.   Income and assessable income

   12.   Special circumstances in which income deemed to have accrued

   13.   Exemption

   14.   Income annuities [Repealed by 17 of 2012]

   15.   Non-recognition of capital gain or capital loss in certain cases

   15A.   Involuntary conversion of assets

   15B.   Capital gains on disposal of business assets

   16.   Income—payments for services

   17.   Assessment to tax for single terminal

   18.   Sums payable by an employer for expenses of an employee

   19.   Expenses and benefits. Asset belonging to employer [Repealed by 1 of 1991]

   20.   Expenses and benefits. Employer may furnish statement [Repealed by 1 of 1991]

   21.   Sections 18, 19 and 20 not to apply in certain cases [Repealed by 1 of 1991]

   22.   Income—passages

   23.   Premiums

   24.   Timber sales

   25.   General

   26.   Foreign exchange gain and foreign exchange loss

   27.   Income deemed to have accrued in Malawi

Division 2—Deductions, Determination of Taxable Income

   28.   Allowable deductions in determining taxable income

   29.   Allowable deductions—educational passages [Repealed by 10 of 1983]

   30.   Personal allowances [Repealed by 10 of 1983]

   31.   Alimony [Repealed by 4 of 1988]

   32.   Allowable deductions—repairs

   33.   Allowable deductions—capital allowances

   34.   Allowable deductions—premiums paid

   34A.   Mineral royalty allowable deduction

   35.   Allowable deductions—bad debts

   36.   Allowable deductions—doubtful debts

   36A.   Allowable deductions—export allowance

   36B.   Allowable deductions—payroll levy

   37.   Allowable deductions—pensions funds and provident funds

   38.   Allowable deductions—sale of timber

   39.   Allowable deductions—research, etc.

   39A.   Allowable deductions—social contribution

   40.   Allowable deductions—annuity payment

   41.   Allowable deductions—new business initial expenditure

   41A.   Allowable deductions—training allownace [Repealed by 24 of 2011]

   41B.   Allowable deductions—transport allowance

   42.   Allowance of losses—general

   43.   Allowance of losses—change in shareholding in company

   44.   Allowance of losses—formation of new company

   45.   Deductions not to be made

   46.   Deductions not admissible as regards income derived from trade

Division 3—Stock and Work in Progress

   47.   Trading stock and work in progress to be taken into account

   48.   Valuation of stock and work in progress at end of year

   49.   Valuation of stock and work in progress at beginning of year

   50.   Definition of cost and market selling value

   51.   Domestic consumption

   52.   Gifts and sales

   53.   Valuation of livestock

Division 4—Determination of Taxable Income where adequate Books and Records are kept

   54.   Books of accounts

   55.   Period of accounts

Division 5—Businesses carried on Partly in and Partly out of Malawi and Businesses Controlled Abroad

   56.   Profits of non-resident persons from sale of exported produce

   57.   Persons carrying on business which extends beyond Malawi

PART IV
SPECIAL TRADES AND CASES

   58.   Taxation of income derived from farming

   59.   Cooperative agricultural societies

   60.   Consumers cooperative societies

   61.   Clubs, etc., formed, etc., for pleasure or recreation

   62.   Building society interest

   63.   Insurance business

   64.   Hire purchase or other agreements providing for postponement of ownership of property

   64A.   Taxation of Mining project

PART IVA
MINERAL ROYALTY

   64B.   Mineral Royalty

   65.   Approval of pension fund or provident fund [Repealed by 17 of 2012]

PART V
TAXATION OF COMPANIES

Division 1—Income Tax

   66.   Charge

   67.   Public officers of companies

   68.   Duty of companies to furnish returns

   69.   Notification of dividend declared

   70.   Dealings by a company in another company’s shares

   70A.   Taxation of dividends

   70B.   Recognition of gain or loss on distribution of property with respect to shares

   70C.   Effect of a distribution of shares of a company to its shareholders

   70D.   Distribution in complete liquidation of a company

   70E.   No gain or loss on certain contributions to capital

   70F.   Reorganization and qualified reorganization of a company

PART VI
INDIVIDUALS

   71.   Charge

   72.   Deemed taxable income

   73.   Income of married women and minor children

   74.   Partnership

PART VII
TRUSTEES

   75.   Special provisions in connexion with income derived from assets in deceased and insolvent or bankrupt estates

   76.   Tax payable by trust

PART VIIA
NON-RESIDENTS

   76A.   Liability for non-resident tax

PART VIII
REPRESENTATIVE TAXPAYERS

   77.   Representative taxpayers

   78.   Liability of representative taxpayer

   78A.   Protection for certain trustees

   79.   Right and personal liability of representative taxpayer

   80.   Company regarded as agent for absent shareholder

   81.   Power to appoint agent

   82.   Remedies of Commissioner against agent and trustee

   83.   Power to require information

PART IX
RETURNS, PROVISIONAL TAX AND ASSESSMENTS

   84.   Return of income

   84A.   Payment of provisional tax

   84B.   Exemption from provisional tax

   84C.   Payment of balance of income tax

   84D.   Payment of tax

   84E.   Penalty for failure to pay taxes

   85.   Duty to furnish returns as to employees, their earnings and other matters

   85A.   Tax clearance certificate

   86.   Commissioner to have access to all public records

   87.   Duty of person submitting accounts in support of return or preparing account for other persons

   88.   Production of documents and evidence on oath

   89.   Estimated income

   90.   Assessment to tax

   91.   Additional assessment

   91A.   Turnover tax

   92.   Assessments and notices thereof

   93.   Register of assessments

   94.   Inspection of register

PART IXA
TAXATON OF FRINGE BENEFITS

   94A.   Liability of employers to pay fringe benefits tax

   94B.   Section 94A not to apply in certain cases

   94C.   Employee defined

   94D.   Fringe benefits tax not to be imposed on employees

PART X
APPEALS

   95.   Burden of proof

   96.   Procedure on appeals

   97.   Appeal to Commissioner

   98.   Appeal to special Arbitrator

   99.   Publication decisions of Special Arbitrator

   100.   Appeals from assessments, etc., by administrative officers

   101.   Appeal to High Court

PART XI
COLLECTION AND RECOVERY OF TAX

Division 1—Withholding Taxes

   102.   Deduction of tax from salaries and wages—Pay As You Earn

   102A.   Deduction of tax from certain payments

   102B.   Payment of withholding tax

   103.   Priority of tax deduction at source

   104.   Formal assessments to be unnecessary

   104A.   Credit for tax deducted at source

Division 1A—Mineral Royalty

   104B.   —

Division 2—General

   105.   Payment of tax on assessment

   105A.   Mutual assistance to recover outstanding tax

   106.   Persons by whom the tax is payable

   106A.   —

   107.   Recovery of tax

   107A.   Creation of a lien

   108.   Form of proceedings

   109.   Production of register of assessments

   110.   Payment of tax by persons leaving Malawi

   111.   Security for payment of tax

PART XII
PENALTIES

   112.   Liability for penalties

   113.   Imposition of penalty

   114.   Accounts deemed to have been submitted by person

   115.   Assisting in making incorrect returns

   116.   Obstruction of officers

   116A.   Forceful rescue of seized property

   116B.   Physical assault of officers

   117.   Inciting a person to refuse to pay tax

   118.   Time limit for penalty proceedings

   119.   Liability of officers of company

   120.   Recovery of tax repaid in consequence of fraud or negligence

   121.   Saving for criminal proceedings, etc.

PART XIII
GENERAL

   122.   Relief from double taxation

   123.   Reduction of tax payable as a result of agreements entered into in terms of section 122

   124.   Relief from double taxation in cases where no agreements have been made under section 122

   125.   Error or mistake

   126.   Repayment of tax

   127.   Transfers to defraud, and artificial transactions

   127A.   Transfer pricing related to business transaction

   127B.   Ratio of debt to equity

   128.   Errors, etc., in assessment and notice may be rectified, and Commissioner may remit tax

   129.   Application of this Part [Repealed by 2 of 1994]

   130.   Liability for minimum tax [Repealed by 2 of 1994]

   131.   Exemptions from minimum tax [Repealed by 2 of 1994]

   132.   Penalty for late payment of minimum tax [Repealed by 2 of 1994]

   133.   Production of receipt [Repealed by 2 of 1994]

   134.   Failure to produce receipts [Repealed by 2 of 1994]

   135.   Prosecution for failure to pay minimum tax [Repealed by 2 of 1994]

   136.   Liability for minimum tax not extinguished [Repealed by 2 of 1994]

   137.   Civil proceedings [Repealed by 2 of 1994]

   138.   Jurisdiction of courts [Repealed by 2 of 1994]

   139.   Certificates by Commissioner [Repealed by 2 of 1994]

   140.   Liability for graduated tax [Repealed by 2 of 1994]

   141.   Exemptions from graduated tax [Repealed by 2 of 1994]

   142.   Relation between minimum tax and graduated tax [Repealed by 2 of 1994]

   143.   Prosecution for failure to pay graduated tax [Repealed by 2 of 1994]

   144.   Collection of graduated tax

   145.   Meaning of “tax year”

   146.   Regulations by Minister

   147.   Saving

FIRST SCHEDULE
GENERAL EXEMPTIONS

SECOND SCHEDULE
CAPITAL ALLOWANCES

PART I
GENERAL

   1.   Initial allowance

   2.   Annual allowances

   3.   Methods of computing annual allowances

   4.   Investment allowance

   5.   Balancing allowances or charges

   6.   Definitions

   7.   Sales of assets

   8.   Meaning of industrial building

   9.   Interpretation

   10.   Allowances for staff housing

PART II
MINING

   11.   Meaning of “mining expenditure”

   12.   Allowance in respect of mining expenditure

   13.   Allowance apportioned on transfer, etc.

   14.   Ineligibility for export allowance and transport allowance

   15.   When expenditure incurred before mining operations, etc.

   16.   Expenditure recovered deemed income in certain circumstances

   17.   Exceptions

THIRD SCHEDULE
PENSION FUNDS AND PROVIDENT FUNDS

   1.-4.   [Repealed by 24 of 2011]

FOURTH SCHEDULE
AMOUNTS RECEIVED OR ACCRUED BY WAY OF A TERMINAL BENEFIT WHICH SHALL NOT BE INCLUDED IN ASSESSABLE INCOME

   1.-3.   [Repealed by 17 of 2012]

FIFTH SCHEDULE

   1.   Interpretation

   2.   Ordinary contributions by employer to pension funds

   3.   Ordinary contributions by employees to pension funds [Deleted by 6 of 2005]

   4.   Ordinary contributions [Deleted by 6 of 2005]

   5.   Maximum allowable deductions [Deleted by 6 of 2005]

SIXTH SCHEDULE
APPROVED OBJECTS FOR A COOPERATIVE AGRICULTURAL SOCIETY

SEVENTH SCHEDULE
DETERMINATION OF TAXABLE INCOME OR ASSESSED LOSSES DERIVED OR INCURRED IN CARRYING ON INSURANCE BUSINESS

EIGHTH SCHEDULE
RULES OF PROCEDURE FOR APPEALS

   1.   Written statement required

   2.   Attendance of appellant

   3.   Failure to attend

   4.   Further procedure

   5.   Notice of appeal

   6.   Grounds of appeal

   7.   Reply

   8.   Notice of hearing

   9.   Failure to attend

   10.   Representation of parties

   11.   Language

   12.   Sequence to be followed

   13.   Costs

   14.   Further procedure

   15.   Appeals to Traditional Appeal Court

   16.   Notice of appeal

   17.   Grounds of appeal

   18.   Service of notice and grounds of appeal

   19.   Reply

   20.   Service of reply

   21.   Normal rules of procedure

NINTH SCHEDULE
DECLARATIONS

TENTH SCHEDULE
PERSONAL ALLOWANCES [Repealed by 10 of 1983]

ELEVENTH SCHEDULE
RATES OF INCOME TAX

TWELFTH SCHEDULE
ASSESSMENT OF FEDERAL PENSIONERS

THIRTEENTH SCHEDULE
TABLE OF RATES OF GRADUATED TAX [Deleted by 6 of 2005]

FOURTEENTH SCHEDULE
WITHHOLDING TAX-RATE OF DEDUCTION

FIFTEENTH SCHEDULE

SIXTEENTH SCHEDULE

SEVENTEENTH SCHEDULE

46 of 1963
12 of 1964 (N)*
19 of 1964
37 of 1964 (N)
10 of 1964 (M)
5 of 1965
33 of 1965
11 of 1966
7 of 1968
18 of 1968
14 of 1969§
16 of 1969
19 of 1969||
27 of 1970¶
14 of 1971¶
6 of 1972
5 of 1972
15 of 1973
10 of 1975
1 of 1976
5 of 1977
4 of 1981
4 of 1982
10 of 1983
1 of 1985
12 of 1987
20 of 1987
4 of 1988
1 of 1990
1 of 1991
7 of 1992
10 of 1993
2 of 1994
1 of 1995
19 of 1995
2 of 1996
5 of 1997
23 of 1997
8 of 1998
18 of 1998
14 of 1999
9 of 2000
10 of 2001
11 of 2002
10 of 2003
6 of 2005
13 of 2006
7 of 2007
11 of 2008
14 of 2009
29 of 2010
24 of 2011
29 of 2010
24 of 2011
17 of 2012
19 of 2013
11 of 2014
12 of 2015
25 of 2016
G.N. 219/1964(N)
137/1966
194/1967

An Act to provide for the taxation of incomes and for purposes ancillary thereto

[1ST JANUARY 1964]

PART I
PRELIMINARY

1.   Short title

   This Act may be cited as the Taxation Act.

2.   Interpretation of certain general terms

   In this Act, unless inconsistent with the context—

   “adjusted basis”, in relation to an asset, means the basis of the asset—

   (a)   in case of corporate shares, other than additional shares, increased by the amount of any contributions to the capital of the corporation made by the taxpayer who owns such shares;

   (b)   in any other case, reduced by the amount of the initial allowance, investment allowance or annual allowance given to the taxpayer in respect of the asset, or increased by the cost of improvements and additions, excluding maintenance or repair costs, made to the asset by the taxpayer;

   “agent” includes any partnership, company or any other body of persons, corporate or unincorporated, when acting as an agent;

   “amount realized”

   (a)   in the case of disposal of an asset by sale for cash, means the case received or contracted to be received;

   (b)   in the case of an exchange of the asset for other property, means that open market price of such other property received on the date of the exchange;

   (c)   in the case of an asset which is subject to a debt which is forgiven or assumed by another upon disposal of the asset, includes the amount of such debt; and

   (d)   in the case of an asset disposed of without any consideration, including disposal by gift, bequest or as a corporate distribution with respect to shares, means the open market price of the asset so disposed of on the date of disposal;

   “assessable income” means assessable income as defined in section 11;

   “assessed loss” means any amount by which the amounts allowed to be deducted under Part III, Division 2, and Part IV, from assessable income (as defined in Part III, Division 1) of any person exceed such income;

   “bank rate” means the rate of interest which the Reserve Bank of Malawi charges on its loans to commercial banks;

   “basis”, in relation to an asset, means (except as otherwise specified in this Act)—

   (a)   in the case of an asset purchased or constructed by the taxpayer, the cost of that asset;

   (b)   in the case of any other asset, the open market price of the asset on the date of its acquisition by the taxpayer:

   Provided that the basis of any capital asset held by the taxpayer, other than an asset used in trade or business and in respect of which an initial allowance, investment allowance or annual allowance has been granted under this Act, shall—

      (i)   be equal to its basis as determined in paragraph (a) or (b) adjusted by the consumer price index, published by the National Statistical Office at the date of disposal of the asset and applicable to the year in which the purchase or the construction of the asset was effected or completed, as the case may be; or

      (ii)   where the taxpayer so opts, be equal to the valuation value as of April 1, 1992, which was submitted to and accepted by the Commissioner by 30th September, 1995, adjusted by the Consumer Price Index published by the National Statistical Office at the date of disposal of the asset;

   “beneficiary with a vested right” in relation to income the subject of a trust created by a trust instrument, means a person named or identified in the trust instrument who has at the time the income is derived an immediate certain right to the present or future enjoyment of the income;

   “business asset” means an asset which is used or is held ready for use in a business, and includes any asset which is held for sale in a business, but does not include shares, treasury bills, bonds, debentures and any other investment assets;

   “capital asset” means all property held by the taxpayer, whether or not connected with a trade or business, excluding—

   (a)   stock in trade and property held primarily for sale to customers in the course of business, including timber and crops or other plants grown primarily for sale; and

   (b)   receivable accounts or notes acquired in the course of business in exchange for services rendered or property described in paragraph (a);

   “capital gain” means the excess of the amount realized on disposal of a capital asset over its adjusted basis or, where there is no adjusted basis, over its basis;

   “capital loss” means the excess of the adjusted basis, or where there is no adjusted basis the excess of the basis, of a capital asset over the amount realized on disposal of the capital asset;

   “child” includes a step-child, a lawfully adopted child, and a child for whom by custom an individual is responsible;

   “collector” means a person other than a tax authority to whom the Commissioner has delegated any of the functions conferred or imposed upon the Commissioner by this Act;

   “commercial rate of interest” means the average rate of interest at which commercial banks lend money to the public;

   “company” includes any association wheresoever incorporated;

   “derivative transaction” means a financial instrument or other contract within the scope of Accounting Standard IAS 9 and with all three of the following characteristics—

   (a)   its value changes in response to the change in an underlying measure (the underlying) which may be a specified interest rate, a financial instrument price, a commodity price, a foreign exchange rate, an index of prices or rates, a credit rating or credit index, or another variable, provided that if it is a nonfinancial variable then the variable is not specific to a party to the contract;

   (b)   it requires no initial net investment or an initial net investment that is smaller than the potential response of its value to changes in market factors; and

   (c)   it is settled at a future date;

“debt” means the total of long term or short term interest bearing loans, or non-interest bearing loans or trade credit;

   “disposal” in relation to an asset, means the transfer of ownership of the asset by any means whatsoever, including, but not limited to, sale, gift, bequest, distribution or exchange;

   “dividend” means any distribution, whether in cash or in property by a company to a shareholder thereof with respect to the shareholder"s interest in the company, other than distributions in complete liquidation of the company or bonus shares as described in section 70C and for purposes of this Act the existence of a dividend shall be determined without regard to whether or not the company has current or accumulated profits;

   “earnings” means the total amount in cash paid at a rate which does not exceed K1,400 per annum received by or accrued to or in favour of an employee in respect of work done or services rendered in Malawi, and whether paid or payable daily, weekly, monthly or at other intervals, including any cash paid in lieu of notice to terminate employment, but excluding any amount received as a war disability pension or widow’s war pension, or as an old age pension paid out of public funds or as an award, benefit, or compensation paid under any written law in respect of injury, disease or disablement suffered in employment.

   “employee or employed person” means any person who has entered into or works under a contract or agreement, expressed or implied, oral or written, for any work or labour whatsoever;

   “employer” includes any person or public authority who pays a wage or salary to an employee in Malawi;

   “equity” refers to—

   (a)   total share capital including reserves and retained earnings or profits;

   (b)   for a company, its minimum paid up capital while it existed during the year; and

   (c)   for a trust, the corpus of the trust;

   “foreign currency” means a currency other than the Malawi currency;

   “foreign currency asset” means an asset denominated in, or the amount of which is otherwise determined by reference to, a foreign currency and includes the notes and coins of such foreign currency;

   “foreign currency liability” means a liability denominated in or the amount of which is otherwise determined by reference to a foreign currency and includes the notes and coins of such foreign currency

   “foreign exchange gain” or “foreign exchange loss” means the amount determined in accordance with section 26;

   “fringe benefit” means any asset, service or other benefit in kind provided by or on behalf of an employer to an employee, if such benefit includes an element of personal benefit to the employee; and

   “fringe benefits tax” means tax payable by employers as provided in section 94A;

   “functions” includes powers and duties;

   “income” means income as defined in section 11;

   “income tax” means tax payable under this Act;

   “independent personal services” include professional services and other services of an independent character excluding management fees;

   “income the subject of a trust to which no beneficiary is entitled” means income the subject of a trust created by a trust instrument which—

   (a)   is not paid to or applied to the benefit of—

      (i)   a beneficiary with a vested right; or

      (ii)   a person who would but for—

         (A)   the conferment on the trustee by the trust instrument of a discretion so to pay or apply the income; and

         (B)   the happening of some event stipulated in the trust instrument other than the exercise of that discretion, be a beneficiary with a vested right; or

   (b)   is not income deemed by virtue to section 72 to have been received or have accrued to or in favour of the person by whom the trust instrument was made; or

   (c)   is not accumulated in terms of the trust instrument for the future benefit of a beneficiary with a vested right;

   “insolvency and bankruptcy” shall be construed in accordance with any enactment in force in Malawi relating to insolvency and bankruptcy and as including an assignment to or arrangement or composition with creditors made in terms of any enactment in force in Malawi relating to those matters and “insolvent” and “bankrupt” shall be construed accordingly;

   “involuntary conversion”, in relation to an asset, means the conversion of an asset by whatever means which, in the opinion of the Commissioner, is beyond the control of the taxpayer, including, but not limited to, destruction in whole or in part, theft, seizure, requisition, condemnation, or threat or imminence of destruction, seizure, requisition or condemnation:

   “Malawi currency” has the meaning assigned thereto in the Reserve Bank of Malawi Act;

   “management fees” means payments to a person for any services of an administrative, technical or managerial nature, if such services make available administrative, technical or managerial knowledge, experience, skills of know-how, and that are not payments to the person as an employee;

   “married woman” means a woman married by a law or by custom, who is not a woman referred to in paragraphs (c) and (d) of the definition of “spouse";

   “mineral” includes any valuable crystalline or earthly substance forming part of or found within the earth and produced or deposited there by natural agencies but does not include any clay (other than fire-clay), gravel, sand, stone (other than limestone) or other like substance ordinarily won by the method of surface-working known as quarrying;

   “mineral royalty” means the payment for the right to extract minerals from the ground;

   “mining operations” means—

   (a)   any operations for the purpose of winning a mineral from the earth;

   (b)   any operations for the purpose of winning a mineral from any substance or constituent of the earth which are carried on in conjunction with operations referred to in paragraph (a) by the person carrying on those operations; and

   (c)   such operations for the purpose of winning a mineral from any substance or constituent of the earth which are not carried on in conjunction with operations referred to in paragraph (a) or by a person carrying on those operations as the Commissioner may determine to be mining operations for the purposes of this Act; and “mine” whether used as a noun or a verb, shall be construed accordingly;

   “mining permit” means—

   (i)   a mineral tenement or an artisanal mining permit as defined under the Mines and Minerals Act, 2016 and includes such a right as may be renewed or varied from time to time; and

   (ii)   where a mining permit covers an area taken from another mining permit while that permit was held by the taxpayer, the area of the other mining permit during the period before the later mining permit was taken from it;

“mining project” means—

   (a)   the holding of a mining permit; and

   (b)   the conduct of activity under that permit including reconnaissance for, exploration for, and mining operations for minerals and including like operations for clay, sand, gravel, stone, or for any substance commonly won by quarrying; and

   (c)   the financing of any of activities in (a) or (b) whether by debt or by equity; and

   (d)   the supply by sale or otherwise of anything resulting from those activities or of anything used, created or acquired in those activities;

   “minor child” means a child who is under twenty-one years of age and is unmarried;

   “open market price”, in relation to an asset, means the price which the asset would fetch if sold on the open market at the time of the event in question;

   “parent” includes a person liable at law or by custom to maintain a child;

   “pension fund” means—

   (a)   a superannuation, pension, widows’ or orphans’ fund established by any enactment whatsoever, whether in force in Malawi or elsewhere;

   (b)   a scheme or fund, other than a fund defined in paragraph (a), which the Commissioner approves or is deemed to have approved as a pension fund under section 65;

   “period of assessment” means any period in respect of which any tax leviable under this Act is chargeable and includes for the purposes of the charging, levying and collection of tax in respect of any period ended on or before the 31st day of March, 1963, any period in respect of which tax was chargeable under the Income Tax Act, of the former Federation of Rhodesia and Nyasaland;

   “permanent establishment” includes an office or other fixed place of business through which business activity is carried on:

   “person” includes an individual, a partnership, a company, a corporation, a trust, a club, a society, an organization, a public authority, an association and an unincorporated joint venture of persons who are not partners so far as they together have a mining project and, in respect of each mining project that they have, a person is a separate taxpayer from being a taxpayer in any other respect;

   “person resident in Malawi” includes—

   (a)   any individual present in Malawi for an aggregate of 183 days or more in any twelve months period commencing or ending in the year of assessment concerned;

   (b)   any trust, estate or partnership established or otherwise organized under any written law of Malawi; and

   (c)   any company incorporated in Malawi;

   “previous law” means any law relating to income tax applicable in the former Nyasaland, or the former Federation of Rhodesia and Nyasaland, or in Malawi, which was in force before the coming into operation of this Act;

   “professional services” include independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants;

   “provident fund” means a fund approved by the Commissioner as a provident fund under section 65;

   “royalty” means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience;

   “spouse” does not include—

   (a)   a husband who is separated from his wife under a judicial order or written agreement of separation; or

   (b)   a husband who—

      (i)   is living apart from his wife; and

      (ii)   is not wholly maintaining his wife; or

   (c)   a wife who is separated from her husband under a judicial order or written agreement of separation; or

   (d)   a wife who—

      (i)   is living apart from her husband; or

      (ii)   is not wholly maintained by her husband;

   “statutory corporation” means a body, other than a private society, incorporated by or in terms of a law in force in Malawi for special purposes specified in or under the law;

   “tax” or “the tax” means the appropriate tax payable under this Act;

   “taxpayer” means any person chargeable with tax, and, for the purposes of any provision relating to any return, includes every person required by this Act to furnish such return;

   “taxable income” means income as defined in section 28 and is assessable income after deduction of allowable deductions;

   “this Act” includes any rules made under this Act;

   “trade” includes every profession, trade, business, employment, calling, occupation, or venture, including the letting of any property;

   “trustee” includes—

   (a)   the administrator or executor of a deceased estate; and

   (b)   the trustee of an insolvent or bankrupt estate or assignee, person having the conduct of an order of composition or trustee under a deed of arrangement in an insolvent or bankrupt estate; and

   (c)   the legal representative of any individual under a legal disability or other person having, whether in an official or private capacity, the possession, disposal, control or management of the property of an individual under a legal disability; and

   (d)   the person having the administration or control of property subject to a usufruct, fidei-cummissum or other limited interest; and “trust;", “property the subject of a trust” and “income the subject of a trust” shall be construed accordingly;

   “trust instrument” means a deed, will, contract of settlement or other disposition, including a verbal declaration, by which a trust is created;

   “withholding tax” means the amount of tax deductible under section 102A;

   “year of assessment” means any period of twelve months in respect of which the tax leviable under this Act is chargeable.

3.   Commissioner of Taxes

   (1) There shall be constituted the office of Commissioner of Taxes (hereinafter referred to as “the Commissioner") which shall be a public office the holder of which shall be charged with the general administration of this Act.

   (2) The Commissioner shall at all times conform with the general directions of the Minister.

PART II
ADMINISTRATION

4.   Delegation of functions by Commissioner

   (1) All officers appointed for the purpose of carrying out this Act shall be under the direction and control of the Commissioner and shall perform such duties as the Commissioner may direct, and the Commissioner may, in writing and subject to such limitations as he may think fit, delegate to such officers or to any administrative officer any of the functions conferred or imposed on him by this Act.

   (2) Nothing in this section shall be deemed to confer upon any person other than the Commissioner any of the functions of the Commissioner under this section or section 5 or to prevent the exercise of any function by the Commissioner in person and the Commissioner shall have in relation to any act of any other officer the same powers as if the act had been done by himself.

   (3) Any reference in this Act to the Commissioner shall be deemed to include in respect of matters as to which any other officer has exercised any function conferred upon him by this Act a reference to that other officer.

5.   Report by Commissioner

   (1) The Commissioner shall furnish to the Minister annually for presentation to the National Assembly a report on the working of this Act.

   (2) In such report the Commissioner shall draw attention to any breaches or evasions of this Act which have come under his notice.

6.   Officers to observe secrecy

   (1) For the purposes of this section, “officer” means a person who is or has been appointed or employed by the Government, and who by reason of that appointment or employment, or in the course of that employment, may acquire or has acquired information respecting the affairs of any other person, disclosed or obtained under this Act or any previous law and shall include a Special Arbitrator and any assessor appointed under section 98 (3).

   (2) Subject to this section, every officer shall preserve and aid in preserving secrecy with regard to all matters that may come to his knowledge in the performance of his duties in connexion with this Act, and shall not communicate any such matter to any person whomsoever other than the taxpayer concerned, or his lawful representative, nor suffer or permit any person to have access to any records in the possession or custody of the Commissioner except in the performance of his duties under this Act:

   Provided that the Commissioner may prepare and publish statistics showing the total amount of income or taxable income received by any class or classes of persons from all or any particular sources during any year of assessment as declared in returns made to the Commissioner.

   (3) No officer appointed or employed in carrying out this Act shall be required to produce in any court any return, document or assessment or to divulge or to communicate to any court any matter or thing coming under his notice in the performance of his duties under this Act except as may be necessary for the purposes of carrying this Act into effect or for the purpose of any prosecution for an offence committed in relation to any tax on income:

   Provided that nothing in this provision shall prevent such officer from being required to disclose such information relating to any taxpayer as that taxpayer may request or authorize to be disclosed.

   (4) Where any agreement or arrangement with any other country with respect to relief for double taxation of income or profit includes provision for the exchange of information with that country for the purpose of implementing that relief or preventing avoidance of tax, the obligations as to secrecy imposed by this section shall not prevent the disclosure of such information to the authorized officers of the Government of such country.

   (5) Notwithstanding anything contained in this section the Commissioner shall permit the Auditor General or any officer duly authorized in that behalf by the Auditor General to have such access to any records or documents as may be necessary for the performance of his official duties and the Auditor General and any such officer shall be deemed to be an officer employed in carrying out this Act for the purposes of this section.

   (6) The Commissioner and every officer shall, before acting under this Act, take and subscribe, before a magistrate or commissioner for oaths, the appropriate oath of fidelity or secrecy set out in the Ninth Schedule.

   (7) Every person who, in contravention of this section or of the true intent of the oath of fidelity or secrecy taken by him and without lawful excuse, reveals to any person whomsoever any matter or thing which has come to his knowledge in the course of his official duties, or suffers or permits any person to have access to any records in the possession or custody of the Commissioner, shall be liable to a fine of K1,000 and to imprisonment for two years.

   (8) Any person who acts in the execution of his office before he has taken the oath prescribed in terms of this section shall be liable to a fine of K20.

7.   Forms

   The Commissioner may from time to time approve the form of returns, claims, statements, notices and all such other forms as may be required for the administration of this Act.

8.   Service of documents

   Any notice or document required or authorized under this Act to be served upon any person shall be sufficiently and effectively served—

   (a)   if personally served upon him; or

   (b)   if left with some adult person apparently resident at, occupying, or employed at his last known abode, office or place of business in Malawi; or

   (c)   if sent by post addressed to such last known place of abode, whether inside or outside of Malawi, office or place of business, or to any post office box rented in the name of such person or the employer of such person, in which case the term “post” means registered or unregistered post and, unless the contrary is proved, the service shall be deemed to have been effected at the time at which the notice would be delivered in the ordinary course of post;

   (d)   if affixed at such last known place of abode, office or place of business in which case such person shall be deemed to have received the notice or document on the fourteenth day after the affixing.

9.   Service of oral notices

   (1) Where a collector is of the opinion that by reason of the illiteracy or infirmity of any person, such person would not understand the meaning of any written notice, request, advice, decision, form or other document, he may direct that the substance of such document shall be communicated to such person in such manner as he may deem fit and section 8 shall not apply.

   (2) A certificate in the prescribed form by any Chief, SubChief, village headman, or by a messenger in the public service or in the employment of a Chief or a local authority that, in accordance with the direction of a collector, the effect of any such document has been communicated to such person shall be admitted as evidence that such communication was made on the date specified on the certificate without proof of the signature of the person signing it.

10.   Validity of documents

   (1) Notices given by the Commissioner under this Act may be signed by any officer authorized by him on his behalf and any notice purporting to be signed by order of the Commissioner shall be as valid and effectual as if signed by himself.

   (2) Every form, notice, demand, or other document issued or given by or on behalf of the Commissioner or any other officer authorized under this Act shall be valid if the name of the Commissioner or officer by whom the same is issued or given is printed or written thereon.

PART III
INCOME

Division 1—Determination of Assessable Income

11.   Income and assessable income

   The income of a person shall include the total amount in cash or otherwise, including any capital gain, received by or accrued to or in favour of the person in any year or period of assessment from a source within or deemed to be within Malawi and his assessable income shall be that income excluding any amount exempt from tax under this Act.

12.   Special circumstances in which income deemed to have accrued

   (1) Income shall be deemed to have accrued to a person notwithstanding that such income has been invested, accumulated or otherwise capitalized by him or that such income has not been actually paid over to him but remains due and payable to him or has been credited in an account or re-invested or accumulated or capitalized or otherwise dealt with in his name or on his behalf, and a complete statement of all such income shall be included by any person in the returns by him under this Act.

   (2) Income, other than earned income (as defined in section 73), received by or accrued to or in favour of a married woman shall be deemed to be income received by or accrued to or in favour of her husband.

13.   Exemption

   (1) There shall be exempt from tax all that income specified in the First Schedule.

   (2) Where any income is exempt from income tax, the exemption shall be limited to the specified or original recipient of the income and shall not extend to persons receiving payments from that recipient, although the payments may be made wholly or in part out of that income.

   (3) The exemption of any income from income tax shall not exempt any person from furnishing any return or information which is required by the Commissioner.

14.   Repealed by Act 17 of 2012

   [Repealed by 17 of 2012].

15.   Non-recognition of capital gain or capital loss in certain cases

   (1) No capital gain and no capital loss shall be recognized for the purposes of this Act in respect of the transfer of any capital asset—

   (a)   between spouses; or

   (b)   between former spouses; or

   (c)   to a spouse from the estate of a deceased spouse; or

   (d)   to a child from the estate of a deceased parent;

   (e)   from an individual to a trust,

   and the adjusted basis, if any, of such asset in the hands of the transferor shall be the basis of the asset in the hands of the transferee;

   (2) No capital gain and no capital loss shall be recognized upon the disposal of the principal residence of an individual and for this purpose an individual shall be taken to have not more than one principal residence at a time, and the determination of the Commissioner with respect to any issue relating to the principal residence of an individual shall be final.

15A.   Involuntary conversion of assets

   (1) Where an asset of a taxpayer is involuntarily converted—

   (a)   into an asset similar to, or related in service or use to, the asset so converted, no capital gain shall be recognized;

   (b)   into an asset not similar to, or related in service or use to, the asset so converted, or into money, capital gain, if any, shall be recognized, subject to subsections (2) and (3).

   (2) Where a taxpayer whose asset has been involuntarily converted makes a valid and timely election and timely acquires an asset that is similar to, or related in service or use to, the asset so converted (hereinafter referred to as the “qualifying replacement asset”), capital gain, if any, shall be recognized only to the extent that the amount realized as a result of such conversion exceeds the cost of the qualifying replacement asset.

   (3) The election by a taxpayer whose asset has been involuntarily converted to limit any capital gain recognized as a result of such conversion shall be valid if the taxpayer, in a timely filed income tax return for the taxable year during which the conversion occurred—

   (a)   briefly describes the type of involuntary conversion;

   (b)   identifies the asset so converted;

   (c)   indicates the adjusted basis of the asset; and

   (d)   states an intention to acquire a qualifying replacement asset.

   (4) For purposes of the section—

   (a)   the acquisition of a qualifying replacement asset shall be timely if such acquisition is made within two years after the close of the first year of assessment in which any part of capital gain is realized;

   (b)   the basis of—

      (i)   a qualifying replacement asset received in the conversion shall be the adjusted basis of the asset so converted, less the open market value of any other asset and any money received by the taxpayer that was not spent on the qualifying replacement asset, plus any capital gain or less any capital loss recognized upon such conversion;

      (ii)   an asset received in the conversion that does not qualify as a replacement asset shall be equal to its open market value;

      (iii)   a qualifying replacement asset shall be equal to its cost less the amount of any capital gain not recognized.

   (5) Subject to the provisions of this Act, where the basis of the qualifying replacement asset exceeds the adjusted basis of the replaced asset, the investment allowance or the initial allowance shall be claimable on the difference.

   (6) This section shall not apply to motor vehicles not used in the business of transporting passengers or goods.

15B.   Capital gains on disposal of business assets

   (1) Subject to subsection (2), no capital gain shall be recognized on the disposal of a business asset, if the gain has been used to acquire a qualifying replacement asset similar to, or related in service or use to, the asset so disposed.

   (2) The taxpayer whose business asset has been disposed of, shall acquire the qualifying replacement asset within eighteen (18) months from the date the disposal occurred and shall declare in his return of income.

*16.   Income— payments for services

   (1) The income of a taxpayer shall include any amount received or accrued in respect of services rendered or to be rendered whether due and payable under any contract of employment or service or not including any contract gratuity.

   (2) For the purposes of this section—

   “contract gratuity” means a gratuity paid under a written contract of employment upon expiry, termination, renewal or extension of such contract, which is paid to an employee who is not during such employment a member of a pension fund other than a pension fund to which he is a voluntary contributor and in respect of which no contributions are payable by his employer out of which a pension will be paid to such employee in respect of such employment.

   (3) No amount paid as a contract gratuity by an employer other than the Government shall be excluded from the assessable income of a taxpayer, unless the provision of the contract providing for the payment of such contract gratuity is similar to and comparable with such provision in contracts between the Government and its employees and has been approved by the Commissioner. The Commissioner shall not approve any provision for the payment of a contract gratuity contained in a contract entered into between a company and any person other than a person—

   (a)   whose time, in the opinion of the Commissioner, is wholly or almost wholly occupied in the service of the company; and

   (b)   who is unable either directly or indirectly to control more than five per centum of the voting rights attaching to all classes of shares of the company.

17.   Assessment to tax for single terminal

   A single terminal payment to an employee in lieu of paid leave shall be assessed to tax as if such leave had been taken by the employee immediately after cessation of employment and after he had been paid accordingly.

18.   Sums payable by an employer for expenses of an employee

   Any sum paid by an employer to an employee in respect of expenses shall be treated as a prerequisite of the office or employment of that employee and shall be included in the employee’s assessable income:

   Provided that the employee may claim as a deduction the amount of any such payment as is expended by him wholly and exclusively in performing the duties of his office.

19–21. Repealed by 1 of 1991

   [Repealed by 1 of 1991].

22.   Income—passages

   Any amount paid by the Government to its employees in respect of or in connexion with leave passages to any country outside Malawi and any comparable amounts similarly paid by any other employer under a contract with an employee, which has been approved by the Commissioner, shall not be treated as a benefit within the meaning of section 18.

23.   Premiums

   There shall be included in income any amount received or accrued from another person as a premium or like consideration paid by such other person for the right to use or occupation of land or buildings or for the right of use of plant or machinery or for the use of any patent, design, trade-mark or copyright or any other property which, in the opinion of the Commissioner is of a similar nature.

24.   Timber sales

   Where land is sold or otherwise disposed of for valuable consideration and there is timber growing on such land which, in the opinion of the Commissioner, has been grown as timber for sale, the market selling value as defined in section 50 of such timber at the time such land is sold or so disposed of shall be included in income.

25.   General

   There shall be included in income any amount recovered or recouped during the year of assessment in respect of amounts allowed as deduction under division 2 of this Part of this Act or under any previous law whether in that or any previous year of assessment.

26.   Foreign exchange gain and foreign exchange loss

    (1) There shall be included in computing income for the purposes of this Act any foreign exchange gain and any foreign exchange loss, as determined in accordance with subsection (2), which arises from a source in Malawi.

   (2) The amount of foreign exchange gain or foreign exchange loss shall be determined in accordance with the following formula—

   a×r1 minus a×r2,

   where

   "a” is the amount of foreign currency received, paid or otherwise computed with respect to a foreign currency asset or liability in the transaction in which the foreign currency asset or liability is disposed of, converted, repaid, or otherwise eliminated;

   "r1” is the official rate of exchange for the foreign currency with respect to the Malawi currency at the date on which the foreign currency asset or liability was obtained or established by the taxpayer; and

   "r2” is the official rate of exchange for the foreign currency with respect to the Malawi currency at the date of satisfying the transaction.

27.   Income deemed to have accrued in Malawi

   (1) An amount shall be deemed to have accrued to any person from a source within Malawi whenever it has been received by or has accrued to or in favour of such person—

   (a)   as remuneration for any services rendered or work of labour done by such person in the carrying on in Malawi of any trade, whether the payment for such service or work or labour is made or is to be made by a person resident in or out of Malawi, and wherever payment for such services or work or labour is made or is to be made;

   (b)   by virtue of any pension or annuity granted to such person by—

      (i)   any person wheresoever resident; or

      (ii)   the Government for services rendered, wheresoever payment of such pension or annuity is made and wheresoever the funds from which payment is made are situated:

Provided that—

      (i)   no pension or annuity shall be deemed to be derived from a source within Malawi if the service or employment for which it was granted was performed wholly outside Malawi. For the purposes of this proviso the service or employment in respect of which a pension or annuity was granted shall be deemed to have been performed within Malawi if the remuneration for the service or employment was deemed to have accrued from a source within Malawi by virtue of paragraph (c);

      (ii)   if the service or employment in respect of which any pension or annuity (other than a pension or annuity granted in respect of employment by the Government or any local authority or any statutory corporation) was granted, was performed partly within Malawi and partly elsewhere, only a proportionate part of such pension or annuity shall be deemed to be derived from a source within Malawi. Such proportionate part shall be calculated in accordance with the ratio that the period of service or employment within Malawi bears to the total period of service or employment in respect of which such pension or annuity was granted;

   (c)   by virtue of any services rendered by such person to the Government or any local authority or any statutory corporation, notwithstanding that such services are rendered outside Malawi:

   Provided that this provision shall apply only if the person rendering the services is resident outside Malawi solely for the purpose of rendering such service;

   (d)   from a person in or out of Malawi who may claim or would otherwise claim a deduction for such amount, in connexion with a permanent establishment in Malawi, as remuneration for services rendered or work of labour done, wherever such services, work or labour may have been rendered or done.

   (2) Pensions payable to pensioners of the Government of the former Federation of Rhodesia and Nyasaland shall be deemed to arise or not to arise from a source within Malawi in accordance with the provisions contained in the Twelfth Schedule.

   (3) Any interest paid by reason of the deferment of the payment of any amount or any part of any amount referred to in paragraph (r) of the First Schedule shall be deemed to have accrued from a source within Malawi notwithstanding that such interest shall have been paid outside Malawi from a source outside Malawi.

   (4) Any dividend attributable to taxable income of a company incorporated in Malawi shall be deemed to accrue from source within Malawi.

   (5) Any amount incurred, claimed or claimable in connexion with a permanent establishment in Malawi shall be deemed to accrue from a source within Malawi, regardless of the place of residence of the recipient, or the place of payment, of such amount.

   (6) Any foreign exchange gain or foreign exchange loss realized in connexion with a permanent establishment in Malawi or arising in connexion with foreign currency assets or liabilities held in Malawi shall be deemed to accrue from a source in Malawi.

   (7) Any capital gain or capital loss realized in respect of tangible property located in Malawi or property representing an interest in a company incorporated in Malawi shall be deemed to accrue from a source within Malawi.

   (8) Any interest not charged on a loan by a lender to another person shall be deemed as income to have accrued from a source within Malawi.

   (9) The Commissioner General shall determine the amount of interest forgone in subsection (8) by using a prevailing Banking lending rate plus five per cent per annum.

Division 2—Deductions
Determination of Taxable Income

28.   Allowable deductions in determining taxable income

    (1) For the purpose of determining the taxable income of any taxpayer, there shall be deducted from the assessable income of such taxpayer the amounts of any expenditure and losses (not being expenditure of a capital nature) wholly and exclusively and necessarily incurred by the taxpayer for the purposes of his trade or in the production of the income.

   (2) Where a taxpayer claims to deduct an amount which might be regarded as deductible under two or more headings by virtue of any of the provisions of this Act, he shall not be entitled to claim that such amount shall be deducted more than once but shall elect under which one of these headings he wishes to claim such amount as a deduction.

   (3) For the purpose of determining the taxable income of any taxpayer, there shall be deducted from the assessable income of such taxpayer the amount of any capital loss realized by the taxpayer in the year of assessment, but to the extent only of either—

   (a)   the capital loss; or

   (b)   any capital gain realized by the taxpayer in that year of assessment,

   whichever is the lesser:

   Provided that any loss realized with respect to an asset used in a trade or business and in respect of which an initial allowance, investment allowance or annual allowance has been given under this Act shall not be subject to the limitation under this subsection but shall be deducted in accordance with subsection (1).

   (4) The whole or any part of the capital loss not deducted by reason of the limitation imposed under subsection (3) shall be carried forward to the following year of assessment and shall continue to be so carried forward until fully deducted from the taxpayer’s assessable income in accordance with that subsection.

   (5) The deduction of any foreign exchange loss shall be subject to the limitation that any realized foreign exchange loss shall not be deductible from assessable income of a taxpayer in the year of assessment to the extent of his unrealized foreign exchange gain which would otherwise be realized if all foreign currency assets and liabilities of the taxpayer were disposed of or satisfied on the last day of the taxpayer’s year of assessment in which the loss was realized, and the whole or part of any such loss which is not deducted by reason of this limitation shall be carried forward to the following year of assessment and continue to be so carried forward until fully deducted from the taxpayer’s assessable income in accordance with the limitation imposed by this subsection.

   (6) The limitation on the extent of deduction imposed by subsections (3) and (4) shall not apply in respect of the year of assessment in which the taxpayer dies or ceases to exist.

29–30 Repealed by 10 of 1983

   [Repealed by 10 of 1983].

31.   Repealed by 4 of 1988

   [Repealed by 4 of 1988].

32.   Allowable deductions—repairs

   Sums actually expended by the taxpayer during the year of assessment for repairs not being expenditure of a capital nature—

   (a)   to any premises or part of premises occupied for the purpose of his trade; or

   (b)   resulting from the letting of property; or

   (c)   of articles, implements, plant, machinery and utensils employed by him for the purpose of his trade,

   shall be an allowable deduction.

33.   Allowable deductions—capital allowances

   There shall be allowed as a deduction from assessable income capital allowances as provided in the Second Schedule:

   Provided that the Minister may, by regulations, determine ceilings of capital allowances deductible in any given year of assessment in respect of certain assets.

34.   Allowable deductions—premiums paid

   (1) An allowance shall be made in respect of any premium or consideration in the nature of a premium paid by any taxpayer for the right of use or occupation of land or buildings, or for the right of use of plant or machinery, or for the use of any patent, design, trade-mark, copyright or any other property which, in the opinion of the Commissioner, is of a similar nature, where such land, buildings, plant, machinery, patent, design, trade-mark, copyright, or property is used for the production of income or from which income is derived but such allowance shall not exceed for any year of assessment such portion of the amount so paid as is equal to the amount of the premium or consideration divided by the number of years for which the right of occupation or use is granted:

   Provided that—

   (a)   where the period for which the right of occupation or use is granted exceeds 25 years, the deduction shall be one twenty-fifth of such premium or consideration; and

   (b)   where the taxpayer acquires the ownership of land or buildings, plant or machinery, patent, design, trade-mark, or copyright or other property in respect of which an allowance has been made in terms of this paragraph, then from the date he acquires such ownership he shall cease to be entitled to any allowance under this paragraph in respect thereof.

   (2) For the purposes of this section, the amount of any premium or consideration in the nature of a premium shall be reduced by the total amount of any similar allowance made under any previous law.

34A.   Mineral royalty allowable deduction

   Sums actually expended by the taxpayer during the year of assessment by way of payment of mineral royalty under section 64A shall be an allowable deduction.

35.   Allowable deductions—bad debts

   There shall be allowed as a deduction bad debts proved to be such to the satisfaction of the Commissioner and which have become bad during the year of assessment if the amount of the debt is included in the current year of assessment or was included in any previous year in the taxpayer’s assessable income either in terms of the Act or any previous law.

36.   Allowable deductions—doubtful debts

   (1) There shall be allowed as a deduction doubtful debts to the extent that they are estimated to be doubtful if the amounts of such debts are included in the current year of assessment or were included in the previous year of assessment in the taxpayer’s income either in terms of this Act or any previous law. Such allowance shall be included in the income of the taxpayer in the following year. For the first year of assessment under this Act any such allowance made for the last year of assessment in terms of any previous law shall be deemed to have been made in terms of this Act.

   (2) Where in any year of assessment a taxpayer receives an amount in respect of a debt for which a deduction has been allowed to him under this Act or any previous law, his assessable income shall include that amount.

36A.   Allowable deductions—export allowance

   (1) There shall be allowed as a deduction an amount (hereinafter referred to as an “export allowance") equivalent to twenty five per centum (25%) of thet taxable income as determined under section 14 of the Export Incentives Act in respect of exports of non-traditional goods made during the year of assessment.

   (2) No deduction of an export allowance shall be made unless the Commissioner is satisfied that the taxable income from which the deduction is to be made has been determined in accordance with the provisions of this Act.

36B.   Allowable deductions—payroll levy

   There shall be allowed as a deduction an amount paid by an employer, who is also a taxpayer, as payroll levy determined under section 20 of the Technical, Entrepreneurial and Vocational Education and Training.

37.   Allowable deductions—pension funds and provident funds

   There shall be allowed as a deduction—

   (a)   an amount to be determined in accordance with the provisions of the Fifth Schedule in respect of ordinary contributions as defined in that Schedule which are made in the year of assessment to a pension fund;

   (b)   any contribution, other than any ordinary contribution as defined in the Fifth Schedule, by an employer to a pension fund which is made for the purpose of ensuring that the moneys in the fund are sufficient to meet all payments to be made in terms of the rule of the fund:

   Provided that the Commissioner may direct that such a contribution by an employer to a pension fund shall be treated as an expense to be spread over such period of years as the Commissioner may determine;

   (c)   an amount contributed by an employer to a provident fund; and

   (d)      contributions to the Parliamentary Pensions Premium Fund made by a member of the National Assembly pursuant to section 11 of the Parliamentary Pensions (Enabling Provisions) Act.

38.   Allowable deductions—sale of timber

   Where income arises from the sale of timber a deduction shall be allowed—

   (a)   in respect of such income from the sale of, or the sale of the right to fell, timber which was growing on the land at the time of the acquisition of the ownership of such land by the taxpayer, an amount determined as follows—

      (i)   where such land was acquired by the taxpayer for valuable consideration, so much of the value of such consideration as the Commissioner thinks just and reasonable as representing the cost of the standing timber;

      (ii)   where no valuable consideration was given by the taxpayer for such land, an allowance fixed by the Commissioner as representing the value of the standing timber at the time that the taxpayer acquired such land;

      (iii)   where the taxpayer sells the timber the amount to be deducted for any year of assessment shall be the portion attributable to the timber sold during that year; and

   (b)   in respect of income from the sale by the taxpayer of timber, the right to fell and dispose of which was not acquired with the land on which the timber was grown, so much of the consideration for which the timber was acquired as is attributable to the amount of the timber sold by the taxpayer in the year of assessment.

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