CAPITAL
Lilongwe
POPULATION
21 Million
AREA
118,484 sq km
LEGAL SYSTEM
A mixed legal system of English common law and customary law; judicial review of legislative acts in the Supreme Court of Appeal.
TAX REGIME
Personal Income Tax | Local & Expatriate
| Summary | Tax Rate/s | ||||||||||||
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The Individual income is subjected to tax referred to as Pay As You Earn (PAYE). PAYE is computed based on a graduated scale. This is applicable to both resident and non-resident individuals. For the expatriates, it is mandatory that they remit PAYE on any income accrued or derived in Kenya. |
The graduated scale for PAYE is as shown below;
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Corporate Income Tax
| Summary | Tax Rate/s |
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Any income that is derived or deemed to have been accrued in Kenya is subject to corporate tax.
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The applicable rate is as follows:
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Withholding Tax
| Summary | Tax Rate/s |
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Withholding tax is an agency tax that is applicable on different services at the point of payment..
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The applicable rate for professional fees is 5% and 20% for both resident and non-resident entities. Interest is taxed at the rate of 15% for both resident and non-resident Dividends is taxed at the rate if 5% and 15% for resident and non- resident entities. Management fees is taxed at the rate of 5% and 20% for resident and non-resident entities |
Capital Gains Tax
| Summary | Tax Rate/s |
| Capital Gains Tax is a final tax that is applied proceeds from the transfer of property. | The applicable rate is 5%. |
Environmental Levy
| Summary |
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There is no environmental levy. However, acquiring the Environmental Impact Assessment License remains mandatory by the law. |
Inheritance Tax
| Summary | Tax Rate/s |
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N/A |
N/A |
Dividend Tax
| Summary | Tax Rate/s |
| Dividends include any benefit (cash or non-cash) that is extended to the owner of a business or a related party to the owner. | Dividends are subject to Withholding tax at the rate of 5% and 15% for both residents and non-residents respectively. |
VAT/GST
| Summary | Tax Rate/s |
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VAT is a consumption tax that is charged on the supply of taxable goods in Kenya and services and on importation into the country.
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Taxable supplies are subjected to VAT at a standard rate of 16% and 0%, except for fuels which are at the rate of 8%. |
Bilateral Tax Treaties and DTAAs
| Summary | Tax Rate/s |
| Kenya has entered into double tax avoidance agreements with several countries, such as South Africa, Zambia, United Kingdom, Denmark, Mauritius, India etc.
These DTAAs clearly highlight its beneficiaries and the taxes applicable between the two states. Within the terms, the agreement also allocates the taxing rights to the relevant country. |
In the cases where residents of a country that has a DTA with Kenya, (contracting state), transact with residents from Kenya, then the tax rates provided under the DTAAs shall prevail.
Where there is no a tax treaty between the contracting states, then the taxes as per the jurisdictional regulations shall be applicable. |
Tax Incentives
| Summary |
| The Income Tax Act entails different tax incentives provisions that the taxpayers can take advantage of in order to reduce their liability while computing for their tax obligations. |
Tax Rulings and Directives
| Summary |
| Tax disputes are limited to the ruling of the Tax Appeal Tribunals. However, taxpayers can appeal their litigations at the High Court on matters of legal interpretations. |
TOP INDUSTRIES
TOBACCO
TEA
SUGAR
SAWMILL PRODUCTS
CEMENT
CONSUMER GOODS
ECONOMIC OVERVIEW
Landlocked Malawi ranks among the world’s least developed countries. The economy is predominately agricultural with about 80% of the population living in rural areas.
Agriculture accounts for about one-third of GDP and 80% of export revenues. The performance of the tobacco sector is key to short-term growth as tobacco accounts for more than half of exports.
Heavily dependent on rain-fed agriculture, with corn being the staple crop, Malawi’s economy was hit hard by the El Nino-driven drought in 2015 and 2016, and now faces threat from the fall armyworm.
The drought also slowed economic activity, led to two consecutive years of declining economic growth, and contributed to high inflation rates.