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. [1 of 1991] 19. *** [repealed by 1 of 1991] 20. *** [repealed by 1 of 1991] 21. *** [repealed by 1 of 1991] 22.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. [14 of 1971] 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 . [7 of 1992] 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 x r1 minus a x 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. [7 of 1968; 19 of 1969; 5 of 1977; 4 of 1982; 10 of 1983; 1 of 1991; 7 of 1992] 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. [12 of 1987] (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. [12 of 1987; 7 of 1992] (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. [7 of 1992] (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 of 1992] (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. [7 of 1992] 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). [7 of 1992] (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. [1 of 1991; 7 of 1992; 1 of 1995] 29. *** [repealed by 10 of 1983] 30. *** [repealed by 10 of 1983] 31. *** [repealed by 4 of l988] 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. [1 of 1991] 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 . 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 of the 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 . [Cap. 39:04; 4 of 1988; 17 of 2012] 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. [9 of 2000; Cap. 55:06] 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 [14 of 1969] (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. [4 of 1981; Cap. 2:06] [14 of 1969] 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 . 39. Allowable deductions — research, etc. There shall be allowed as a deduction— (a) the amount of any expenditure, not being expenditure of a capital nature, incurred by the taxpayer during the year of assessment on experiments and research relating to his trade ; (b) any sum contributed by the taxpayer during the year of assessment to any scientific or educational society or institution or other body of a public character approved by the Minister if the taxpayer has stipulated that the sum must be utilized by such society, institution, or body, as the case may be, solely for the purpose of industrial research or scientific experimental work connected with the trade of the taxpayer ; (c) any sum contributed by the taxpayer during the year of assessment in the form of a grant, bursary, or scholarship to enable any other person to take a course of technical education related to the trade of such taxpayer at any educational institution approved by the Minister; (d) individual donations of not less than K250 made during the year of assessment by the taxpayer to any such charitable organization as the Minister may from time to time by notice published in the Gazette approve for the purposes of this paragraph; and [19 of 1969; 7 of 1992] (e) individual donations of not less than K500 made during the year of assessment by the taxpayer to any such non-profit institution operated solely or principally for social welfare, civic improvement, educational development, or other similar purposes as the Minister may, from time to time, by notice published in the Gazette approve for the purposes of this paragraph. [2 of 1996] [1 of 1990; 7 of 1992; 2 of 1996] 39A. Allowable deductions — social contribution There shall be allowed as a deduction of fifty per centum for any amount paid as a social contribution directly into the building of a public hospital or school, or the sponsoring of youth sporting development activities. [17 of 2012] 40. Allowable deductions — annuity payment Any amount paid by way of annuity, allowance or pension during the year of assessment by any taxpayer — (a) to a former employee who has retired from the taxpayer ’s employ on the grounds of ill-health, infirmity or old age; or (b) to any person who is dependent for his maintenance upon a former employee of such taxpayer or (where such former employee of such taxpayer is deceased) was so dependent immediately prior to his death, shall be allowed as a deduction: Provided that the deduction under paragraph (b) shall not exceed in respect of persons so dependent on any one retired or deceased employee the sum of K1,200. 41. Allowable deductions — new businesses initial expenditure (1) In arriving at the taxable income of a taxpayer derived from a manufacturing business begun on or after the 1st day of April, 1963, there shall be allowed the amount of any expenditure which— (a) is incurred by the taxpayer , not more than eighteen months before beginning the business, in the course of establishing the business; and (b) would have been allowed as a deduction had it been incurred after the beginning of the business. (2) For the purpose of this section a “manufacturing business” is one carried on in buildings within the definition of industrial building contained in paragraph 8 of the Second Schedule. 41A. *** [repealed by 24 of 2011] 41B. Allowable deductions — transport allowance There shall be allowed as a deduction an additional twenty-five per centum of the international transport costs incurred by the taxpayer for his exports, whether produced by manufacturing in bond or otherwise, but other than exports of products specified in the Schedule to the Export Incentives (Exclusion) Order, made under the Export Incentives Act. [7 of 1992; 24 of 2011; 17 of 2012; G.N. 23/1990; Cap. 39:04] 42. Allowance of losses — general There shall be deducted, from any amount of assessable income , any assessed loss arising solely out of operations in Malawi, whether determined under this Act or any previous law , incurred by the taxpayer in any previous year of assessment to the extent to which such assessed loss has not been allowed as a deduction from his income of a previous year of assessment : Provided that— (a) a deduction under this section shall, as far as possible, be made in the first year of assessment after the year in which the assessed loss was incurred and, in the next year of assessment up to a period of the six years; (b) no person who— (i) has been adjudged or otherwise declared or has become insolvent or bankrupt; or (ii) has made a conveyance or assignment of his property or estate for the benefit of his creditors, or an arrangement with his creditors releasing him, wholly or partially from his debts, shall be entitled to carry forward an assessed loss incurred before the date he was adjudged or otherwise declared or became insolvent or bankrupt or made the conveyance, assignment arrangement, as the case may be; and (c) an assessed loss shall be reduced by the amount or value of any benefit received by, or accruing to, a person resulting from a concession granted by, or a compromise made with, any of his creditors whereby his liabilities have been reduced or extinguished, if such liabilities arose in the ordinary course of operations. [6 of 2005; 19 of 2013] 43. Allowance of losses — change in shareholding in company (1) If during any year of assessment there is a change in the shareholding of a company with an assessed loss or in the shareholding of a company which directly or indirectly controls any company with an assessed loss and the Commissioner is satisfied that such change has been effected solely or mainly in pursuance of or in connexion with any scheme for taking advantage of such assessed loss no assessed loss incurred prior to that change shall be deductible. (2) For the purposes of this section a company shall be deemed to be controlled by another company if the majority of the voting rights attaching to all classes of its shares are held directly or indirectly by such other company . 44. Allowance of losses — formation of new company If a company with an assessed loss (hereinafter referred to as the “old company ”)— (a) was incorporated outside Malawi; (b) carried on its principal business within Malawi; (c) is about to be wound up voluntarily in its country of incorporation for the purpose of the transfer of the whole of its business and property wherever situated to a company which will be or has been incorporated under Malawi law (hereinafter referred to as the “new company ”) for the sole purpose of acquiring the whole of the business and property wherever situated of the old company ; (d) the sole consideration for the transfer referred to in paragraph (c) will be the issue to the members of the old company of shares in the new company in proportion to their shareholding in the old company ; and (e) no shares in the new company will be available for issue to any persons other than members of the old company , the new company shall be allowed as a deduction after the transfer referred to in paragraph (c) has been effected the assessed loss of the old company to the extent to which that assessed loss has not been allowed as a deduction to the old company in a previous year of assessment . 45. Deductions not to be made No deduction shall in any case be made in respect of any of the following matters— (a) the cost incurred by any taxpayer in the maintenance of himself, his family or establishment; (b) domestic or private expenses of the taxpayer including the cost of travel between the taxpayer ’s residence and place of work; (c) any loss or expense which is recoverable under any insurance contract or indemnity; (d) tax upon the income of the taxpayer or interest payable thereon whether charged in terms of this Act or any law of any country whatsoever; (e) income carried to any reserve fund or capitalized in any way; (f) any expenses incurred in respect of any amounts received or accrued which are not included in the term “ income ” as defined in this Act ; (g) save as is provided in section 37 any contribution made by a taxpayer to a fund established for the purpose of providing pensions for employees or the windows, children, dependants or nominees of deceased employees or for all or any of those purposes; (h) save as is provided in section 37 any contribution made by a taxpayer to a fund established for the purpose of providing sickness, accident, unemployment or other benefits for employees or the widows, children or nominees of deceased employees or for all or any of these purposes; [14 of 1969] (i) any expense in respect of which a subsidy has been or will be received; and (j) fringe benefits tax and any penalty chargeable thereon. [1 of 1991] [1 of 1991; 14 of 1969; 10 of 1983] 46. Deductions not admissible as regards income derived from trade No deduction shall, as regards income derived from any trade , be made in respect of any of the following matters— (a) the rent of, or cost of repairs to, any premises not occupied for the purposes of trade , or any dwelling house or domestic premises, except such part thereof as may be occupied for the purposes of trade ; (b) interest which might have been earned on any capital employed in trade . Division 3 — Stock and work in progress 47. Trading stock and work in progress to be taken into account (1) Where a taxpayer carries on any business, the value, ascertained under this Division, of all trading stock and work in progress on hand at the end of any accounting year shall be taken into account in ascertaining whether or not the taxpayer has a taxable income . (2) Where the value of all trading stock and work in progress on hand at the end of the accounting year exceeds the value of all trading stock or work in progress on hand at the beginning of that year, the assessable income of the taxpayer shall include the amount at the excess. (3) Where the value of all trading stock and work in progress on hand at the beginning of the accounting year exceeds the value of all trading stock and work in progress on hand at the end of that year, the amount of the excess shall be an allowable deduction. 48. Valuation of stock and work in progress at end of year Trading stock and work in progress shall be valued on the basis of the cost price or market selling value of each item of trading stock or of all work in progress, as the case may be, at the end of the accounting year: Provided that, by agreement with the Commissioner, a taxpayer may elect to adopt any basis which conforms to recognized accountancy practice and is not contrary to this Act , but where such basis is elected the election shall be binding for future accounting periods unless the Commissioner otherwise agrees and any change shall be upon such terms and conditions as he may impose. 49. Valuation of stock and work in progress at beginning of year The value of trading stock and work in progress to be taken into account at the beginning of the accounting year shall be its value as ascertained under this Act or any previous law at the end of the immediately preceding accounting year. 50. Definition of cost and market selling value For the purpose of this Division— “ cost ” means the historical cost of bringing the relevant item of stock to its existing condition and location; “ market selling value ” means the expected realizable value of the relevant item of stock in the taxpayer ’s normal selling market, the value of work in progress shall include overhead charges to the extent of the recognized accountancy practice for the type of business. [14 of 1971] 51. Domestic consumption The value of trading stock taken by the taxpayer for his domestic or private consumption or use shall be— (a) in the case of non-farming stock an amount equal to the cost price to the taxpayer or the market selling value of such stock at the time the stock was taken, whichever the taxpayer may elect; (b) in the case of farming stock an amount which the Commissioner accepts to be a fair and reasonable valuation at the time such stock was taken. 52. Gifts and sales Where— (a) the taxpayer disposes by sale, gift or otherwise of property being trading stock, standing or growing crops or trees which have been planted and tended for the purpose of sale; and (b) that property constitutes or constituted the whole or part of the assets of a business which is or was carried on by the taxpayer ; and (c) the disposal was not in the ordinary course of carrying on that business, the market selling value of that property at the date of disposal shall be included in the assessable income of the taxpayer , and the person acquiring that property shall be deemed to have purchased at a price equal to that value. 53. Valuation of livestock Livestock shall be valued at cost or market selling value and sections 47 to 52 inclusive shall apply. [14 of 1971] Division 4 — Determination of taxable income where adequate books and records are kept 54. Books of accounts (1) Every person carrying on a business shall keep sufficient records of his income and expenditure to enable his assessable income and allowable deductions to be readily ascertained and shall retain such records for at least seven years after the completion of the transaction, acts or operation to which they relate: Provided that this subsection shall not require the preservation of any records— (a) in respect of which the Commissioner has notified the taxpayer that their preservation is not required; or (b) of a company which has gone into liquidation and which has been finally dissolved. (2) If a taxpayer fails or refuses to keep books or accounts which, in the opinion of the Commissioner, are adequate for the purposes of this Act the Commissioner shall by notice in writing require such person to keep such records, books and accounts as the Commissioner considers to be adequate in such form and in such language as may be specified in the said notice. [14 of 1969] 55. Period of accounts (1) Where a taxpayer makes up his accounts for a period of 12 months ending on some day other than the 30th June, the Commissioner may in his discretion accept such accounts for assessment in respect of the assessment year ending the 30th June prior or subsequent to the closing date of such accounts, and no part of such assessment shall be charged to tax in any other year of assessment . Any return in respect of which accounts have been so accepted shall be deemed for all purposes of this Act to be a return for such year of assessment : Provided that where the accounts of any taxpayer have been accepted for a year or period ending on some date other than the 30th June, either under this Act or any previous law , all subsequent accounts of such taxpayer shall, unless the Commissioner otherwise agrees, and upon such terms and conditions as he may impose, be made up for each succeeding period of 12 months ending on such other date. (2) Where a taxpayer whose accounts have been accepted in terms of subsection (1) ceases to trade , there shall be returned for assessment accounts which shall include all income which has been received by or accrued to such taxpayer in the period between the closing date of the last accounts so accepted for the immediately preceding year of assessment and the date when such taxpayer ceased to trade . (3) Where such period exceeds 12 months, separate accounts shall be rendered for a l2-month period ending on the date accepted as the closing date of his accounts under subsection (1) and for the balance of the period in excess of 12 months. (4) The taxable income determined on the basis of such accounts shall be charged to tax as follows— (a) if the period is in excess of 12 months, the taxable income determined on the basis of the accounts rendered for 12 months as required in terms of subsection (3) shall be deemed to be the taxable income for the year of assessment succeeding that in which the taxable income based on the accounts for the immediately preceding year of assessment was assessed, and the taxable income for the remaining period shall be deemed to be the taxable income of the following year of assessment ; (b) if the period is one of less than 12 months, the taxable income based on the accounts rendered in terms of paragraph (a) shall be deemed to be the taxable income of the year of assessment succeeding that in which the taxable income based on the accounts for the immediately preceding year was assessed: Provided that, where a taxpayer has rendered accounts for assessment and the whole or part of the taxable income determined from such accounts has been charged to tax in more than one year of assessment , either under this Act or under any previous law , then when such taxpayer ceases to operate the taxable income for the last year of assessment shall be reduced by an estimate of the taxable income which has been so charged to tax in more than one year of assessment . If such estimate exceeds the taxable income for the last year of assessment the taxable income for the penultimate year of assessment shall be reduced by the amount of such excess. The said taxable income shall be assessed as the taxable income of such taxpayer notwithstanding that such taxpayer may not have been in existence during any portion of such year of assessment . [13 of 2006] 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 (1) Where a non-resident person produces, grows, mines, creates, manufactures, fabricates, improves, packs, preserves, or constructs in whole or in part anything within Malawi, and exports the same without sale prior to the export thereof, he shall be deemed to have derived from a source within Malawi a taxable income corresponding to the proportionate part of any profit ultimately derived from the sale thereof outside Malawi. (2) The taxpayer shall submit to the Commissioner proposals for the determination of the taxable income deemed to be derived from a source within Malawi. (3) The Commissioner shall consider the proposals submitted under the provisions of subsection (2) and, if he is of the opinion that the taxable income calculated in accordance therewith approaches as closely as possible to that which might be expected to ensure if the general provisions of this Act were applied, he may accept the same, and the taxable income as determined for any year of assessment shall be deemed to be the taxable income of such person or company for that year. (4) Should no such proposals be submitted, or if the Commissioner is not satisfied with the proposals so submitted, the Commissioner may determine the taxable income in such manner as appears to him most appropriate, having regard to the circumstances of the case. (5) Where a person sells, exports, transfers or otherwise disposes of goods, property or services, to a person whether resident or not, who is directly or indirectly related to such person , at a price which is lower than the market value of such goods, property or services, he shall be required to include the market value of such goods, property, or services in his assessable income . [1 of 1995] (6) Where the Commissioner is of the opinion that any goods, property or services have been sold, exported, transferred, or disposed of at a value lower than the market value, the Commissioner may determine the market value of such goods, property or services in such manner as appears to him appropriate having regard to the circumstances of the case, and shall adjust the taxable income of such person accordingly. [1 of 1995] (7) The foregoing provisions of this section shall apply mutatis mutandis to the determination of an assessed loss . [1 of 1995] [14 of 1971] 57. Persons carrying on business which extends beyond Malawi (1) Where the trade of any person , other than a person carrying on the business of insurance, extends to any country outside Malawi and the Commissioner is satisfied that it is impossible or impracticable to ascertain the taxable income derived by such person from sources in Malawi in the manner otherwise provided in this Act , such person shall submit to the Commissioner proposals for the determination of his taxable income in some alternative manner. (2) The Commissioner shall consider the proposals submitted in terms of subsection (1) and, if of opinion that the taxable income calculated in accordance therewith approaches as closely as possible to that which might be expected to ensure if the general provisions of this Act were applied, may accept the same, and the taxable income so determined for any year of assessment shall be deemed to be the taxable income of such person or company for that year. (3) Should no such proposals be submitted, or if the Commissioner is not satisfied with the proposals so submitted, the Commissioner may determine the taxable income in such manner as appears to him most appropriate, having regard to the circumstances of the case. (4) The foregoing provisions shall apply, mutatis mutandis , to the determination of an assessed loss .
