On 3 July 2017 the Malawi revenue authority published Gazette Notice No 36 of 2017 regarding Taxation (Transfer Pricing Documentation) Regulations 2017. According to the regulation, taxpayers are required to conform to contemporaneous documentation requirements for controlled transactions. The following items are to be included in the documentation:
- An overview of the taxpayer’s business operations and organizational chart.
- Description of the corporate organizational structure of the group of which the taxpayer is a member and the group’s operational structure.
- Details of controlled transactions including analysis of the comparability factors.
- Details of the functions undertaken by the connected parties in relation to the controlled transaction.
- An explanation of the selection of the most appropriate transfer pricing method.
Language: Documentation shall be submitted in the English language.
Time limit for submission of documentations: The documentation shall be submitted to the Commissioner General within forty five days of the written request being duly issued by the Commissioner General.
Penalty for documentation failure: Any person who fails to comply with the transfer pricing documentation requirements shall be liable to an initial penalty not exceeding the Malawi Kwacha equivalent of 1,400 US Dollars at the prevailing exchange rate. Subsequent penalties will be imposed in an amount not exceeding the Kwacha amount equivalent of 2,100 US Dollars at the prevailing exchange rate for each period of one month while the failure continues.
The Transfer Pricing Regulations became effective from 1 July 2017, and repealed the Regulations contained in the Taxation Act.
