Applicability of VAT
Under Malawi’s Value Added Tax Act, VAT is charged on every supply of goods and services for consideration during or as a part of business activities. The sale of the assets of a VAT-registered or VAT-registrable entity will be subject to VAT.
Transfer of business as a going concern
However, the disposal of any part of the business (including assets) capable of separate operation is zero-rated where the buyer carries on the same business i.e., transfer of business as a going concern.
Transferee not registered for VAT
Where a business carried on by a taxable person is transferred to another person as a going concern and the transferee is not registered for VAT at the time of the transfer, the transferee at the time of the transfer is liable for registration for VAT and shall apply for registration.
The transferee will be required to notify the Commissioner General for the Malawi Revenue Authority with 30 days of the transfer and the transaction shall be outside the scope of VAT. No VAT will apply.