How to calculate the TEVET levy in Malawi

Preparing payroll is rarely just about calculating salaries. For HR and finance teams in Malawi, there are several statutory obligations to consider, including PAYE, pension contributions, and the TEVET levy.

But how much should an employer contribute towards the TEVET levy? Which payroll figures should be included, and what percentage applies?

Understanding these requirements is essential for businesses that want to manage their payroll obligations accurately and remain compliant.

What Is the TEVET Levy in Malawi?

TEVET stands for Technical, Entrepreneurial and Vocational Education and Training. In Malawi, the TEVET levy is a statutory contribution paid by employers to support the development of technical and vocational skills.

The funds help finance training initiatives that equip people with practical skills for employment, entrepreneurship and improved workplace productivity. The levy is administered through the Technical, Entrepreneurial and Vocational Education and Training Authority (TEVETA), which regulates and promotes skills development in the country.

Unlike PAYE, the TEVET levy is an employer contribution; it is not a deduction from an employee’s salary.

Who Is Required to Pay the TEVET Levy in Malawi?

The TEVET Act places the responsibility for paying the levy on employers. According to TEVETA, every employer is required to contribute 1% of their basic payroll, regardless of the size or status of the organization.

This generally covers private companies, public institutions, and other organizations that employ people and pay salaries or wages. The obligation rests with the employer, meaning businesses should account for the levy as part of their statutory employment costs rather than deducting it from employees’ salaries.

However, the Act provides for possible exemptions. Under Section 23, the Minister may, on the recommendation of TEVETA and by Order published in the Government Gazette, exempt an employer from the provisions of Section 20, which impose the TEVET levy. Employers should therefore confirm whether any applicable exemption covers their organization rather than assume they are exempt because of their size or sector.

What Is the TEVET Levy Rate in Malawi?

The TEVET levy rate in Malawi is 1% of an employer’s basic payroll for the previous year. This is an employer contribution and should be included in the organization’s annual statutory payroll costs.

It is important to understand that “basic payroll” does not refer to basic salary alone. The TEVET Act defines it as the total basic annual emoluments paid by an employer to employees. Because “emoluments” is broader than basic salary, it may capture items such as bonuses, overtime and other cash benefits ascertainable in monetary terms on the payroll, subject to any allowable deductions. Employers should therefore review the full composition of payroll and seek confirmation from TEVETA or MRA where particular allowances or gratuities are involved.

For HR and finance teams, this means the levy should be calculated using the applicable payroll components for the previous year, rather than simply multiplying employees’ basic salaries by 1%.

How to Calculate the TEVET Levy: A Step-by-Step Guide

Calculating the TEVET levy is relatively straightforward once you have identified the correct payroll figures. The levy is 1% of the employer’s qualifying payroll for the previous year.

Follow these steps:

Step 1: Identify the relevant payroll period

Use your payroll records for the previous financial year. For example, if you are calculating the levy for the 2026/27 financial year, use the relevant payroll figures for 2025/26.

Step 2: Calculate total qualifying employee emoluments

Add the relevant payments made to employees during the year. These may include basic salaries, bonuses, overtime, gratuities and allowances such as housing, transport and telephone allowances. Other payments subject to PAYE may also need to be included.

TEVETA advises employers to use payroll records consistent with those maintained for PAYE purposes.

Step 3: Apply the 1% levy rate

Once you have established the total qualifying annual payroll, multiply it by 1%.

The formula is:

TEVET Levy = Total Qualifying Annual Payroll × 1%

Worked example

Suppose a company has 10 employees, each receiving average monthly qualifying emoluments of K300,000.

• Monthly payroll: 10 × K300,000 = K3,000,000
• Annual payroll: K3,000,000 × 12 = K36,000,000
• TEVET levy: K36,000,000 × 1% = K360,000

The company would therefore owe K360,000 in TEVET levy for that year, based on the figures in this example.

Remember that this is an illustration. Your actual liability will depend on your organization’s qualifying payroll and the applicable assessment period.

How to Pay the TEVET Levy in Malawi

Employers in Malawi can pay the TEVET levy through the TEVET Levy Assessment System (TLAS), which allows them to complete their payroll assessment and generate a payment reference.

The process generally involves the following steps:

Step 1: Register on TLAS

Visit tlas.mra.mw and create an account using your organization’s Tax Identification Number (TIN). Employers who are not yet registered for the TEVET levy with TEVETA should complete that registration first.

Step 2: Complete the Employer Data Form

Log in to TLAS and complete the Employer Data Form (EDF). Enter the relevant payroll information so that the system can establish the amount payable.

Step 3: Generate a Payment Reference Number

After completing the assessment, generate a Payment Reference Number (PRN). This number identifies your payment and should be retained for reference.

Step 4: Make the payment

Use the PRN to pay through a commercial bank or Electronic Funds Transfer (EFT), following the payment instructions provided by the system.

Step 5: Keep your payment receipt

Once payment has been processed, use TLAS to print your receipt. Keep it together with your payroll records and assessment documents for future reference.

Employers should also note that Section 20(4) of the TEVET Act allows the levy to be paid in monthly instalments of up to 12 months. Where TEVETA formally notifies an employer that the levy is due, payment must be made within 30 days of that notification.

TEVET Levy Penalties and Compliance Requirements

Failure to meet TEVET levy obligations can expose an employer to financial and legal consequences. HR and finance teams should therefore treat levy calculations, payments and payroll record-keeping as important compliance responsibilities.

Late or unpaid levy

Under Section 21 of the TEVET Act, an employer who fails to pay the whole or part of the levy when required may be charged an additional penalty equal to 20% of the unpaid amount.

For example, if an employer has an outstanding levy of K360,000, the additional 20% penalty would be K72,000, bringing the amount to K432,000, before any other applicable recovery costs or interest.

Recovery of unpaid amounts

Section 22 provides that unpaid levies and penalties may be recovered as civil debts. The Act also provides for recovery through court proceedings, including the filing of a certificate for the amount due.

Payroll record-keeping

Section 25 requires employers to maintain up-to-date basic payroll records at their principal place of business in Malawi. These records must be available for inspection by authorized TEVETA officers. If an employer fails to maintain the required records, the Authority may estimate the employer’s basic payroll for the relevant period.

False information and evasion

Section 26 makes it an offence to deliberately provide false information, omit required information or fail to maintain payroll records with the intention of evading the levy. A person found guilty may face a fine of K50,000, imprisonment for up to three years, or both.

To avoid these risks, employers should reconcile payroll figures regularly, submit accurate information, pay the levy within the required period, and retain supporting payroll and payment records.

Conclusion: Staying Compliant with TEVET Requirements

Calculating the TEVET levy in Malawi does not have to be complicated. By understanding the 1% rate, identifying the correct qualifying payroll figures and following the required payment process, employers can manage this statutory obligation more effectively.

For HR and finance teams, the key is to maintain accurate payroll records, review annual employee emoluments and ensure payments are made within the required timelines. Where there is uncertainty about an assessment or payment requirement, consult TEVETA or the Malawi Revenue Authority for clarification.

With proper payroll planning and record-keeping, businesses can remain compliant while contributing to the development of technical and vocational skills in Malawi.