What
is Tevet Levy
What
is Tevet Levy
Section 20 (1) and (2) of
the TEVET Act creates a TEVET Payroll levy into which “every employer” must pay
“the sum of money equal to one per centum of the basic payroll in respect of
the previous year”. This levy forms part of the TEVET Fund that is supposed to
finance programmes approved by the Board of the TEVET Authority as defined in
the TEVET Act.
TEVET Levy Payment
SUMMARY
ON TEVET LEVY
Who Pays
The TEVET Act enjoins
upon every employer to pay 1% of basic payroll into the TEVET Fund.
Basic Payroll
The TEVET Act defines
“basic payroll” as “total basic annual emoluments paid by the employer to the
employee.”
Who is an employer?
The Employment Act (2000)
defines the term “Employer” as “any person, body corporate, undertaking, public
authority or body of persons who or which employs an employee and includes
heirs, successors and assignees of the employer.”
What records are
employers expected to keep?
Section 25 of the TEVET
Act requires every employer to keep and maintain “at his principal place of
business in Malawi” an up-to-date record of their payroll for all their
employees and make that record available for inspection by an inspector
authorized by the TEVET Authority.
For which period is
TEVET Levy payable?
The TEVET Levy is
payable in one year in respect of the payroll records of the previous year.
What payment method is
the MRA and TEVET Authority encouraging?
Who is supposed to pay
the TEVET Levy?
The TEVET Act demands
that every employer, regardless of size or status, pays 1% of basic payroll
into the TEVET Fund which is managed by TEVET Authority. This Levy is sorely a
cost of the employer and should not be deducted from the employees’ emoluments.
Who is an employer?
The Employment Act
(2000) defines the term “Employer” as “any person, body corporate, undertaking,
public authority or body of persons who or which employs an employee and
includes heirs, successors and assignees of the employer.” For purposes of the
TEVET Levy payment, an employer is any registered organization/ company that
employs people and pays them salaries/ wages. The TEVET Act defines “basic
payroll” as “total basic annual emoluments paid by the employer to the
employee.” The term “basic payroll” is not the same as “basic salary” but the law
connects “payroll” with “emoluments” which is a much broader term than basic
salary. Emoluments cover a wide range of employer’s cost in return for services
rendered by the employee. These include, asic Pay/Salary, gratuities
& other terminal benefits; Bonuses; Overtime; Car Allowance; House
Allowance; Telephone Allowance; Guard Allowance; Utilities Allowance;
Settling-in Allowance; Passage/Airfare that is subject to Pay As You Earn
(PAYE); Children’s Fees Allowance; Risk/Hardship Allowance; Domestic Servant
Allowance; Acting/Responsibility Allowance and Leave Grants.
The above list is not
exhaustive and any similar payments to employees on which PAYE is assessed must
also be included when computing the basis for the TEVET Levy.
What records are
employers supposed to keep?
Section 25 of the TEVET
Act requires every employer to keep and maintain “at his principal place of
business in Malawi” an up-to-date record of their payroll for all their
employees and make that record available for inspection by an inspector
authorized by the TEVET Authority. The payroll records should be the same
records that are used for PAYE tax purposes.
Section 20 (5) cites
that where in any case the basic payroll of an employer cannot be ascertained
with any reasonable accuracy, the Executive Director, may in writing require
the employer to pay a levy of such amount as the Executive Director may
specify, and the employer shall pay the levy so specified within the time
specified by the Executive Director.
For which period is
TEVET levy payable?
The TEVET Levy is
payable in one year in respect of the payroll records of the previous year. For
example, the TEVET Levy payable in the financial year 1st July 2017 to 30th
June 2018 is based on payroll records for the period of 1st July 2016 to 30th
June 2017. This means that TEVET Levy is assessed on previous year payroll
records.
What payment method is
TEVET Authority and MRA encouraging?”
Employers have to self-assess their
payroll costs to determine and pay the amount of Levy payable to TEVET
Authority. In self-assessment, employers are supposed to fill in an
Employer Data Form (EDF).
What are the steps
followed in TEVET Levy payment?
- Get the Employers Data Form (EDF) from MRA offices,
TEVET Authority Secretariat and TEVET Regional Service Centres, MRA and
TEVETA websites or through email. These forms are also available at every
Standard Bank enquiries desks.
- Fill the EDF in full in triplicate. The form will
assist you to self-assess and determine your gross emoluments (salaries
and all payroll allowances). This form will be useful when MRA/TEVET
Authority come to verify if you are indeed paying the right amount. Send
the copies of your form to MRA and also to TEVET Authority offices as
designated on the EDF.
- After calculating the gross emoluments, calculate TEVET
Levy which is 1% of that total.
- Go to any of the banks below to deposit the Levy:
Account Name: TEVET
Authority
Account Name: TEVETA
Private Levy
Bank Name: NBS Bank
Account Name: TEVETA
Private Levy
Bank Name: FDH Bank
or go to any MRA
Office to pay the Levy where you will get an official receipt. Make sure you
get a printed receipt at either offices
What penalties are
defined for those who do not comply with payment of TEVET levy?
Section 21 and 22 of the
TEVET Act defines stiff penalties for those who fail to pay TEVET Levy. The
penalties include an additional 20% charge for unpaid amounts and other civil
processes at the civil courts.
For those who fail to
provide correct information, the penalties extend to fines and imprisonment as
the case may be determined by the courts.