The impact of double taxation treaties on the domestic tax revenue generation:the case of Malawi

Abstract

This thesis analyses the impact of double taxation treaties on the domestic revenue generation in Malawi. The thesis systematically compares and contrasts Malawi with other developing countries with the view of establishing practical experiences and pieces of evidence. Direct foreign investment benefits theory has been used to guide this research. This theory has further aided in establishing a comparative understanding of the benefits and detriments that come with double taxation treaties in developing countries in general. Primary data collection through questionnaires was conducted in the six tax advisory firms and the Malawi Revenue Authority (MRA). This was done through closed and open-ended structured questions. The methods used included self administered questionnaires and focus group discussion. An average of 85.5% of the tax specialists contacted responded to the survey giving an average response rate of 85.5%. The results of the study faults the relevance of double taxation treaties in Malawi as the findings show a MK0.306 billion annual tax revenue loss during the years under study. In view of the study’s findings, Malawi needs to seriously rework on its double taxation treaties currently in force to comparatively match the advantages which come with the much sought capital inflows. The study concludes by suggesting that double taxation treaties effects on domestic employment, foreign direct investments, immovable property, technical fees, royalties, interest etc in terms of tax inflow and outflow remain of interest for future researches.