The Supreme Court of Appeal has dismissed an appeal by Illovo Sugar (Malawi) PLC in a major tax dispute with the Malawi Revenue Authority, ruling that the company had no legal standing to challenge non-resident tax obligations belonging to two South African firms.
In its judgment delivered on May 21, 2026, the Supreme Court upheld an earlier High Court ruling which found that Illovo was only acting as a withholding agent under Section 76A of the Taxation Act and not as a representative taxpayer entitled to challenge the substantive tax liability of the foreign companies.
The dispute arose in 2019 after Illovo applied for Tax Clearance Certificates from MRA to remit payments to South African IT firms, Bytes Systems Integration and Adapt IT (Pty) Ltd, for services rendered to the company.
“The Appellant lacked sufficient legal interest to challenge the non-resident entities’ substantive tax liability or to invoke the protections of the Malawi–South Africa Double Taxation Agreement on their behalf,” reads part of the Supreme Court judgment.
Illovo had argued that the payments qualified as “industrial or commercial profits” under the Malawi–South Africa Double Taxation Agreement (DTA) and were therefore exempt from non-resident tax in Malawi.
However, MRA rejected the request and directed Illovo to deduct and remit non-resident tax before transferring the payments to the South African companies, maintaining that the payments fell within the scope of taxable income under Section 76A of the Taxation Act.
Following the decision, Illovo lodged an administrative appeal before the Commissioner General of MRA, but the appeal was dismissed. The company later took the matter before a Special Arbitrator who ruled in its favour, holding that Illovo qualified as a representative taxpayer with legal standing to challenge the tax.
But the High Court overturned the Special Arbitrator’s decision, ruling that Illovo was merely a withholding agent responsible for deducting and remitting tax on behalf of the foreign companies and was not legally chargeable for the underlying tax liability.
A seven-member panel of the Supreme Court led by Chief Justice Rizine Robert Mzikamanda agreed with the High Court’s findings, ruling that the South African companies were the actual taxpayers while Illovo’s role was limited to collecting and remitting tax to MRA.
The court further held that rights and protections under the Malawi–South Africa Double Taxation Agreement could only be invoked by the non-resident taxpayers themselves or by a properly recognised representative taxpayer under Part VIII of the Taxation Act.
“The appeal is hereby dismissed in its entirety for want of locus standi,” reads another part of the ruling. “The judgment of the High Court dated 10 April 2025 is upheld.”
The appeal was dismissed with costs, with Illovo ordered to pay MRA’s legal costs in the Supreme Court, High Court, and before the Special Arbitrator.
