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Incentives Regime

Tax incentives in Malawi are enshrined in the main tax legislations that include the Customs and Excise Act, the Income Act and the Export Processing Zones (EPZ) Act. Malawi offers the following incentives:

General Incentives
Incentives for Industrial Raw Materials under Industrial Rebate Scheme
Incentives for Hotels and Lodges
Incentives for the Dairy Farming Industry
Incentives for Fishing Industry
Incentives for Telecommunication Sector
Incentives for Mining Industry
Incentives For Water Supply Sector
Export Incentives
Incentives For Manufacturing Under Bond

 


General Incentives:

  • 100 percent investment allowance on qualifying expenditure for new building and machinery;
  • Allowance up to 40 percent for used buildings and machinery
  • 50 percent allowance for qualifying training costs;
  • Allowance for manufacturing companies to deduct all operating expenses incurred up to 25 months prior to the start of operations;
  • Loss carry forward of up to seven years, enabling companies to take advantage of allowances;
  • Additional 15 percent allowance for investment in designated areas of the country such as Kanengo, Chirimba and Luwinga Industrial sites;
  • Free repatriation of dividends, profits, and royalties.

Incentives for Industrial Raw Materials under Industrial Rebate Scheme
The aim is to encourage value addition and boost manufacturing capabilities with the view to create employment and generate foreign exchange. Incentives are granted on raw materials used in production process in Malawi. The process of accessing the scheme is as follows:

  • Applicant has to fill Form Number 81 and attach a brief summary of the manufacturing process;
  • Provide Tax Payer Identification Number (TPIN);
  • Submit Names and Particulars of the Directors including their TPIN;
  • Provide Cost of Raw Materials and quantity thereof per unit of finished product;
  • Submit Total cost of production of the product to be manufactured per unit; and
  • Submit Value of the product before a mark up;
  • Furnish MRA with a percentage of value addition as a result of manufacturing process.
  • Applications will be considered by a committee set up for this purpose.

Criteria for Consideration

  • Proof of value addition is key to the process;
  • Honest declarations
  • Compliant to existing Customs and Excise Laws
  • Formula is [Direct Cost – (Cost, Insurance and Freight + Production Cost)] = 20%;

Incentives for Hotels and Lodges

The following items enjoy duty, excise and VAT free direct importation except the building materials for hotels, lodges, conference centers and inns:

  1. Glass, china porcelain, earthenware and stone articles of tableware; enamelware and hollowware for table use Electro Plated Nickel – Silver (E.P.N.S) and plated ware; knives, forks, spoons and similar articles for cutlery and marked linen permanently or indelibly engraved, etched, stamped or in any other manner marked with the name of the hotel licensed under the Tourism and Hotels Act (Cap.50:01), and solely for use therein; industrial catering equipment, motor boats, scuba diving, jet skis, kayaks, wind surfers, pedallos, air conditioners, generators, gym equipment, massage equipment, industrial washing machines, bar fridges, sauna, hot steam baths, For furniture and furnishings the hotel, lodge or inn should have 50 rooms or more.
  2. Materials and Equipment for the establishment of a Conference Centre of a seating capacity of 200 people being: Public Address System, Video Conferencing Equipment, Television Screens, Amplifiers, LCD equipment and, industrial catering and bar equipments permanently or indelibly engraved, itched, stamped or in any other manner marked with the name of the organization or other identification to the satisfaction of the Commissioner General.

Incentives for the Dairy Farming Industry:

  • No customs duty, excise and VAT on specialized machinery, equipment, machinery and other related goods;
  • No excise duties on purchases of raw materials and packaging materials made in Malawi.

Incentives for Fishing Industry
Specialized goods for use in fishing industry enjoy customs duty, excise and VAT free. These include machinery, plant, laboratory equipment and materials, aerators, pumps, blowers, diamond mesh, nets, measuring equipment, separators, specialized tanks and diffusers, boat engines and trawlers for deep sea fishing.


Incentives for Telecommunication Sector
Specialized goods for direct use in telecommunication industry imported by organizations in public telecommunication service as approved by the Commissioner General enjoy customs duty, excise and VAT free. These include Telecommunication transmission, Apparatus and accessories such as core switching equipment, vas equipment, BSS equipment, satellite equipment and antennae.


Incentives for Mining Industry
Mining machinery, plant and equipment will enjoy customs duty, excise and VAT free.


Incentives For Water Supply Sector
Goods for use in water supply being plant, machinery, equipment, water meters and water treatment chemicals imported by water boards approved by the Minister responsible for water management enjoy customs duty, excise and VAT free.
Incentives For Electricity Generation, Transmission And Distribution
Goods for use in electricity generation and distribution being plant, machinery, equipment and electricity supply meters, by an organization approved by the Minister responsible for electricity management enjoy customs duty, excise and VAT free.


Export Incentives
Incentives For Establishing Operations In An Export Processing Zone (EPZ) Include:

  • Zero corporate tax rate; ;
  • No withholding tax on dividends;
  • No duty on capital equipment, machinery and raw materials;
  • No excise taxes on purchases of raw materials and packaging materials made in Malawi.
  • No Value Added Tax (VAT)

Incentives For Manufacturing Under Bond Include:

  • Export tax allowance of 12 percent of export revenues for non-traditional exports.
  • Transport tax allowance equal to 25 percent of international transport costs, excluding traditional exports.
  • No duties on imports of capital equipment used in the manufacture of exports.
  • No VAT
  • No excise tax or duty on the purchase of raw materials and packaging materials.
  • Timely refund of all duties (duty drawback) on imports.
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