The Malawi Government provides tax incentives on raw materials, machinery and equipment to different sectors of the economy. The incentives are provided for either in the main Customs Tariff or in specific Customs Procedures Codes (CPC) of the Customs and Exercise (Tariffs) Order. The incentives are implemented under the Customs and Exercise Act (Chapter 42:01).
Tourism is Malawi’s third foreign exchange earner after tobacco and tea and investors intending to invest in the tourism sector in Malawi can enjoy a number of incentives and they include free import duty, free import excise and zero-rated VAT. Under CPC 442 (a), investors in the tourism industry will not pay import duty, import excise and VAT will be zero-rated if they import goods for hotels, lodges and inns with 50 rooms and above.
Such goods include; Glass, china porcelain, earthenware and stone articles of table ware, enamelware and hollowware for table use electro plated nickel – silver and pated ware, knives, forks spoons and similar articles for cutlery and marked linen etched, stamped or in any manner marked with the name of the hotel.
They can also import industry catering equipment, motor boat, scuba diving, jet skis, kayaks, wind surfers, pedalos, marked linen, air conditioners, generators, gym equipment, message equipment, industrial washing machines, bar fridges, sauna, hot steam baths. Furniture and curtains, carpets and rags must be permanently or indelibly marked. In addition, two shuttle buses every five years and off-road game/scenery viewing motor vehicles (Safaris) are duty free under CPC 450 and CPC 451, respectively.
Under CPC 442 (b), investors in the tourism sector will not pay import duty, import excise and VAT will be zero-rated if they import materials and equipment for the establishment of a conference centre with a 200 seating capacity. Such materials and equipment include public address system, video conferencing equipment, television screens, amplifiers, LCD equipment and industrial catering and bar equipment and indelibly engraved, itched, stamped or in any other manner marked with the name of the hotel, lodge or inn.
For the Energy Sector
The Malawi Government provides tax incentives on raw materials, machinery and equipment. The incentives are provided for either in the main Customs Tariff or in specific Customs Procedures Codes (CPC) of the Customs and Exercise (Tariffs) Order.
Such incentives are implemented under the Customs and Exercise Act (Chapter 42:01). Energy generation and distribution affect foreign direct investment and they also play a critical role in the socio-economic development of any country.
Business players can now invest in the energy sector following the extension of the CPC 489 under the Customs and Excise (Tariffs) Order to allow all investors to import goods for electricity generation and distribution as approved by the responsible Minister. This will encourage investment in the energy sector and improve electricity generation and distribution capacity to support industries that require use of electricity for production.
In order to promote the energy sector, the following goods for use in electricity generation and distribution are duty free but subject to 16.5% VAT. The goods include fuses, transformers, sling, ring main unit, insulators, galle chain equipment, conductors, surge arrestors, column duplex, AAC/PVC and electricity supply meters.
In addition, other goods such as energy saver bulbs, solar batteries, solar battery chargers, energy lamps, generators, inverters and solar panels are import duty free but VAT at 16.5% is payable.
Apart from the energy sector, there are also incentives for the construction sector. Taxes on most machinery were removed in order to promote the various productive sectors of the economy. Government has further removed taxes on crane lorries, concrete mixer lorries, mobile drilling derricks and track laying tractors for the construction industry to boost the industry.
For the Agricultural Sector
There are a number of tax incentives for different sub-sectors in the agriculture sector, including animal breeding, irrigation, horticulture, fishing and poultry. Such incentives, provided on raw materials, machinery and equipment, are either in the main Customs Tariff or in specific Customs Procedures Codes (CPC) of the Customs and Exercise (Tariffs) Order.
Agricultural equipment and machinery are duty free in their own right. As far as animal breeding is concerned, importers will be exempted from taxes on importation of livestock meant for breeding. This covers live bovine animals, live swine, sheep and goats as approved by Ministry of Agriculture. This is to encourage diversification and promote animal husbandry.
Under CPC 446, investors in the irrigation sector will be exempted from import duty, import excise and VAT will be zero-rated on the following goods for direct use in irrigation; PVC pipes, asbestos pipes/rubber seals, galvanized pipes, elbow, sprinklers, rainers, control valves, solvent cement, diesel engine ranging from 12kw-17kw with tubes, pressure gauges and nozzles imported by a farming entity recognized by the Secretary for Agriculture.
Under CPC 477), investors in the fishing industry can enjoy free import duty and import excise and zero-rated import VAT on importation of specialised goods for use in fishing industry being 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.
Vessels for processing or preserving fishery products are import duty free but VAT of 16.5% is payable. Investors can also enjoy duty free clearance by importing fertilizers, insecticides, fungicides, herbicides, ploughs, harrows, scarifers, cultivators, weeders, manure spreaders, fertilizer distributors and milking machinery.