Tax Update
Calculation of duty on imported saloons and station wagons

Calculation of duty on imported saloons and station wagons

Imported motor vehicles are classified into two broad categories for duty purposes. These are passenger and goods carrying vehicles. Passenger carrying vehicles are further sub divided into two categories: those that carry less than ten passengers such as saloons and station wagons and those that carry more than ten passengers like minibuses and buses.

When calculating Customs duty for saloons and station wagons, we look at the year of manufacture and the engine size to arrive at the current rates of duty applicable: the bigger the engine capacity and the older the vehicle, the higher the rates of excise duty. Below is a table that best illustrates the variation of duty rates according to age and engine capacity:  

When calculating duty, we base the duty payable on the Customs Value of the imported vehicle. Customs Value = Cost (FOB) + Insurance + Freight value + Port charges. This cost is converted into Malawi Kwacha using the rate of exchange of the foreign currency in use at the time the declaration for payment of duty is being made. Assuming that the vehicle is a saloon of 1499cc (engine size) and is more than 8 years but less than 12 years old, duty will be calculated using the current applicable rates: import duty 25%, import excise 30% and import VAT 16.5%. Where Customs Value for duty purpose is, MK 2, 000, 000, duty will be calculated cumulatively as follows:
1.    Import duty         = 25/100 x 2, 000, 000 =K500, 000
2.    Import excise        =30/100 x 2, 000, 000 + 500, 000=K750, 000
3.    Import VAT         =16.5/100 x 2, 500, 000 + 750,000 = 536, 250
4.    Total duty payable    = K500, 000 + K750, 000 +K536, 250 =K1, 786, 250.

MRA further wishes to remind all motor vehicle importers that declaring a false year of make for a vehicle is an offence that attracts high penalties.

Feedback: tax@mra.mw 0888 958 220

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