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Tax incentives

Tax incentives

Malawi offers a wide range of tax incentives with the aim of encouraging development, enhancing output, earning and saving foreign exchange, and expanding employment opportunities. 

These tax incentives are aimed at enabling business establishments to grow and expand their operations thereby contributing to the overall social-economic development of Malawi. The incentives fall under two main categories of taxes, Customs & Excise Taxes and Domestic Taxes. 

Customs & Excise Tax Incentives come in two forms namely General Incentives and Specific Incentives. General Incentives are applicable to any Malawian taxpayer upon importation of a product. On the other hand, Specific Customs & Excise Incentives apply to those approved to operate in a specific sector under agreed conditions. 

The Malawi Customs & Excise Tariff book provides for various sector specific tax incentives through Customs Procedure Codes (CPCs) which give declaration of goods and conditions eligible for tax exemption. 

Customs & Excise Taxes are taxes imposed at a rate percent of the Cost, Insurance and Freight (CIF) value of imported goods. Customs & Excise Taxes comprise of Import Duty, Import Excise, Import Value Added Taxes (VAT) and Export duty. 

Similarly, Domestic Tax Incentives also come in two forms, General Incentives and Specific Incentives. General Incentives are incentives which are accessible by every taxpayer operating as a ‘business person’ or ‘business entity’ in the country. 

On the other hand, Specific Domestic Tax Incentives are sector specific and are accessible by a taxpayer operating as a ‘business person’ or ‘business entity’ in that particular sector.

Domestic Taxes are taxes collected from income generated within the geographical confines on the country and they include Income Tax, Value Added Tax (VAT), Fringe Benefit Tax (FBT), Non-Resident Tax (NRT), Withholding Tax on Dividends and Domestic Excise. Domestic Tax Incentives in Malawi are mainly in form of tax exemptions against the levied taxes. 

Over the next few weeks, we will be analyzing general and specific tax incentives under both Customs and Excise and Domestic Taxes to enable you to make informed decisions on your tax obligations. We are hoping that such analysis would enable you to take advantage of the tax incentives to grow your business and contribute to the overall social-economic development of Malawi.

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