Investment Guide
Home Investing in Malawi Investment Legislation
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Investment Legislation
The Investment and Export Promotion Act of 2012 governs investments in Malawi. The government promotes foreign investments in most sectors of the economy without limitations on ownership, investment size and source of funds.
Further, the law does not restrict competitions and discriminate against foreign investors at any stage of investment.

The Government of Malawi encourages foreign direct investments by offering several investment incentives.:
GENERAL INCENTIVES FOR INVESTORS
  • 100% investment allowance on qualifying expenditure for new building and machinery.
  • Allowance up to 40% for used building and machinery
  • Allowance of manufacturing companies to deduct all operating expenses incurred up to 25 prior to the start of operations.
  • Free repatriation of dividends, profits and royalties.

Malawi has promulgated the Export Processing Zones Regime through Export Processing Zones Act of 1995. The regime attracts export-orientated industries, by offering them favorable investment and other incentives.

KEY INCENTIVE UNDER THE EXPORT PROCESSING ZONES ACT
  • 100% exemption of corporate income tax.
  • No withholding tax on dividends
  • No duty on capital equipment, machinery and raw materials
  • 0% value added tax


INVEST FUNDING OPTIONS
The financial sector of Malawi comprises the central bank, commercial banks, commercial banks, microfinance institutions, discount houses and other financial institutions. Informal financial arrangements play an important in the economy due to low penetration of financial services, especially in the rural regions.

KEY SOURCES OF FINANCE
Banks
Around 11 commercial banks operate in Malawi, with the three largest banks accounting for over 60% of the sector’s deposits and assets. Some of the important banks in the country include:
  • National Bank of Malawi Limited
  • Standard Bank of Malawi Limited
  • First Merchant Bank of Malawi Limited
  • Nedbank

Stock Market
Established in 1994, the Malawi Stock Exchange (MSE) started equity trading in late 1996. As of March 2011, the MSE listed shares for one foreign and 14 national companies.
Microfinance Institutions
Microfinance Institutions in Malawi is still in its early stage of development. The country has several microfinance institutions (MFIs) including:
  • Malawi Rural Finance Company
  • Small Enterprises Development Organization of Malawi (SEDOM)
  • Credit Cooperatives (MUSCCO)

Others
Other financial institutions offering financing facilities include leasing companies (such as Leasing and Financing Company Limited) and discount houses (such as first discount House Limited, continental Discount House Limited)

TAXATION
Since 2006, Malawi has implemented several reforms to improve the fiscal management of the country. Malawi has been notable for its strong commitment to business incentives, particularly for foreign investors.

Keys Taxes
Type Rate
Corporate Income Tax Standard rate of 30%; investment income of pension funds is subject to tax rate.
Foreign branch tax 35%
Value-added tax 16.5% however, banking and life insurance services are exempted
Dividends withholding tax 10% unless reduced under an applicable tax treaty
Interest withholding tax 20% applies to residents; 15% applies to interest payments made to non-residents, unless reduced under an applicable tax treaty.
Royalties withholding tax 20% applies to residents; 15% applies to interest payments made to non-residents, unless reduced under an applicable tax treaty.
Personal income tax First MWK180, 000 income is tax free, thereafter, next MWK is taxed at 15% and excess at 30%.
Payroll tax Training Authority


AGREEMENTS AND ASSOCIATIONS
Regional Trade Associations and Blocs

Malawi is a member of/ signatory to the following:
  • South African Development Community (SADC)
  • Common Market for Eastern and Southern Africa 9 (COMESA)
  • African Growth Opportunity Act (AGOA)


INDIA MALAWI RELATIONS
Important bilateral treaties and agreements are:
  • Memorandum of Understanding (MoU) on cooperation in the filed of Agriculture and Allied sector (2010)
  • Agreement on Protocol for Consultation (2010)
  • Agreement on Cooperation in the development of small scale enterprises in Malawi (2010)
  • MoU on Human Resources and Development (2010)
  • India extended a US$50-million Line of Credit (LoC) to Malawi in 2009-10 for its developmental projects. In February 2008, India extended an LoC of US$30 million for irrigation, grain storage, tobacco threshing and one-village, one-product projects.


International Investment Guarantees and Agreements
Malawi is a member of/ signatory to the following:
  • Multilateral Investment Guarantee Agency (MIGA), which provides guarantee against non commercial risks
  • International Centre for the Settlement of Investment Disputes (ICSID)


Double Taxation Treaties (DTT)
The Government has concluded 9 DTTs as of December 2010.
  • These include DTTs with Sweden, UK, Denmark, France, Norway, Switzerland, Netherlands, South Africa and Norway.


Bilateral Investment Treaties (BIT)
Malawi has signed 6 BIT as of December 2010.
  • These include treaties with Taiwan, Malaysia, and Egypt, Italy, Netherlands and Zimbabwe.
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