Consumers Association of Malawi (Cama) has protested the Malawi Revenue Authority’s (MRA) decision to introduce fixed duty on imported vehicles, describing the move as punitive.
In a written response on Monday, Cama executive director John Kapito said apart from pushing small businesses out of the market, the fixed vehicle will make it difficult for Malawians to afford secondhand cars.
He said: “Most of these traders were using personal resources to venture into this business with little profits but overall it assisted Malawians to own a car and considering that most banks are unwilling to provide loans for cars, pushing these taxes means not many Malawians can now afford these cars with these high taxes.”
The fixed rates target secondhand motor vehicles manufactured between 2001 and 2020. They are expected to be rolled out on July 15 2023.
For motor vehicles that are zero to three years old and those older than 23 years, an Ad valorem will be used where duty will be charged according to value.
But during a news conference in Blantyre on Monday, MRA deputy commissioner for facilitation, customs and excise Chimwemwe Kawalewale said the taxes will help address valuation disputes and restrict importation of older secondhand vehicles.
He said the new taxes also follow requests from importers of used motor vehicles to the Ministry of Finance and Economic Affairs and were duly presented and adopted in Parliament during the 2023/24 Budget Meeting.
Kawalewale said in coming up with the fixed tax schedule, the tax collector took into account preferential trade agreements contrary to speculation that following the gazetting, prices of motor vehicles have increased.
Under gazetted Customs and Excise Tariffs Amendment 2023, signed by Minister of Finance and Economic Affairs Sosten Gwengwe, where a used motor vehicle is damaged in transit, the Commissioner General shall determine the specific tax payable based on the severity of the damage.
Importers of secondhand motor vehicles have since threatened to go to court to challenge the MRA decision.
On Monday, Gwengwe said MRA needed to engage dealers to hear their grievances before implementing the new measures.