Players in the manufacturing industry have hailed the industrial rebate scheme, a measure introduced by government to boost manufacturing companies by removing import valued added tax (VAT) on raw materials for the industry.
According to Malawi Revenue Authority (MRA), the general pattern of the industrial rebate scheme entails that various types of industries are approved for rebate and specified materials for use in a particular industry may be imported, or delivered from an excise factory, at reduced rates of duty.
Rab Processors shipping manager Madalitso Sibu said in an interview this week that the system has been beneficial to the manufacturing company, adding that they save on importation costs.
She said the company is benefiting from the rebate scheme but disclosed that the company is struggling with some taxes, hence failing to meet the regional threshold.
“We are failing to meet the [demands of] international market because some the taxes that we pay to the Malawi Revenue Authority (MRA) are still high. We are, however, glad that through this meeting, we have been able to forward our concerns and they have considered revising the taxes to enable us meet regional standards,” she said at a meeting organised by MRA in Blantyre.
MRA commissioner general Raphael Kamoto, while admitting that local manufacturers are struggling to meet a regional threshold of 35 percent, said the meeting was a platform to discuss such issues and provide solutions.
He encouraged local manufacturers to use locally available resources to reduce import costs thereby boosting their production capacity to compete on the regional and international market.
“It is about time manufactures took advantage of available infrastructure like the railway line that links Malawi and Nacala [in Mozambique] and shift their means of transport from trucks to railway to save on the cash they use for transport purposes,” he said.
He said the tax collector will jointly work with the manufacturers to look at the obstacles that hinder their growth, making them less competitive on the market.
Kamoto said the ideas will be forwarded to government and the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) to come up with solutions to address the matter.
The industrial rebate system was established in 2011 and currently has 166 registered manufacturers under the industrial rebate scheme.
Once an industry has been approved, manufacturers may apply for registration in that industry to take advantage of the rebates on the materials.