MCCCI wants tax incentives for manufacturing sector

Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has urged government to provide tax incentives to manufacturing firms that use a substantial portion of local inputs to save foreign exchange.

In her presentation at the start of the  2024/25 Pre-budget Consultation Meetings in Blantyre yesterday, MCCCI director of business environment Madalisto Kazembe said the priority industry qualification should be extended to existing taxpayers with safeguards to prevent abuse.

She said the current status prohibits other existing potential investors who registered their businesses before the regulation was introduced.

Said Kazembe: “The chamber recognises that the prevailing fiscal space amidst the shocks is very limited and gives little room for the government to maneuver in coming up with comprehensive incentives.

“Promoting manufacturing sector growth in the 2024/25 budget should be a serious priority for government. Triggering growth in this sector would offset the huge demands for imports, enhance import substitution and in turn release pressure on foreign exchange.”

Among others, she said government should come up with a Special Purpose Vehicle or Industrial Development Fund to provide capital specifically targeting investments in the manufacturing sector, apply the maximum demand tariff when businesses are operating at their maximum capacities and allocate enough resources to fight against smuggling.

Meanwhile, the chamber has, among others, urged Treasury to reduce the excise tax on local fruit wines to 10 percent from 95 percent to ensure the survival of the industry and domestic small-scale fruit suppliers and reduce value-added tax on local oil products to curb smuggling and promote local sales.

To reduce the agriculture sector’s vulnerability to climate shocks such as dry spells through significant investment in irrigation, MCCCI is also proposing the removal of 10 percent domestic excise tax on pipes used for large-scale irrigation.

To reduce costs of communication, MCCCI has also urged Treasury to consider revising the 15 percent non-resident tax charged on Internet and the 10 percent excise tax levied on data services.

Meanwhile, the Institute of Chartered Accountants in Malawi chief executive officer Noel Zigowa urged Treasury to revise income tax on companies and individuals involved in primary agriculture from 30 percent to 10 percent to encourage investment in the agriculture sector.

In his response, Minister of Finance and Economic Affairs Simplex Chithyola Banda observed not all the suggestions will be accommodated in the 2024/25 National Budget, but will remain critical in guiding the ministry in the budget process.