By Fryson Chodzi

LILONGWE-(MaraviPost)-Finance Minister Felix Mlusu on Friday, May 28, 2021 presented a MK1.9 trillion Malawi’s national budget for 2021/2022 which many locals are excited with introduction of free week duty.

Fryson Chodzi, one of the country’s social commentator unpacks what is inside the said free week duty that Malawians not be too excited.

Chodzi EXPLAINS: Before you get too much excited, the proposal is about a duty free week and not tax free week! What this means is that for all imports on that week to be gazetted, people will be exempted from paying ‘Duty’ and not other taxes. Maybe there is need for a further explanation and in black and white.

Let’s put this into perspective using a vehicle import as an example.

If you are importing a motor vehicle of not more than 8 years old and not exceeding 1500 cc, you are required to pay the following at compound interest

  1. Duty at 25%
  2. VAT at 16.5%.

In this case the Duty will be 0% and you will still end up paying 16.5% VAT

Second scenario is if the motor vehicle requires exercise. Say you purchase a Mercedes Benz which is older than 8 years and not more than 12 years the following applies

  1. Duty at 25%
  2. Exercise tax for exceeding CC from 1500 to 1999 at 15%
  3. Year Exercise (8 to 12 yrs) at 30%
  4. VAT at 16.5%

In this case its only the duty exempted while you will still pay the Exercize and VAT

In the case of other goods, the duty will be exempted but any other goods that attract VAT you will still be required to pay.

So, please as you are planning to enjoy the ‘duty free week’ plan that you will still have to pay tax for your imports of course slightly lower than normal.

There are grey areas that needs clarification from the Government what this ‘duty free week’ mean because it might only mean groceries.

Let’s hope vehicles are included in this ‘goods’ otherwise we might be in for a shock to realize that sientas and Miras are not part of the goods exempted on the duty free week.

Disclaimer: The views expressed in the article are those of the author not necessarily of The Maravi Post or Editor

NBS Bank Your Caring Bank