Decoding the Malawi vehicle tax structure
Gone are the days when people frowned at somebody for buying a car first before owning a house. Today, it is virtually everybody’s dream to purchase a motor vehicle, with some households owning at least two cars.
However, clearance of vehicles at the border or any customs station can sometimes be a nightmare, especially when the duty payable is not what one had expected to pay. I have attempted to provide tips to would-be importers on how to estimate or predict duty payable and achieve a smooth vehicle clearance experience.
To begin with, the commonest motor vehicles that people import into Malawi fall into two broad categories: vehicles for transportation of persons and goods carrying vehicles. Vehicles in these categories fetch different rates of duty depending on several factors.
Notably, the category for vehicles for transportation of persons is split into two further groups. The first group comprises vehicles that carry nine or less persons for example saloons and station wagons. Under this group, the rates of duty are dependent on the year of make and the size of the engine or cylinder capacity (CC). Older vehicles attract higher rates of duty than newer ones; and vehicles with smaller engines attract lower rates of duty than those with bigger engines. Generally, vehicles manufactured within eight years and of CC not more than 1500 attract the lowest rates of duty.
Under the second group, you will find vehicles that transport 10 or more persons, including the driver. These include minibuses and buses, and the rates of duty depend on the year in which the vehicle was manufactured and the number of persons who can be transported. Like in the first group, older vehicles attract higher rates of duty than newer ones but conversely, vehicles that carry relatively large numbers of persons attract lower rates of duty than those that carry fewer persons.
Under the goods carrying vehicle category, the amount of tax payable is dependent on the year of manufacture and the gross vehicle weight (GVW) or total tonnage of the vehicle including goods. Just like in the above category, older vehicles attract higher rates of duty than newer vehicles. Here, vehicles manufactured within 15 years are considered new. Secondly, vehicles with larger tonnage attract lower rates of duty than those with lower tonnage. The rationale being vehicles with larger tonnages are regarded as catalysts of national development because they create employment and also transport essential goods in large volumes.
By way of demonstration: the total payable tax for a person carrying vehicle of eight years old with the engine capacity of not more than 1500 CC will be 46 percent of total cost of the vehicle [cost + insurance + freight] while 162.13 percent of total cost will be paid for a person carrying vehicle of over 12 years old and an engine capacity exceeding 3000CC.
Similarly, total tax payable for goods carrying vehicle of 15 years or less and of GVW exceeding 20 tonnes is only five percent of total cost compared to 53.78 percent of total cost for a vehicle of over 15 years and GVW of tonnage of between 10 and 15.
There are some exceptions though. Following the entering into force of the Tripartite Free Trade Area on June 10 2015 in Egypt, no import duty is collected on vehicles originating from South Africa when the importer presents an authentic Sadc certificate.
Note that where applicable, excise duty and VAT are chargeable. Further, no taxes are collected on minibuses and buses manufactured within five years upon approval from the Malawi Revenue Authority. This facility is available to any importer.
As a rule of thumb, newer and small engine sized vehicles attract the lowest rates of duty and a visit to the nearest customs station before ordering a vehicle can also spare us problems associated with vehicle clearance. n
