The Renewable Energy Industries Association of Malawi (Reiama) on Thursday took to task officials from Malawi Revenue Authority (MRA) and Malawi Bureau of Standards (MBS) to explain the tariff regime change.
This followed complaints from industry players that they are still paying import duty and value added tax (VAT) on renewable energy technologies despite being removed by government.
During the meeting in Lilongwe, the association complained that contrary to the existing tax policy in force which zero rates import duty, import excise and VAT on all imported renewable energy products, MRA is still taxing the products, thereby suffocating industry players.
Apart from the taxation complaint, Reima executive director Ron Kabvina also said their members have raised concerns against MBS, accusing the body of collecting products as samples for inspection, but does not return the collected samples to the owners.
By ‘silently’ subjecting solar products to tax, he said the move has triggered exorbitant prices of the products, which he said is contrary to efforts by government to increase access to electricity in the rural and undeserved areas through the use of renewable energy sources.
In the 2019/20 National Budget, government announced tax incentives for solar lighting products and other renewable technologies by scrapping off duty, excise and VAT to make solar lights affordable and accessible to Malawians as only around 10 percent of the population is connected to the grid.
Said Kabvina: “We have distributors of these solar energy products who have their products in MRA warehouses for over five months just because the tariffs changed without notice by MRA itself.
“The implication of this is that products such as lamps will have to cost 50 percent more as importers or distributors will have to factor in tax element.”
Sunny Money executive director Brave Mhone told the meeting that the company’s shipment was withheld by MRA in October last year as a result of similar confusion over tariff application of renewable energy technology.
He explained that the company is not against the clearance or tariff codes but pleaded with MRA to include such new codes, in the duty and VAT-free status.
In response, an MRA official from the customs and excise division (technical) Ephraim Munthali explained that some tariff codes had changed since the country’s migration to the Common Market and Eastern and Southern Africa (Comesa) in 2018.
“As a way forward, I suggest that you write Treasury and specifically mention about the change in the codes from 94054030 to 94052030. This issue is hinging on duty rates other than tax classification. Classification is the mandate of MRA, but in terms of duty rates, that is the duty of Treasury,” he said.
The country’s National Energy Policy of 2018 also seeks to establish a vibrant, reliable, incentivised and sustainable private sector-driven renewable energy technology industry, among other broad objectives.