Introduces new measures to incentivize investment in the priority sectors and promote local employment

07 Mar 2023

The Government of Malawi made several income tax-related announcements on March 7, 2023, following the Budget Statement for the fiscal year 2023/24 presented to Parliament on March 2, 2023. The measures aim to incentivize investment in the priority industry, promote local employment, and ensure transparency in the assessment process.They include:

Tax Holiday and Duty-Free Importation: Investors in mega farms will enjoy a tax holiday of up to 10 years, along with the privilege of importing machinery and building materials duty-free.

Amendments to the Priority Industry Scheme: The following changes were made to the scheme:

a. Retroactive Incentives: Investors registered before 2013 can now qualify for incentives under the Priority Industry Scheme, provided the new investment operates as a subsidiary.

b. Local Employment Requirement: All companies operating in the priority industry must have at least 30% of their management positions filled by local employees.

c. Joint Ventures: Joint ventures between Malawians and non-Malawians will be considered Malawian investments if the Malawian investors contribute at least 51% of the capital investment.

d. Transparency in Assessment: Assessment criteria for qualification to operate in the priority industry will be included in regulations to increase the transparency of the assessment process.

e. Designated Sectors: The priority industry will consist of the following designated sectors for the next 10 years, from 2023 to 2033: agro-processing, energy generation and distribution, and mega farms. This inclusion comes with a sunset clause for each sector.

f. Tax Holiday Period: The regulation will specify the tax holiday period for each investment.