Development of Policy, Legal, and Insitutional Framework for - ppiaf

Development of Policy, Legal, & Institutional Framework for the PPP Program in Malawi
Final Report
Stamp duty at the rate of three percent of the value of the property subject of the
transfer or sale is payable to the Government. There is also duty, albeit a much
reduced level, on a mortgage or charge.
This is a form of tax. It could therefore very be that in trying to encourage
investment in PPPs the Government may grant a general or specific waiver
for this duty.
7. Companies Act & Protected Flag, Emblems and Names Act
PPPs can be undertaken through any myriad of vehicles, although the incorporation
of a limited liability company under the Companies Act would be the commonest
type. The process for securing the registration of a company in Malawi is fairly
simple and straight-forward. If the name of the proposed company wishes to use
the word “Malawi” or “National” or “Republic” etc, it is necessary to obtain specific
approval from the Government – the Office of the President and Cabinet.
ISSUE:
Stamp Duty is payable on the nominal capital of the company. This can be
costly depending of the amount of the authorised share capital. To facilitate
PPPs and help to make new projects viable, one of the potential incentives
could be to allow the prospective investors a waiver with regard to this
stamp duty.
8. Taxation Act, Customs and Excise Act
The Tax Act provides a tax regime for any investor, be it a citizen or non-citizen or
indeed a corporate entity. With respect to resident individuals and companies, tax is
levied on all income from within or deemed to be within the country. In relation to
commercial operations, the Act allows (within some limitations) the carry over of
operating losses in the determination of taxes payable in later years. Additionally,
the employer is required to withhold employment taxes (popularly known as “Pay
As You Earn” or “PAYE”).
ISSUES:
A recent amendment of the Taxation Act (2005) attempts to limit to six years
the ability to carry forward any tax losses. The Investment Promotion Act, on
the other hand, suggests that tax losses can be carried forward indefinitely.
Work is in hand that seeks to remove the discretion to grant tax waivers from
the Minister of Finance. Any incentives for PPP projects therefore will need
to be sanctioned by Parliament probably through the new Act.
To enable PPP projects to be viable, it may be necessary to accord certain
projects preferential taxation rates. The Government may wish to give this
matter further thought.
9. The National Transport Policy, 1998 & the Road Traffic Act
High transport costs, weak infrastructure and poor access to rural areas remain
important issues in the economic development of Malawi. This will prove a major
consideration in the implementation of PPPs. It is as much an obstacle as it is an
THE INSTITUTE FOR PUBLIC-PRIVATE PARTNERSHIPS 95