Lex Africa Guide 2012 Full - Afrer.org

Sole trader.SACRANIE, GOW & CO.MALAWIFirm InformationContact: Shabir Latif (SC)Telephone: +265 1 840 311/593/492/678Mobile: +265 888 825 138/991 247 695Fax: +265 1 840 750Email:sgow@sacgow.com and sgow@hotmail.uk.comPolitical SystemMultiparty democracy since 1994.Latest GDP figuresUS$5.38 billion.Growth Rate6% Estimate (Source: RBM Economic and Financial ReviewNovember 2010).Growth Rate by Sector (2010)Agriculture: 2%Mining and quarrying: 80.2%Manufacturing: 4.3%Construction: 16.5%Accommodation and food services: 8.2%Information and communication: 9.2%Wholesale and retail Trade: 5.8%Projected strong growth in mining and quarrying,accommodation and food services and information andcommunication.Inflation Rate8.1%% (October 2011).Investment ClimateThe Government is eager to continue attracting foreigninvestment in both the private and public sectors. Malawi hasopened up and liberalised its economy and is encouragingforeign investment in the mining industry, local production forexport and adding value to agricultural products. TheGovernment is pursuing stable macroeconomic policies byexercising fiscal and monetary discipline in terms of itsinternational obligations and maintaining stable interest ratesand a stable exchange rate for the Malawi Kwacha (MWK), thecountry’s currency. Tobacco sales and continued donor aid inthe form of balance of payments support enable Malawi tofinance its foreign currency account balance. The number ofcounters on the Malawi Stock Exchange is 15. There has not beenany new listing for a number of years.Forms of BusinessPrivate or public limited liability companyExternal company (i.e. a branch of a foreign company)PartnershipTrading trustFormation of a CompanyCompanies, both local and foreign, must be registered with theRegistrar of Companies. Companies can be incorporated andregistered within 24 hours. A local company must have aregistered office in Malawi and a foreign company must have adocumentary agent in Malawi. Local companies must have amajority of at least 3 resident directors. Businesses notoperating as incorporated companies or trusts are required toregister their business names and the name(s) of theproprietor(s) of the business. Licences are required for certaintypes of business and other registrations are required for variouspurposes such as income tax, service and other taxes.Exchange ControlsExchange controls still exist in Malawi and are managed by theReserve Bank of Malawi (RBM). Foreign investment capital,whether in the form of equity or loans, needs to be registeredwith the RBM. The RBM’s prior approval is required for the termsand conditions of foreign loans, foreign investment in the formof equity and remittance of dividends (and capital in the event ofdisinvestment), technical, management and consultancycontracts with non-residents, licensing and royaltyarrangements and technology transfers. These approvals aregranted in respect of transactions concluded on internationallyprevailing terms, conditions and standards. It takes about 4- 6weeks to process applications with the RBM. In order to pay forimports, prior permission is required from authorised dealerbanks and applications are expeditiously processed.TaxationTax is levied on income from actual and deemed Malawi sourcesat the following rates:30% for companies (35% of for foreign companies) and 21%for life assurance businesses;25% for ecclesiastical, charitable or educationalinstitutions of a public character or trusts;sliding rates from 0% up to 30% (based on annual income)for individuals and partnerships;30% for approved companies operating in an exportprocessing zone;0% for 10 years or 15% for companies operating in priorityindustries;minimum tax of 1% on turnover below MWK50 000 000and 2% exceeding MWK50 000 000. This only applies toindividuals and enterprises for the first three years fromdate of commencement of business.Almost all taxpayers operating businesses are required to payestimated advance tax on a quarterly basis. Operating losses canbe carried forward indefinitely for manufacturing, agriculturaland mining industries and for six years for trading industries.There are other taxes including, among others:value added tax (VAT) on annual turnover in excess of 6million Malawi Kwacha;a turnover tax at 2% has been introduced for those taxpayers whose turnover is between 2 to6 million Malawi Kwacha;duty charged on import of goods;surtax charged on imports, services andlocally manufactured goods;capital gains tax - any gain from the sale45