Car Import Duty in Malawi

Taxes and Duties on used vehicles

By Jack Kates

Due to high import taxes, importation of vehicle in Malawi is quite high. In 2010, an excessive excise duty was also added, this has doubled the cost of used vehicles and in some cases making newer vehicles more affordable. This in a country where monthly salary is US$30. There is a 25% import duty on CIF value of the car, the excise duty introduced in 2010 varies from 5% to 100% depending on make and engine capacity as well as age of the vehicle, a surtax of 16.5% and K15,000 fixed destination inspection fee (DIF) for all items valued over K300,000. There hav e been recent proposal to reduce import duty by 20%. If implemented that could revive used car market.

For example, second-hand vehicles with an engine capacity of up to 1,500 cc and below eight years of age attract a basic import duty of 25 percent on their CIF cost, with a further 16.5 percent value added tax (VAT) levied on the sum of the CIF and import duty. Vehicles between 8 and 12 years old with the same engine capacity attract an additional excise duty of 35 percent, levied on the sum of the CIF, VAT and import duty. This punitive excise duty has pretty much destroyed used car import business. This is not justified on environmental grounds as there are only 8 cars per 1000 persons in Malawi compared to 114 in Zimbabwe and 897 in United States.

Most second-hand vehicles are imported through Tanzania’s main port of Dar es Salaam, with some coming through Durban in South Africa. Insurance and freight costs are calculated from the vehicle’s point of purchase to the port of arrival.

The new system was implemented in tandem with a decision by the MRA to suspend all inland clearance of imported goods, including second-hand vehicles, in order to reduce the likelihood of vehicles being smuggled to avoid excise duty. All imported goods are now cleared at the port of entry, and are detained there if their owners do not have the money to pay duties.

If vehicle is sold, disposed within Five years of importation, then used vehicle importer has to pay duties similar to the amount paid to Customs at initial importation. Here are taxes due on import of commercial vehicles :-

• Up to 2000cc :- seating capacity less than 10 people.

  • Import Duty:- 25%

  • VAT:- 16.5%

  • Excise:- 15%

• 2000-2500cc :- seating capacity less than 10 people.

  • Import Duty:- 25%

  • VAT:- 16.5%

  • Excise:- 30%

• 2500-3000cc- seating capacity less than 10.

  • Import Duty:- 25%

  • VAT:- 16.5%

  • Excise:- 40%

• Over 3000c- seating capacity less than 10.

  • Import Duty:- 25%

  • VAT:- 16.5%

  • Excise:- 50%

• Minibus holding more than 10 people.

  • Import Duty:- 25%

  • VAT:- 16.5%

  • Excise:- Nil

• Trucks under 3 Ton.

  • Import Duty:- 10.00%

  • VAT:- 16.5%

  • Excise:- 5.00%

• Trucks over 3 Ton.

  • Import Duty:- 1.10%

  • VAT:- 2.50%

• Truck over 10 Ton.

  • Excise:- 1.50%