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Optimism over new tax regulations on cigarettes

Nyasa Manufacturing has applauded government for the new tax regime on cigarettes announced by Finance Minister, Goodall Gondwe, when he presented the 2016/2017 national budget.

In his budget presentation, Gondwe said government has decided to revert to the two tier taxation system for cigarettes which was used prior to amendments made in 2014 as one way of encouraging local production of cigarettes.

Gondwe said under the system, government is proposing to apply a levy of $10 per 1000 sticks of cigarettes for locally made cigarettes or $10 per 1000 sticks of cigarettes for imported cigarettes with 70 percent locally grown tobacco content.

“Mr. Speakers, Sir, to support and encourage the interest shown by investors in cigarettes manufacturing, we are reverting to the two-tier excise tax regime that prevailed prior to amendments in 2014,” Gondwe said.

He further said the excise tax regime to be applied to cigarettes puts the Malawi excise tax structure in line with the rest of the neighbouring countries; a situation he said will reduce smuggling of cigarettes into the country.

Reacting to the minister’s statement, Chairman of Nyasa Manufacturing, Konrad Buckle, said the move made by the government will help to boost investments within the sector.

“We are really happy with the government’s decision to support local manufacturers and induce investment. We, however, would like the government to put measures in place to ensure that local content is 70 percent and that the country gets true benefits by value adding to the Malawi tobacco,” he said.

Buckle further said his company has downsised due to smuggling hence the company is hopeful that with the new tax changes, things will improve.

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