Malawi's tax regime remains prohibitive to attract meaningful foreign direct investments (FDI) and it impacts negatively on private sector, the World Bank has said but that has been dismissed by Treasury Czar Goodall Gondwe.
"The investment allowances currently in force are insufficient to attract or induce meangful investment , the industrial rebate scheme is cumbersome, with the short validity period for the industrial period for the industrial rebate license creating uncertainty among investors, the withholding tax creates unnecessary burden, especially for the smallholder farming community," says the World Bank in its newly released Malawi Economic Monitor report.
Additionally, the report says actors in the financial sector claim that "policy uncertainity" regarding export bans for agriculture produce and weak judicial system as constraints preventing them from lending out to commercial farming and agri-business.
A discussion between the private sector representative and government has been recommended by the bank to remedy the situation.
But Minister of Finance, Economic Plannimg and Develooment , Goodall Gondwe said the country's taxation system was recommended by the International Monetary Fund (IMF).
Gondwe said the World Bank report is "nonsense" because the taxation regime that Malawi is implementing now "was given to us by the IMF."