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Investors lobby for India-Malawi Double Taxation Treaty

December 23, 2023 / Marcel Chimwala

Indian investors say there is a need for the governments of Malawi and India to sign a Double Taxation Treaty in order to prevent the taxation of the same income or assets in both countries, which is a stumbling block to investment.

A representative of the investors who is also MD for Trinity Ventures Inc. K.S. Gurulingaswamy says in an interview with Mining & Trade Review that it will be beneficial for Malawi to have a Double Taxation Pact with India in order to attract huge investments from that country.

Gurulingaswamy says:  “There are large number of rich Indian business people who are interested to invest in Malawi due to the good opportunities available.”

“They are interested to invest in sectors such as Agriculture, Tourism, Mining, and Renewable Energy.  However, due to the non-existence of a Double Taxation Treaty between the countries and the uncertainty faced due to it, such investors are hesitant to invest and start businesses in Malawi.”

Double taxation treaties offer several benefits to investors including avoidance of double taxation, which is done by specifying rules on how income should be taxed in each country to ensure that taxpayers are not unfairly taxed on the same income or assets in both countries.

Gurulingaswamy, whose company is prospecting for black granite in Mchinji, also explains that such a pact plays a role in the promotion of cross-border trade and investment by providing clarity and certainty to individuals and businesses regarding their tax liabilities in different countries.

“This clarity reduces tax-related uncertainties and promotes international economic activities,” he says.

Gurulingaswamy says tax treaties can also make a country more attractive for foreign investors by providing favourable tax treatment, such as reduced withholding tax rates on dividends, interest, and royalties explaining that this can incentivize foreign companies to invest in the country by making it more financially appealing.

Tax treaties also facilitate cooperation and exchange of information between countries’ tax authorities.

He says: “This helps in preventing tax evasion and ensuring compliance with tax laws by allowing the exchange of information between the signatory countries.”

“By providing clear guidelines for determining tax liabilities in cases involving cross-border transactions, tax treaties can reduce administrative burdens for taxpayers. This clarity simplifies tax compliance procedures, saving time and resources.”

Currently, South Africa, Ethiopia, Botswana, Namibia, Mozambique, Kenya, Tanzania, Zambia, Uganda and Morocco, which are enjoying massive investments from India, have a Double Taxation Treaty with the Asian economic giant.

Malawi has signed double taxation treaties with Botswana, Denmark, France, Kenya, Mozambique, Netherlands, Sweden, Switzerland, United Kingdom and United States of America.

There are also pending treaties with Egypt, Mauritius, Norway, China, Seychelles, Zambia and Zimbabwe.

Malawi taxes at source unlike countries like the United States that tax worldwide income on its citizens.

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