Rex Chikoko, of The Nation, has analysed a deal stuck between Malawi’s government and a Brazilian mining company, in which the country appears to have lost out.
The agreement made between the government and the mining company was for the construction and rehabilitation of a railway running through southern Malawi, which would transport coal from the mining site in western Mozambique to its coast.
The analysis, published on 24th July 2015, shows that the negotiations ended with the Malawian government offering a number of tax exemptions, resulting in a “raw deal” for the country.
Government Gives Up Taxes To Vale
Poor negotiating skills have cost Malawi a fortune in a concession agreement it struck with Brazilian mining company, Vale Logistics Limited (VLL), as the deal favours the company, according to The Nation’s analysis of the pact and tax experts.
Malawi is expected to be getting K920 million (about $2 million) annually out of the K460 billion ($1.1 billion) VLL railway line investment after giving the company tax exemptions on almost all the taxes that could have accrued.
Among others, Malawi gave away corporate tax calculated at 30 percent and value added tax (VAT) and 16.5 percent. Click here for full article.