A free-trade area is the region encompassing a trade bloc whose member countries have signed a free trade agreement (FTA). Such agreements involve cooperation between at least two countries to reduce trade barriers—import quotas and tariffs— and to increase trade of goods and services with each other. If people are also free to move between the countries, in addition to FTA, it would also be considered an open border. It can be considered the second stage of economic integration.

It is a requirement under the Export Incentives Act for a company to register with the Malawi Investment and Trade Center as an exporter in order to access the incentives and enjoy the related benefits. The Act which is administered by the Malawi Investment and Trade Center provides the following incentives:

• 22 percent tax allowance on export proceeds excluding unmanufactured tobacco, tea, coffee and cane sugar.
• Transport tax allowance of 25 percent of international transport costs quoted CIF.
• Duty drawback on imported raw materials including packaging materials made locally for manufacturers in bond.
• No duties and Value Added Taxes on imports of capital equipment used mainly in the manufacture of exports.
• No excise taxes and Value Added Taxes on purchases of raw materials and packaging materials made in the country for
  manufacturing in bond.

Additionally, Malawi government enacted the Export Processing Zones (EPZ) Act of 1995. The EPZ scheme provides
the following incentives:

• No withholding tax on dividends. 
• No duty or capital requirement on capital equipment and raw materials.
• No excise taxes on purchases of raw materials and packaging materials made in Malawi.
• No VAT on inputs and export produce/manufacture.

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