The Bankers Association of Malawi (BAM) has called on government to clarify the new 0.05 percent bank transfer levy, warning that ambiguity could result in Malawians being subjected to heavy taxation on all banking transactions.
The bank transfer levy on all bank transfers was introduced in the new tax law, to be borne by the sender, and is aimed at enhancing revenue from financial transactions.
However, in its 2026-27 pre-budget proposals, BAM has urged government to clearly define the scope of the levy to avoid the risk of taxing all banking activities.
Its Chief Executive Officer, Lyness Nkungula, said that under a strict interpretation, all electronic transfers could qualify for the levy, including own-account transfers, bill and tax payments, inter-bank settlements and international transfers. She said there is a need for clear definitions and consolidation within tax laws to reduce compliance confusion, particularly regarding what constitutes banking business.
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“The law must clearly define the scope of the levy; otherwise, all bank activities could potentially be taxed. Banking services subject to Value Added Tax (VAT) should be clearly scheduled to ensure clarity and consistency,” Nkungula said.
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In her submission, she also said taxes should be structured in a way that promotes economic growth.
Nkungula cited the introduction of the 17.5 percent VAT, adding that it increases consumer costs and reduces disposable income, thereby making life more expensive for ordinary Malawians.
Consumers Association of Malawi Executive Director John Kapito said the levy is a major blow to consumers and may derail the financial inclusion strides made so far. “I think we are going to witness a situation where people prefer to transact outside the formal system. Most consumers would rather move away from banks because you cannot have your money simply eaten up by taxes in the bank,” Kapito said.
Kapito called on government to ensure there are thorough consultations with all stakeholders before implementing tax measures, to take into consideration public views on the matter.
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In its 2025 Annual Economic and Business Review, the Malawi Confederation of Chambers of Commerce and Industry called for a carefully balanced policy approach to the proposed tax measures.
Minister of Finance Joseph Mwanamvekha has defended the 0.05 percent bank transfer levy, arguing that it is significantly lower than commercial bank charges and targets wealthy Malawians rather than the poor.
“We are working on the principle that those who earn more should contribute more. We do not want to squeeze the very poor people that we want to protect. Those that make more money have to contribute more,” Mwanamvekha said.
