Debate has ensued among commentators and economists over the revenue collection enforcement drive by the Malawi Revenue Authority (MRA) on some taxes and new tax measures recently introduced by the government.
Experts say while the measures are necessary for addressing fiscal pressure, they could hurt businesses and other tax payers, if enforced haphazardly.
For instance, in recent weeks, MRA called on property owners to register, obtain Taxpayer Identification Numbers (TPINs) and declare rental income ahead of a nationwide landlord identification exercise scheduled this February, as it moves to enforce tax collection on rentals.
But analysts warn that while broadening the tax base is crucial for fiscal stability, its success would hinge on public trust, gradual implementation and visible improvements in service delivery by duty bearers.
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The revenue collection body also postponed rollout of its Electronic Invoicing System (EIS) to May this year following protests over inadequate consultation and low civic education.
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In an interview on Tuesday, economist Marvin Banda said tax reforms are central to stabilising public finances and reducing Malawi’s dependence on borrowing and donor funding.
Banda said compliance would allow the government to improve public services while shrinking chronic fiscal shortfalls.
Malawi’s budget deficits have averaged 10 to 14 percent of GDP, and according to Banda, without increased revenue mobilisation, the country risks deepening debt burdens and aid dependency.
“By broadening the tax base and improving tax compliance the government would be able to improve the type and quality of public service delivery, reduce fiscal deficits, debt financing and aid dependency,” he said.
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However, Banda acknowledged widespread public frustration with the tax system due to poor public service delivery.
He said gradual taxation is ideal for Malawi’s situation to allow the taxpayers adapt to the changing environment.
Taxation expert Emmanual Kaluluma said rental income tax laws, for instance, have existed for years, with the real problems lying in weak compliance, limited taxpayer education and uneven enforcement.
Kaluluma cautioned against what he described as a blanket application of the law without regard to Malawi’s poverty levels and income distribution.
Speaking on Times Radio on Monday, MRA Manager for Domestic Taxes– Technical Enock Hapala said landlords will only be taxed on profits after expenses, with the first K2.04 million charged at zero percent and income above that threshold taxed at 30 percent.
MRA Head of Corporate Affairs Wilma Chalulu said the implementation would be phased.
Other tax measures introduced in the 2025-26 Budget include removal of the 25 percent tax band on Pay As You Earn, with incomes between K170 000 and K1.57 million now attracting 30 percent tax. Those up to K10 million will be taxed at 35 percent while a new 40 percent tax rate applies beyond that threshold.
When presenting the mid-year budget statement, Minister of Finance Joseph Mwanamvekha announced the increase in the value added tax (VAT) rate from 16.5 percent to 17.5 percent.
He also announced the introduction of a 0.05 percent bank transfer levy to be applied on all bank transfers and another 0.05 percent mobile money levy on mobile money transfers of above K100 000 to be paid by the sender.
In its 2025 Annual Economic Report, Malawi Confederation of Chambers of Commerce and Industry said while necessary for addressing Malawi’s fiscal pressures, the revenue measures, have important implications for the business environment.
The chambers called for a carefully balanced policy approach. The government faces fiscal pressure amid low revenue generation and rising public debt, now at K24.2 trillion, a situation which makes revenue mobilisation an increasingly urgent policy priority.
