The Malawi Revenue Authority (MRA) has indicated that increasing the zero-rated tax bracket to K150,000 from K100,000 will see the tax collector lose about K50 billion in Pay As You Earn (Paye).
This came out during a press briefing that the Authority held in Blantyre on Wednesday.
MRA Commissioner General John Biziwick said the shift in the tax bracket will marginally affect its revenue mobilization efforts but was quick to indicate that they hope to recover the same through the Value Added Tax (VAT).
“We are going to lose between K40 billion to K50 billion, however, this money will increase the people’s disposable incomes and they will be able to purchase goods, by doing so they will be paying VAT. While we have lost on one hand we hope to collect even more through the VAT,” Biziwick said.
Presenting the 2024- 25 budget statement in parliament Finance Minister Simplex Chithyola Banda said the move was aimed at cushioning employees in formal employment from the effects of the currency alignment.
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“The government has increased the zero Paye bracket from K100,000 to K150,000. Accordingly, the new monthly Paye structure will be first K150,000 will be taxed at 0 percent, next K350,000 will be taxed at 25 percent, next K2,050,000 will be taxed at 30 percent and excess of K2,550,000 will be taxed at 35 percent,” Chithyola said.
