Malawi’s President has approved the Value Added (Amendment) Act 2025, raising VAT and introducing levies on bank and mobile money transfers. The 2025-26 Mid-Year Budget Review also updates PAYE, supernormal profit and capital gains taxes, gambling winnings, and reinstates a 20% surcharge on imported cement. 

RF Report

Malawi’s President has signed the Value Added (Amendment) Act 2025, raising the VAT rate from 16.5% to 17.5%. The Act received presidential assent on 20 December 2025 and was gazetted on 30 December 2025, entering into force the next day, 31 December 2025.

The VAT rate increase is part of Malawi’s 2025-26 Mid-Year Budget Review Statement, which was presented to the National Assembly on 21 November 2025.

The 2025-26 Mid-Year Budget Review Statement proposes various direct and indirect tax measures. The main tax measures include increasing the VAT rate and introducing new levies on bank transfers and mobile money transactions.

The key tax measures are as follows:

Money transfers

  • A 0.05% levy is introduced on all bank-to-bank transfers, payable by the sender.
  • A 0.05% levy also applies to mobile money transfers exceeding K100,000, payable by the sender.

Pay As You Earn (PAYE)

  • The zero-rate threshold is increased from K150,000 to K170,000 per month.
  • The 25% tax bracket has been removed.
  • A 30% tax rate applies to monthly incomes from K170,000 to K1.57 million.
  • A 35% tax rate applies to monthly incomes from K1.57 million to K10 million.
  • A 40% tax rate applies to monthly incomes exceeding K10 million per month.

Supernormal profit tax

  • The threshold for supernormal profits is reduced from K10 billion to K5 billion.
  • Taxable income below K5 billion will be taxed at 30%, while income above K5 billion will be taxed at 40%.

Gambling and lottery winnings

  • Previous tax-free thresholds of MWK 100,000 and MWK 500,000 are removed.
  • All winnings are now subject to withholding tax.
  • The withholding tax rate is increased from 10% to 15%.

Minimum alternative tax (MAT)

  • A 0.5% MAT on turnover is introduced for companies with a turnover above K5 billion and operating for more than three years.

Capital gains tax on shares

  • The holding-period exemption is removed.
  • Capital gains tax will now apply to the disposal of all shares.

Customs and excise taxes

  • A 20% surcharge is reinstated on imported cement