Malawi’s Minister of Finance Simplex Chithyola Band presented the 2025-26 Budget Statement on 28 February 2025. The budget, totaling MWK 8 trillion, aims to stabilise the economy in the face of sluggish GDP growth, soaring inflation, and mounting debt.

The 2025-26 budget introduces various tax measures pertaining to direct and indirect taxation, including corporate tax rates and new customs and excise duties.

Corporate tax rates

The key tax measure is reducing the corporate tax rate for non-residents with a permanent establishment in Malawi from 35% to 30%. The budget also proposed amendments to income tax laws, including classifying mega farms as a priority sector to grant them a 10-year tax exemption and introducing new stamp duty offenses to improve tax compliance.

Customs duty

Changes to import duties include increased allowances for duty-free vehicles for parliament members, 0% import duty (currently 12%) on materials for amusement park construction, duty-free irrigation pumps, and a 25% import duty on separate vehicle and equipment engines.

Additionally, import duties on e-cigarettes will be raised.

Excise duty

The main excise duty measures in the 2025-26 budget include a 0% excise duty on materials for amusement park construction, reduced excise duties for hybrid electric vehicles (HEVs), a 200% excise duty on e-cigarettes, and an increase in the excise tax on plastic bags from 10% to 250%.

Value added tax (VAT)

The budget proposes eliminating the 16.5% VAT on bread, buns, and confectioneries.

If the budget is approved by the parliament and receives the president’s assent, the proposed tax measures will take effect starting 1 April 2025.