The 2025–26 Mid-Year Budget Review proposes broad tax increases and new levies, tighter enforcement, and revised corporate and personal tax structures, all pending parliamentary approval.
Malawi’s Ministry of Finance, Economic Planning, and Decentralisation (MoFEPD) presented the 2025-26 Mid-Year Budget Review Statement 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 Value Added Tax (VAT) rate and introducing new levies on bank transfers and mobile money transactions.
Restructuring Supernormal Profit Tax
The threshold for applying the supernormal profit tax on companies has been significantly lowered from MWK 10 billion to MWK 5 billion. Under the revised structure, company profits below MWK 5 billion will continue to be taxed at the standard rate of 30%, while earnings of MWK 5 billion and above will now be subject to a higher rate of 40%
Introduction of the Minimum Alternate Tax (MAT)
To address the issue of companies that continue to operate while perpetually declaring losses, a Minimum Alternate Tax (MAT) at the rate of 0.5% percent on turnover will be introduced.
Companies will now be required to pay the higher of the regular corporate income tax (30% on profit) and the 0.5% turnover MAT.
The MAT will apply only to companies that have been operating for more than three years and have a turnover exceeding MWK 5 billion.
Any amount paid above the minimum alternate tax requirement will be treated as a credit, offset against future tax obligations.
Value Added Tax (VAT) Rate Increase
The standard VAT rate will increase from 16.5% to 17.5%. To curb widespread non-compliance, the government has also warned that strict penalties will be enforced against any shop or business that fails to issue VAT receipts for goods or services.
Bank Transfer Levy
A 0.05% levy is being introduced, payable by the sender, and applied to all bank transfers (both within and across banks).
Mobile Money Transfer Levy
A 0.05% levy will apply to mobile money transfers exceeding MWK 100,000, and will also be paid by the sender. This MWK 100,000 limit is intended to protect low-income earners.
Taxation of Winnings and Gambling
The MWK 100,000 and MWK 500,000 thresholds for applying withholding tax on betting and lottery winnings have been removed, meaning that all winnings will now be taxed.
Withholding Tax Rate On Gambling Winnings
The withholding tax on gambling winnings will rise from 10% to 15%. In addition, the existing 15% excise tax on gross lottery revenues will be strictly enforced, with particular focus on radio and television stations.
Capital Gains Tax on Shares
Capital gains tax will now apply to all share disposals, regardless of how long the shares were held. Previously, capital gains tax was not applied to shares held for more than one year.
Enforcement of Residential Rental Income Tax
The Malawi Revenue Authority (MRA) has been directed to immediately enforce the collection of rental income tax on residential properties, particularly in major cities (Mzuzu, Lilongwe, Zomba, and Blantyre), citing non-compliance among residential property owners.
Personal Income Tax (PAYE) Adjustments
The Government is adjusting the Pay As You Earn (PAYE) system, with the stated goal of shielding low-income earners while increasing contributions from higher earners.
PAYE threshold and bracket changes:
- Zero-rate monthly income threshold raised to MWK 170,000.
- 25% tax bracket eliminated.
- 30% rate applies to monthly incomes from MWK 170,000 to MWK 1.57 million.
- 35% rate applies to monthly incomes from MWK 1.57 million to MWK 10 million.
- The new 40% rate applies to monthly incomes above MWK 10 million.
These proposed changes are not yet in effect and remain subject to parliamentary approval.
