Fueling Growth: Navigating Malawi’s Tax Landscape to Drive Business Success

Key Business Points

• Increased value added tax rate from 16.5 to 17.7 percent may lead to higher production costs and prices for businesses, affecting consumer purchasing power and potentially slowing economic growth.
• The introduction of a 0.05 percent levy on bank and mobile transfers may increase transaction costs for businesses and individuals, potentially reducing liquidity and affecting cash flow management.
• Minimum alternate tax on turnover and the lowering of the super-profit tax threshold to K5 billion from K10 billion may impact businesses’ profitability and investment decisions, particularly for large corporations and high-growth enterprises.

The Institute of Chartered Accountants in Malawi (Icam) and the Economics Association of Malawi (Ecama) have warned that the government’s newly introduced tax measures could exacerbate inflationary pressures and worsen household welfare. The revised fiscal plan, presented by Minister of Finance, Economic Planning and Decentralisation Joseph Mwanamvekha, aims to broaden revenue mobilisation in a challenging economic environment. According to Icam chief executive officer Noel Zigowa, "these tax changes speak to an urgent need to keep the government functioning under difficult conditions". On the other hand, Ecama president Bertha Bangara-Chikadza views the package as a push toward restoring fiscal discipline, citing parallel expenditure controls such as limiting foreign travel and intensifying payroll audits.

The tax measures include an increase in value added tax rate, a levy on bank and mobile transfers, minimum alternate tax on turnover, and the lowering of the super-profit tax threshold. These changes have been met with criticism from opposition parties, with Malawi Congress Party spokesperson on Finance Eisenhower Mkaka and Budget and Finance Committee chairperson Sosten Gwengwe describing the measures as punitive. As mnasi wa uchumi (economic players) in Malawi, businesses and entrepreneurs must navigate these changes and consider their implications on tsogolo la biashara (business growth) and maendeleo ya uchumi (economic development). With the government attempting to rein in inefficiencies and better manage the wage bill, businesses may need to kulenga mapato (diversify revenue streams) and kutengeneza mikakati (develop strategies) to mitigate the impact of these tax measures.

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