Banks call for clarity on new transfer levy – The Times Group

New Transfer Levy: What Malawi Businesses Need to Know to Minimize Costs and Maximize Growth

Post was last updated: January 21, 2026

Key Business Points

  • The Bankers Association of Malawi (BAM) is urging the government to clarify the scope of the new 0.05 percent bank transfer levy to avoid taxing all banking activities, which could lead to heavy taxation on all transactions.
  • The introduction of the levy and the 17.5 percent VAT may increase consumer costs and reduce disposable income, making life more expensive for ordinary Malawians and potentially derailing financial inclusion efforts.
  • Businesses and stakeholders are calling for thorough consultations with the government to ensure that tax measures are carefully balanced and consider public views, promoting economic growth and protecting the poor.

The Bankers Association of Malawi (BAM) has expressed concerns over the ambiguity surrounding the new 0.05 percent bank transfer levy, which was introduced in the new tax law. The levy, aimed at enhancing revenue from financial transactions, is to be borne by the sender. However, BAM’s Chief Executive Officer, Lyness Nkungula, warns that a strict interpretation of the law could result in all electronic transfers being subject to the levy, including own-account transfers, bill and tax payments, inter-bank settlements, and international transfers. This, she says, could lead to heavy taxation on all banking transactions, negatively impacting Malawians.

Nkungula emphasized the need for clear definitions and consolidation within tax laws to reduce compliance confusion, particularly regarding what constitutes banking business. She also stressed that taxes should be structured to promote economic growth, citing the introduction of the 17.5 percent VAT as an example of a tax measure that increases consumer costs and reduces disposable income. As she put it, "The law must clearly define the scope of the levy; otherwise, all bank activities could potentially be taxed." This sentiment is echoed in the Chichewa business phrase "Tithandize mwamsanga," which means "let’s work together to understand the tax laws."

The Consumers Association of Malawi Executive Director, John Kapito, shared similar concerns, stating that the levy is a major blow to consumers and may derail financial inclusion efforts. Kapito warned that consumers may prefer to transact outside the formal system, moving away from banks due to the high taxes. He called on the government to ensure thorough consultations with all stakeholders before implementing tax measures, taking into consideration public views on the matter. This is in line with the Chichewa business principle of "Kugwiritsa ntchito mtundu," which means "involving the community in decision-making."

The Malawi Confederation of Chambers of Commerce and Industry also weighed in, calling for a carefully balanced policy approach to the proposed tax measures in its 2025 Annual Economic and Business Review. Minister of Finance Joseph Mwanamvekha defended the 0.05 percent bank transfer levy, arguing that it is significantly lower than commercial bank charges and targets wealthy Malawians rather than the poor. Mwanamvekha emphasized that the government is working on the principle that those who earn more should contribute more, aiming to protect the poor. As he put it, "Timu tidzitumiza kale," which means "we must work together to achieve our goals." The government’s approach to taxation will be crucial in promoting economic growth and investment opportunities in Malawi, and businesses will be watching closely to see how the situation unfolds.

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Vanessa Banda
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