Revitalizing Malawi’s Economy: Navigating Tax Reforms to Fuel Business Growth

Key Business Points

• Tax reform is crucial for Malawi’s economic growth, with the private sector calling for a simplified sales tax system and an increase in the tax-free threshold to K250,000.
• Over-taxation is a competitiveness issue, with punitive excise duties driving smuggling and undermining emerging industries, and the private sector urging the removal of duties on certain products to align with regional trade practices.
• Investment incentives, not higher tax rates, are needed to unlock growth, with the private sector proposing a private-sector-driven mining investment fund to stabilize revenues and build reserves.

The Institute of Chartered Accountants in Malawi (Icam) and the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) have warned that the government’s current fiscal planning trajectory is chasing revenue at the expense of investment growth. In separate submissions to the Treasury, the two bodies cautioned that the pressure to widen the tax net and plug deficits risks suffocating businesses already battered by inflation, forex shortages, and policy unpredictability. Icam President Daniel Jere emphasized that Malawi’s narrow tax base has left formal employees carrying a disproportionate burden, and proposed raising the tax-free threshold and scrapping the 40 percent top marginal rate.

MCCCI Chief Executive Daisy Kambalame pressed for digitization of revenue collection to curb leakages and corruption, and warned that punitive excise duties are driving smuggling and undermining emerging industries. She noted that over-taxation is not just a revenue issue, but a competitiveness issue, and that the government must realize this in order to promote economic growth. The business lobby also called for a private-sector-driven mining investment fund to stabilize revenues and build reserves, and urged the removal of excise duties on products such as Maheu and domestic pipes to align with regional trade practices.

Both submissions converge on the point that Malawi cannot tax its way into prosperity. With GDP growth revised down to 2.7 percent in 2025 and more than half of businesses operating below 50 percent capacity, the private sector insists that investment incentives, not higher rates, will unlock growth. The warning sets up a policy clash as the Treasury drafts the 2026-27 budget, with officials promising inclusivity and fiscal discipline but the private sector’s message being blunt: without predictable, fair, and investment-friendly tax reforms, Malawi risks facing deepening stagnation and eroding investor confidence. As one business leader noted, "Tikufuna kusamalidwa kwa njira ya ululu" (we want to be developed through a proper way), highlighting the need for a more sustainable and equitable approach to economic development.

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