Customers to bear tax burden—banks

Tax Burden Shifts to Consumers: What Malawi Businesses Need to Know

Post was last updated: January 20, 2026

Key Business Points

  • The 0.05 percent bank transfer levy may make almost all banking activities taxable, with customers bearing the costs, according to the Bankers Association of Malawi (BAM).
  • The lack of clarity on the scope of the new levy may lead to confusion and increased costs for consumers, as it currently includes account transfers, bill payments, tax payments, international transfers, and inter-bank settlements.
  • High taxes may discourage growth, with the 17.5 percent value added tax and 40 percent corporate tax potentially reducing disposable income and discouraging reinvestment, while the 40 percent tax on Pay As You Earn (Paye) may affect high-skilled professionals and retention, emphasizing the need for maziko a mchenga (tax fairness) in Malawi’s business environment.

The Bankers Association of Malawi (BAM) has raised concerns over the newly introduced 0.05 percent bank transfer levy, which may make almost all banking activities taxable. According to BAM chief executive officer Lyness Nkungula, the law needs to clarify the scope of the new levy, as it currently includes a wide range of transactions, such as account transfers, bill payments, tax payments, international transfers, and inter-bank settlements. This lack of clarity may lead to confusion and increased costs for consumers, ultimately affecting mfuko za chipemu (savings) and ulipati (profitability) for businesses.

Nkungula emphasized that taxes should be structured to encourage growth, rather than discouraging it. She noted that the new 17.5 percent value added tax and 40 percent corporate tax may reduce disposable income and discourage reinvestment, while the 40 percent tax on Pay As You Earn (Paye) may affect high-skilled professionals and retention. Instead, she suggested that high taxes should target imports with no economic value, rather than local productivity, to promote kukula za malawi (Malawi’s growth).

In response, Minister of Finance, Economic Planning and Decentralisation Joseph Mwanamvekha defended the new tax measures, saying that they were adopted after careful consideration and that the Treasury had been deliberate in ensuring that those with a higher ability to pay should contribute more towards rebuilding the economy. He noted that the 0.05 percent rate is much smaller than what banks charge, and urged banks to support the tax measure, emphasizing the need for ubale (fairness) in the taxation system.

The introduction of the bank transfer levy and other tax measures has been met with caution from the Economics Association of Malawi, which warned that while the revised corporate income tax may result in increased revenues collected, it may also reduce companies’ ability to reinvest profits, slowing business expansion, reducing competitiveness, and investor confidence. As the government continues to implement these measures, it remains committed to continuous dialogue with all stakeholders, monitoring the impact closely to ensure that the reforms achieve their intended objectives without undermining business confidence or economic activity, and promoting maendeleo ya malawi (Malawi’s development).

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Vanessa Banda
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