Opposition warns measures will burden citizens as government pushes revenue reforms.

By Edwin Mauluka

Parliament on Tuesday passed two major taxation bills contained in the 2025/2026 Mid-Year Budget, approving a series of new tax measures despite strong objections from opposition lawmakers who argued the changes would worsen the financial strain already facing ordinary Malawians.

The Minister of Finance, Economic Planning and Decentralisation, Joseph Mwanamvekha, defended the measures throughout the debate, stressing that the country’s economic position required immediate and decisive action. He warned that delaying reforms would further weaken the economy and undermine ongoing recovery efforts.

“Our situation is such that if we do nothing, the economy will be in trouble,” Mwanamvekha said, urging MPs to back the revenue-raising measures. “We need to make tough decisions now so that our economy goes back on track.”

MPs voted on two key bills — the Taxation Amendment Bill (Bill 28 of 2025) and the Value Added Tax Amendment Bill (Bill 29 of 2025) — both aimed at strengthening domestic revenue mobilisation. The Taxation Amendment Bill introduces new levies, widens the tax base, and adjusts personal income tax bands, while the VAT Amendment Bill raises the VAT rate from 16.5 to 17.5 percent.

Under the approved measures, the Taxation Amendment Bill will introduce:

A 0.05% levy on mobile money and bank transfers
Transfers below MWK100,000 on mobile money platforms will be exempt.

A Minimum Alternative Tax (MAT) of 0.05% of turnover
Applies to companies with turnover above MWK5 billion that have operated for at least three years, targeting firms that report losses while remaining active.

Removal of the capital gains tax exemption on shares held for more than one year
All share disposals will now attract capital gains tax.

Reduction of the profit threshold for the 40% corporate income tax rate
Now applies to profits above MWK5 billion, down from MWK10 billion.

A revised PAYE structure removing the 25% bracket and adjusting thresholds.

Removal of withholding tax thresholds on betting winnings and increasing the rate from 10% to 15%.

Mwanamvekha argued the new mobile money levy was minimal and comparable to similar measures in Zambia, Zimbabwe and Uganda. He insisted the 0.05 percent rate would have a negligible effect on individual transactions but would significantly boost revenue over time. He added that the MAT would improve fairness by ensuring companies contribute to the tax system even when they declare losses, noting that any payments above normal corporate tax would be treated as credits for future obligations.

On PAYE, he said the new structure would benefit lower-income earners by widening the tax-free band to MWK170,000 and ensuring that those earning less than MWK400,000 per month now pay less tax.

Responding to concerns about taxing betting winnings, the minister said the revision was necessary to broaden the tax base and capture revenue from the expanding gambling industry.

Parliament approves new taxes as Mwanamvekha warns of economic trouble MediaGov — ***Finance Minister Joseph Mwanamvekha.***

For the main opposition Malawi Congress Party (MCP), Mzimba South MP Emmanuel Chambulanyina Jere rejected several provisions, especially the levy on mobile money. He argued that the measure amounted to taxing people for accessing their own money and would deepen financial stress for low-income Malawians who rely heavily on mobile transactions.

Jere also criticised the bank transfer levy, warning that it could discourage savings and push some people back toward informal cash-based systems. He dismissed the withholding tax requirements for landlords as “harsh,” arguing that many property owners are already struggling with inflation and rising maintenance costs. The revised PAYE structure, he said, would not adequately shield civil servants who have seen their purchasing power eroded.

Mwanamvekha countered that withholding tax on rentals was not a new measure, saying it was introduced under the previous MCP administration and was only being operationalised through the new bill.

The Taxation Amendment Bill passed during the Committee of Supply stage with 94 votes in favour, 49 against, 2 abstentions, and 77 members absent.

Also approved was the VAT Amendment Bill, which increases the VAT rate to 17.5 percent. The minister said the adjustment was modest and necessary, arguing that Malawi must raise more domestic revenue given the country’s limited fiscal space and the urgent need for macroeconomic stability. He said the revised rate also aligns Malawi with regional peers such as Tanzania and Madagascar.

Opposition MPs remained critical. Dedza Kasina MP Joshua Malango, speaking on behalf of the MCP, said the VAT increase would raise the cost of essential goods and put additional pressure on poor households. Mchinji North East MP Anthony Masamba questioned why policymakers were willing to impose new taxes while protecting their own salaries and fuel allowances. He argued that reducing benefits for senior officials could demonstrate leadership and generate some savings without burdening the poorest Malawians. “What message are we sending to Malawians? Are we not mediocre, are we not greedy?” Masamba wondered.

First Deputy Speaker Victor Musowa responded by encouraging Masamba to bring a private member’s bill to propose the reduction of MPs’ benefits, saying the House would support such an initiative if tabled formally.

Despite the divisions, both bills ultimately passed, paving the way for the government to begin implementing the new tax regime in the second half of the financial year. For Mwanamvekha, the approval marks what he described as a necessary step toward restoring fiscal discipline and rebuilding confidence in Malawi’s economic recovery plan. Whether the measures will deliver relief or provoke further public frustration now depends on how quickly the promised economic improvements begin to materialise.

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