Malawi 2026 Budget: VAT Threshold & Digital Tax

March 26, 2026

Conseillers en matière de TVA

The Malawian government presented the 2026-2027 Budget Policy Statement, which introduces a broad set of tax reforms aimed at stabilizing public finances while supporting economic recovery and long-term growth. The stated changes aim to ease the compliance burden for smaller businesses and expand the tax base in areas that have been under-taxed.

Tax Measures Under Budget Policy Statement

One of the most notable changes is the increase in the VAT registration threshold from MWK 25 million (around USD 14,350) to MWK 50 million (around USD 28,700). The decision to increase the registration threshold by 100% effectively removes many smaller businesses from the requirement to register for VAT, reducing their administrative obligations and allowing them to operate more easily.

Simultaneously, the government aims to shift its focus toward sectors that are harder to tax but increasingly important, particularly the digital economy. Therefore, it plans to introduce VAT on foreign digital services such as those provided by Netflix, Facebook, and YouTube. However, this matter will be addressed in a separate legislative document. Nonetheless, by introducing such a tax, Malawi is aligning itself with regional trends, where countries such as Zambia, Kenya, and Uganda already have similar rules in place.

Furthemore, the government is reassessing the VAT system, specifically focusing on exemptions and duty-free privileges granted to certain goods, individuals, and institutions. The main reason for revisiting the list of exempt items and beneficiaries is to strike a more careful balance between protecting vulnerable groups and ensuring sufficient revenue collection.

Conclusion

Together, these measures are intended to strengthen revenue collection, improve fairness in the tax system, and support Malawi’s broader goal of economic recovery and fiscal consolidation starting from April 2026. However, given the announcement of the introduction of VAT on foreign digital service providers, taxable persons engaged in these activities should closely monitor for any further developments on this matter.

Source: Malawi Government - 2026-2027 Budget Policy Statement

What are the key tax changes in Malawi’s 2026–2027 Budget Policy Statement?

The budget introduces several tax reforms, including doubling the VAT registration threshold, plans to tax foreign digital services, and a review of VAT exemptions to improve fairness and revenue collection.

How has the VAT registration threshold changed in Malawi?

The VAT registration threshold has increased from MWK 25 million to MWK 50 million, effectively removing many small businesses from mandatory VAT registration and reducing their compliance burden.

Why is Malawi introducing VAT on foreign digital services?

Malawi aims to expand its tax base by targeting the growing digital economy, ensuring that foreign service providers contribute to tax revenues similarly to local businesses.

Which digital services could be affected by the new VAT rules?

The proposed VAT would apply to foreign digital platforms such as streaming services and social media providers, including companies like Netflix, Facebook, and YouTube.

What changes are being considered regarding VAT exemptions?

The government is reviewing existing VAT exemptions and duty-free privileges to better balance support for vulnerable groups with the need to increase tax revenues.

When will these tax reforms take effect in Malawi?

The reforms are expected to be implemented starting from April 2026, although specific measures like VAT on digital services may follow separate legislation and timelines.

Malawi

Afrique

Exonérations fiscales

Enregistrement fiscal

Conformité fiscale

Services numériques

Conformité et déclaration de la TVA

TVA

Vente au détail

Numérique

Chercheur en fiscalité de la TVA, spécialisé dans la fourniture d'informations claires et actualisées sur les réglementations et la conformité en matière de fiscalité indirecte pour notre site web. Rasmus Laan