Tax penalties soar past target

The Malawi Revenue Authority (MRA) collected K15.5 billion in tax penalties during the first-quarter of the 2026/27 financial year, exceeding its K4.2 billion target by 263 percent and surpassing the total collected in the entire previous fiscal year.

Between April and June, MRA raised K15.5 billion in penalties compared to K13.9 billion collected throughout the whole of the 2025/26 financial year against a target of K5.2 billion.

Speaking on the sidelines of a media training workshop in Mzuzu on Monday, MRA head of corporate affairs Wilma Chalulu said penalties mainly arise from inaccurate tax returns and discrepancies uncovered during audits.

“Businesses seeking tax clearance certificates are required to submit their tax returns and financial records. This is when MRA identifies submissions that are not compliant and applies penalties.

“Businesses conduct self-assessments, but MRA also carries out audits to verify whether the declarations made are accurate,” she said.

The surge in penalties comes as MRA has accelerated tax compliance measures, including migration of more than 8 260 of the targeted 9 000 value-added tax (VAT)-registered businesses onto the Electronic Invoicing System (EIS) by June 2026, representing more than 91 percent of the target.

Malawi Confederation of Chambers of Commerce and Industry (MCCCI) chief executive officer Daisy Kambalame said the sharp increase in

penalties reflects both tougher tax enforcement and mounting financial pressure on businesses.

In a written response, she said the rollout of the EIS, real-time transaction reporting, risk-based audits and enhanced data analytics has significantly strengthened MRA’s ability to detect late filing, under-declaration and non-payment of taxes.

“MCCCI’s Business Climate Survey for the first-quarter revealed persistent foreign exchange shortages, high inflation, rising operating costs and cash flow constraints, making it difficult for many businesses to meet their tax obligations on time and contributing to higher levels of non-compliance,” she said.

Kambalame said while the increase demonstrates improved tax administration, it also signals growing financial distress within the private sector.

Scotland-based Malawian economist Velli Nyirongo said the sharp rise in penalties should not automatically be interpreted as evidence that taxpayers are becoming less willing to comply.

However, he said the magnitude of the increase warrants closer scrutiny.

“Penalties rising to K15.5 billion in just one quarter suggest that non-compliance may be becoming more widespread.

“The key question is whether MRA’s success reflects stronger enforcement or a deterioration in the underlying tax base,” he said.

Economics Association of Malawi president Bertha Bangara-Chikadza said high inflation, foreign exchange shortages and other macroeconomic challenges continue to squeeze businesses and households alike.