The Bankers Association of Malawi (BAM) says the newly introduced 0.05 percent bank transfer levy will make almost all banking activities taxable, leaving customers to bear the costs. In the association’s proposal to the 2026/27 National Budget, BAM chief executive officer Lyness Nkungula argued that it is necessary for the law to clarify the scope of the new levy as currently all electronic transfers qualify under strict interpretation. She said the electronic transfers include account transfers, bill payments, tax payments, international transfers and inter-bank settlements.
Nkungula observed that taxes make ordinary Malawians’ lives more expensive, as such, there is need for clear definitions and consolidation in tax laws to reduce compliance confusion in the banking business definition. She said: “We have a newly introduced 0.05 percent tax on bank transfers, banks have adopted it and we are in the process of finalising it. “But the main issue is the application.
When we look at the transfers in the bank and we take strict interpretation of the law, almost all bank transfers will be taxed. We need clarity as the risk is that consumers will pay a lot for bank services.” Nkungula said it is important that taxes should be structured to encourage growth, observing that already, the new 17.5 percent value added tax increases consumer costs and reduces disposable income while the 40 percent corporate tax after K5 billion profits discourages reinvestment while the 40 percent tax on Pay As You Earn (Paye) for K10 million income affects high‑skilled professionals and retention. “High taxes should target imports with no economic value, not local productivity,” she suggested.
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In his response, Minister of Finance, Economic Planning and Decentralisation Joseph Mwanamvekha said the 0.05 percent rate is much smaller than what banks charge, urging bank’s support on the tax measure. He said the Treasury is working on the principal that those that earn more, should contribute more; hence, the 40 percent corporate tax levied on profit exceeding K5 billion. In the 2025/26 Mid-Year Budget Review last November, Mwanamvekha announced the introduction of a bank transfer levy at 0.05 percent on all bank transfers to be incurred by the sender.
He also introduced a mobile money transfer levy of 0.05 percent on transactions above K100 000 paid by the sender. Mwanamvekha also removed the 25 percent tax band on Paye with incomes between K170 000 and K1.57 million now attracting 30 percent tax, those up to K10 million will be taxed at 35 percent while a new 40 percent tax rate applies beyond that threshold. He also increased the value added tax (VAT) rate from 16.5 percent to 17.5 percent and also announced downward revision of corporate income tax for companies earning “supernormal” profits from K10 billion to K5 billion.
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