Service providers have begun passing the cost of new taxes onto consumers, pushing up prices of everyday goods and services and squeezing thousands of Malawians as the year begins. The tax changes took effect on January 1 2026 after President Peter Mutharika assented to the Taxation Amendment Bill and the Value Added Tax (VAT) Amendment Bill, alongside other Bills. The changes raise the zero Pay As You Earn (Paye) threshold from K150 000 to K170 000, but also introduces higher marginal rates: 30 percent for incomes from K170 000 to K1.57 million, 35 percent for incomes up to K10 million and 40 percent for earnings above K10 million.
The Malawi Revenue Authority (MRA) instructed VAT-registered operators to apply the new rate immediately. Several service providers, including mobile network operators, have since notified customers of price adjustments. A notice from TNM plc reads: “Effective 1 January 2026, prices of all TNM products and services will be adjusted following the change of VAT to 17.5 percent and introduction of a 0.05 percent levy on e-money transfers greater than K100 000.” The price adjustments come at a time Centre for Social Concern (CfSC) data shows that the cost of living increased by eight percent in November 2025 from K871 175 to K938 841.
Rising food taxes and increased VAT was attributed to the cost of living increase. Our spot-checks on Thursday and Friday in both retail shops and local hawkers that are VAT registered found that some basic necessities like sugar, salt, cooking oil, soap and sanitary pads have been adjusted with at least between K1 000 and K2 500. In an interview on Friday, Consumers Association of Malawi (Cama) executive director John Kapito said the tax adjustments will be detrimental to Malawians. “These taxes have been adjusted at a time when consumers are experiencing the highest cost of living and the impact will be devastating.
