Malawi tax rates 2026

Income outside PAYE, such as an individual's business profits, has its own two-band scale: 0% on the first K2,040,000 a year and a flat 30% above it.

An individual becomes resident in Malawi by spending 183 days or more in the country in any twelve-month period that starts or ends in the year of assessment. Separate visits are added together, and because the window can straddle two years, a stay running from March to October makes a person resident in both years of assessment it touches. Trusts, estates and partnerships set up under Malawian law, and companies incorporated in Malawi, are resident by definition.

Malawi taxes income from a source within, or deemed to be within, the country, and capital gains count as income. Pay for work done in Malawi is Malawian income whoever pays it and wherever the money lands, so a foreign payroll does not move a salary out of reach. Gains on property located in Malawi, or on shares in a company incorporated there, are Malawian income even when the seller lives abroad.

Employers deduct PAYE every month and pay it to the Malawi Revenue Authority by the 14th of the following month, and an individual whose only income is a salary or pension taxed under PAYE pays no provisional tax. Everyone else estimates the year's tax at the start of the year of assessment and pays it in four quarterly instalments, each due within 25 days of the quarter's end.

The annual return is due within 180 days of the taxpayer's accounting date, and any balance of tax is paid with it. The October 2026 payment calendar set 31 October as the return deadline for accounts closed on 30 April, alongside 14 October for PAYE, withholding tax and fringe benefits tax and 25 October for VAT and provisional tax. Returns go in online through Msonkho Online or at a domestic taxes office.

A non-resident with no permanent establishment in Malawi pays a final tax of 15% on the gross amount of any Malawian-source income. The payer deducts it when the amount accrues, is paid, remitted or credited, including payments into an account abroad, and remits it to the Malawi Revenue Authority straight away. Exempt income and pension or annuity payments fall outside this charge, and income attributable to a Malawian branch is taxed through a return instead.

Since 14 April 2026 Malawi also reaches foreign businesses that sell online. Non-resident providers of digital services, including streaming, online advertising, mobile apps and software subscriptions, must register for VAT regardless of turnover, and the tax is charged according to where the consumer is.

Dividend withholding tax is a final tax in Malawi: the company deducts it when it distributes the dividend, remits it within 14 days, and the shareholder leaves the dividend out of the return. Interest carries withholding tax at source, with exceptions for interest paid to banks, to exempt bodies and to non-residents already charged the 15% non-resident tax.

The seller of an asset adjusts its cost by the consumer price index published by the National Statistical Office, subtracts that indexed cost from the price, and pays provisional tax at 30% on the gain. Capital losses offset gains. Gains on shares listed on the stock exchange lost their exemption for holdings of 12 months or more on 30 December 2025, and from 14 April 2026 a disposal of listed shares carries a 2% final withholding tax.

Since 14 April 2026, individuals who rent out residential houses pay a final tax of 15% on the gross rent, with no deduction for expenses and no credit other than withholding tax already suffered. The rent stays out of the landlord's taxable income. Each landlord registers for a taxpayer identification number through Msonkho Online and files a return by the 20th day after each quarter; the first quarter closed on 30 June 2026, with its return due on 20 July.

Companies pay 30% on taxable income up to K5 billion and 40% on the excess. A company with annual turnover above K5 billion that has traded for at least three years pays the higher of that corporate tax and a minimum alternative tax of 0.5% of turnover, and the excess paid as minimum tax carries forward as a credit for six years. From 1 May 2026 invoices from electronic fiscal devices stopped counting as tax invoices, and businesses now issue them through the Electronic Invoicing System.

The Taxation (Amendment) Act and the Value Added Tax (Amendment) (No. 2) Act took effect on 30 December 2025. They raised VAT to 17.5% from 16.5%, added the 40% PAYE band, and placed a levy of 0.05% on mobile money transfers above K100,000 and on every electronic bank transfer, paid by the sender. All betting, gambling and lottery winnings now carry 15% withholding tax, as the old tax-free thresholds of K100,000 and K500,000 were removed.

A second package from the February 2026 budget became law on 14 April 2026. Besides the rental income tax, it introduced a 3% levy on motor vehicle insurance premiums collected by insurers, 10% withholding tax on casino winnings, and withholding tax on rent of 20%, or 15% for individuals under specific provisions. Transfer pricing cases can now be assessed for up to nine years, and the Malawi Revenue Authority serves notices by email and other digital channels.