Malawi Revenue Authority (MRA) data shows that tax revenue contributions to the national budget continues to shrink, with the 2024/25 fiscal year recording the lowest contribution at 67 percent.
During the year under review, data contained in the first edition of Malawi’s Tax Statistics compiled by MRA shows that out of the K4.55 trillion domestic revenue, tax revenue contribution was recorded at K3.06 trillion.
In the 2023/24 fiscal year, with a contribution of 86 percent, tax revenue wast K2.19 trillion out of the K2.55 trillion government revenue whereas in the 2022/23 financial year, tax revenue was K1.54 trillion out of K1.96 trillion government revenue, representing 79 percent contribution.
Similarly, in the 2021/22 financial year, tax revenue stood at K0.96 trillion out of K1.27 trillion government revenue, representing a contribution of 76 percent while in the 2020/21 financial year, tax revenue hit K1.11 trillion out of KK1.37 trillion government revenue, representing 81 percent.
The reduction, according to MRA, indicates the availability of other sources for financing for the government.
In a statement accompanying to the report, MRA commissioner general Daniel Daka said the public tax collector has made significant strides in enhancing tax collection efficiency and broadening the tax base despite facing numerous economic challenges, including fluctuating donor funding and global economic uncertainties.
He said the public tax collector is dedicated to optimise revenue collection, supporting the country’s overarching development agenda as espoused under the Corporate Strategic Plan (CSP) 2020/26.
Said Daka: “Our commitments within this strategy include implementing robust revenue enhancement measures, ensuring strict taxpayer compliance and collection efficiency to meet our revenue targets, and enforcing stringent budgetary controls to monitor expenditures and adhere to allocated budgets.”
The data show that domestic taxes collection amounted to K2.208 trillion, below the target of K2.377 trillion by K168.5 billion, representing a 93 percent performance.
On the other hand, the international trade taxes totalled K850.45 billion against a target of K1.04 trillion.
Based on tax type, income tax at K934 billion was the major contributor to tax revenue in the 2024/25 fiscal year followed by trade taxes at K850 billion, pay as you earn at K606.5 billion, domestic value added tax at K502.6 billion, domestic exercise at K127.6 billion while other taxes contributed K37.9 billion.
On the other hand, the financial and insurance sector, which held the largest share at 25.66 percent, followed by manufacturing at 18.36 percent and wholesale and retail trade including the repair of motor vehicles and motorcycles at 15.83 percent.
In a written response on Tuesday, EK Tax Consulting senior tax consultant Emmanuel Kaluluma observed that economic challenges have negatively affected efforts to increase tax revenues.
He said: “In addition we have a policy which has put any income earned from employment or business in a year at K1.8 million or below at zero percent. This means a high number of people are not paying taxes.
“Furthermore it is ignored that one of the objectives of taxes is to take from the haves to give to the have nots. It is therefore difficult to understand why a zero tax rate should be enjoyed by the haves, who are in a high income bracket.”
On his part, F2 Financial and Tax Consultant managing director Fernando Sangwati observed that the declining tax revenue contribution to the national budget affects the government’s ability to fund essential public services and development projects.
He said: “Reduced tax revenue restricts the government’s ability to invest in critical sectors such as healthcare, education and infrastructure while increasing reliance on borrowing and makes the economy vulnerable to economic shocks.”
Sangwati has since urged for strengthening tax enforcement, fostering a conducive business environment to stimulate economic activity and increase tax revenue to invest in productive sectors that drive growth while prioritizing essential expenditures and minimising wasteful spending.
Meanwhile, the ratio of domestic revenue to gross domestic product has decreased from 18.1 percent in 2024/25 to 17.1 percent in 2025/26, below the 18.4 per cent target set in the 2021/26 Domestic Revenue Mobilisation Strategy.
