Malawi turns to its tax authority to fill the hole left by donors

Malawi’s tax authority is being asked to raise almost the entirety of the country’s K10.978tn budget for 2026/27, more than a decade after international donors withdrew direct financial support to the government following one of the country’s largest corruption scandals.

The Malawi Revenue Authority (MRA) once operated alongside donor funding that covered as much as 40 per cent of the national budget. That support was suspended in October 2013 after the so-called Cashgate scandal, in which public funds were siphoned from government accounts at Capital Hill, prompting the UK, the EU, Norway, the World Bank and other partners to halt direct budgetary assistance. That money has not returned, leaving what the authority describes as “a deep hole that Malawians need to fill.”

The scale of the task is considerable. MRA revenue underwrites the salaries of teachers, doctors, nurses, police and soldiers, funds hospital drugs and school textbooks, and finances the farm input subsidy programme and social cash transfers — with no alternative domestic funding source to fall back on.

Compliance push meets a hard deadline

The authority has moved to reinforce compliance among taxpayers ahead of a run of deadlines this month. In a notice issued through its Msonkho Online platform, commissioner general Felix Tambulasi urged taxpayers to file and pay on time, noting that “timely compliance keeps you penalty free.” Pay As You Earn, withholding tax and presumptive tax are due by 14 September; mineral royalties and domestic excise by the 20th; value added tax by the 25th; and income tax by the 30th.

Tightening the border

Beyond domestic collection, MRA has positioned itself as the principal safeguard of Malawi’s trade revenue. Through the Automated System for Customs Data (Asycuda World), electronic cargo tracking, the Customs Valuation, Tariff and Facilitation System, and the Blantyre Inland Examination Centre, the authority says it is closing loopholes that allow importers to under-declare goods and avoid duty.

New rules governing Customs-Controlled Warehouses now require exporters of soya, maize and groundnuts to declare earnings through the Reserve Bank of Malawi’s Currency Declaration Form, a measure intended to prevent export proceeds from being held offshore. MRA says failure to remit such earnings carries a fine equivalent to the value of the goods and a prison term of up to five years, though this penalty has not been independently verified against the underlying legislation. The authority has also introduced Kalondolako tax stamps and revised tariffs, which it says are designed to shield compliant traders from cheaper, untaxed imports.

The macroeconomic case

MRA frames its own performance as central to macroeconomic stability. Meeting its collection target, the authority argues, reduces the government’s need to borrow domestically, easing pressure on interest rates, inflation and the kwacha. Falling short, it says, forces the government to borrow instead at rates above 30 per cent — a figure this article has not independently verified — with knock-on effects across the economy.

At the retail level, MRA argues that enforcement tools such as its Electronic Invoicing System and the Kalondolako stamps protect compliant traders in markets including Tsoka and Limbe from being undercut by smugglers. Traders holding a Taxpayer Identification Number and Tax Clearance Certificate gain access to bank loans, government contracts and export markets; those without, the authority says, remain informal, small-scale and vulnerable to closure.

A long-term revenue target

MRA has tied its collection goals to Malawi’s long-term development strategy, Malawi 2063, which sets out an ambition for the country to become an “inclusively wealthy and self-reliant” upper-middle-income economy by that year — a strategy distinct from, though timed alongside, the African Union’s continental Agenda 2063. The plan rests on three pillars: agricultural productivity and commercialisation, industrialisation, and urbanisation, each of which the authority argues depends on sustained tax revenue for irrigation, industrial infrastructure in Blantyre, Lilongwe and Mzuzu, and public services for a growing urban population. MRA’s K6.2tn collection target for 2026/27, cited publicly by Tambulasi, is presented not merely as a revenue line but as the price of that self-reliance.

Resistance on the ground

That ambition has met friction in practice. Through 2025 and 2026, traders in Karonga, Lilongwe and Blantyre have closed shops, blocked roads and, in some instances, stoned MRA enforcement officers during inspections. Separately, small-scale importers have protested the rollout of the Electronic Invoicing System, arguing it raises their cost of doing business.

Tambulasi has appealed directly to traders’ civic duty: “We need to love our country by paying correct amounts of taxes all the time.”

Economist Dr Ben Dzolowere was more pointed in his assessment of non-compliance. “Tax evasion is not smart business, it is economic suicide,” he said. “When you hide sales, under-declare imports or refuse EIS, you are not cheating MRA, you are cheating your own country. Government will still need to pay salaries and buy drugs, so it will borrow expensively and the cost comes back to you through high interest rates, high inflation and a weak kwacha.” On the attacks on enforcement officers, he added: “Stoning MRA officers does not reduce your tax bill. It only makes enforcement more expensive… If you have issues with a tax, engage through your association. Dialogue builds a nation, stones destroy it.”

Not all complaints are about the tax itself

Some criticism of MRA centres not on compliance obligations but on operational efficiency. Eric Chilimampunga, managing director of Bua Holdings Company Limited, trading as Bua General Dealers Supplies Company, said the authority performed well overall but needed to speed up clearance of goods at borders and checkpoints.

“If you go to borders you are greeted by fleet of trucks waiting to be cleared, what are they waiting for — that waiting increases cost of doing business by us traders,” he said.