Malawi implements 2026 1% VAT rate increase in 2025/26 Budget Review
Malawi’s Revenue Authority has confirmed a 1% VAT rise to 17.5% effective from 1 January 2026.
This is a notable shift in its indirect tax policy for the remainder of the 2025/26 financial year. Presenting the Mid-Year Budget Review Statement to the National Assembly on 21 November 2025, the Minister of Finance, Economic Planning and Decentralization outlined a package of measures intended to raise revenue, manage inflationary pressures, and support domestic production.
Headline Tax Measures
The budget proposed two core indirect tax changes:
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Standard VAT rate increase from 16.5% to 17.5%.
This represents a full percentage point rise and reverses several years of relative stability in Malawi’s headline VAT rate. The proposal is framed as part of a broader fiscal consolidation strategy to address structural revenue deficits and reduce reliance on borrowing.
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Reinstatement of a 20% surcharge on imported cement.
The measure had previously been suspended to ease pressures on construction costs but is now being revived. The surcharge is explicitly targeted at imported cement and is designed to protect domestic producers and support local manufacturing recovery.
Rise puts Malawi at average VAT rate
Such a rise would edge Malawi towards the high end of the average rate for South East Africa:
- 16% Zambia
- 18% Tanzania
- 16% Mozambique
