Malawi's Parliament has enacted the Value Added Tax (Amendment) Act 2026, introducing VAT on digital services supplied by non-resident providers and doubling the registration threshold from K25 million to K50 million annually.
Digital Services Taxation
The legislation brings digital services within the VAT scope, covering streaming services, cloud computing, software downloads, online advertising, digital marketplace facilitation, e-books, and mobile applications. Non-resident digital services suppliers, electronic marketplace operators, and intermediaries must register for VAT regardless of the K50 million turnover threshold.
The place of supply for digital services is determined by the recipient's usual place of residence or establishment, departing from traditional contract or payment location rules. Non-resident digital services suppliers and intermediaries cannot claim input tax deductions on their digital service transactions.
Registration and Exemptions
The VAT registration threshold increases to K50 million for domestic suppliers, while maintaining mandatory registration for all digital service providers. New exemptions include fish under specific customs headings, dairy products, natural honey, infant milk, milling industry products, cooking oils, and wheat flour.
Zero-rating provisions expand to cover buses with 45+ seat capacity, building materials for tourism industry use, and laundry soap. The Third Schedule updates customs procedure codes eligible for zero-rating.
Context
This reform aligns Malawi with international trends toward taxing the digital economy, following similar measures across Africa and globally. The threshold increase aims to reduce compliance burden on smaller businesses while the digital services provisions target revenue from multinational technology companies serving Malawian consumers.