This paper evaluates the revenue effects of Malawi’s comprehensive tax reforms implemented between 2013 and 2022. Using administrative panel data from the Malawi Revenue Authority and difference-in-differences identification that exploits staggered roll-out across tax instruments, we find that reforms increased the tax-to-GDP ratio by 3.4 percentage points, with three-quarters of the gain driven by improvements in VAT compliance and withholding regimes for small firms.

Contributions by tax type:

Excise tax redesign—particularly on tobacco and alcohol—accounted for most of the remainder, while corporate income tax collections were flat once profit-shifting responses are netted out.

Dynamic revenue analysis:

Dynamic revenue analysis shows that gains emerged within two fiscal years and persisted even after controlling for GDP growth and aid inflows.

Heterogeneous effects:

Heterogeneous effects reveal larger improvements in urban districts and among medium-size enterprises that received targeted e-filing incentives.

Counterfactual simulations:

Counterfactual simulations indicate that accelerating VAT invoice matching and broadening the presumptive turnover tax base could yield an additional 1.1% of GDP by 2026 at minimal efficiency cost.

Conclusion:

The findings suggest that administrative modernization coupled with selective rate adjustments can materially enhance revenue performance in low-income countries facing narrow tax bases.