An Investigation of Factors Contributing to Tax Avoidance and Evasion Among Cross-Border Traders in Lilongwe City, Malawi

This research investigates tax evasion and avoidance among cross-border informal traders in Lilongwe City, Malawi, in order to examine factors affecting compliance behaviour and investigate mechanisms for improving tax collection. A mixed-methods design was employed, combining survey data from 62 structured questionnaires and qualitative data from interviews and focus group discussions conducted with the traders and stakeholders. The survey assessed demographic and socio-economic profiles of traders, awareness and knowledge of tax demands, the impact of institutional and regulatory frameworks, perceptions of the taxation regime, and the contribution of government policies toward enforcing compliance. The results indicate that although most traders are cognizant of their tax burden, tax compliance is frustrated by excessive taxation rates, burdensome processes, corruption, and the absence of effective enforcement. The majority of traders are young, relatively educated, and are trading on a small scale, and experience difficulties with insufficient training and capacity to deal effectively with tax systems, leading to both deliberate and inadvertent non-compliance. The report highlights the need for transparency, fairness, taxpayer education, and selective incentives in order to enhance voluntary compliance. The study recommends tax policy reform, simplified procedures, enhanced capacity-building programs, stronger anti-corruption efforts, and enabling incentives to small traders. More broadly, the research adds to knowledge of informal taxation of trade in Malawi and provides policy-relevant recommendations to enhance the tax base and encourage compliance.