Institute of Chartered Accountants in Malawi (Icam) has called for the need for government to establish an independent panel of arbitrators to protect the taxpayer from losing out in times of disputes related to tax issues.
Currently, taxpayers appeal against tax disputes to the commissioner general (CG) of the Malawi Revenue Authority (MRA), a situation that makes the public tax collector into a prosecutor, juror and judge; thereby, giving the aggrieved taxpayer a raw deal.
Speaking y e s t e r d a y dur ing the M i n i s t r y of Finance Pre-Budget Consultation meetings for the 2016/2017 fiscal year in Blantyre, Icam
member of the Taxation and Audit Committee Audrey Mwala said this can be modelled along the mediation procedures currently in use at the High Court which requires an agreement between the parties as to who should be the mediator.
She said Section 97 of the Taxation Act grants a taxpayer the right of appeal to the MRA CG if the taxpayer is not satisfied with their tax assessments while Section 98 grants the taxpayer the right to appeal against the CG to a
the President and whose findings of fact are final. Special Arbitrator appointed by
“Currently, the practice is that even large sums in dispute have to be paid pending appeal awards [which generally takes years to be made], and sometimes never emerge at all,” said Mwala.
Icam said the problem is worse in value added tax (VAT) where no refunds that may fall due subsequently can be claimed unless all assessments in dispute have been paid in full, even in tests cases.
Said Mwala: “Icam is concerned that the appeals process to the commissioner general can result in the commissioner general consulting the very officers who made the disputed ruling. Furthermore, we would like the process to be expedited. Delays in rulings do have a detrimental effect on business confidence and activities.”
However, in a separate interview, MRA deputy director (corporate affairs) Steve Kapoloma said the current system allows for taxpayers to engage a magistrate for consultation on issues to do with tax as one way of ensuring neutrality.
Recently, MRA was embroiled in a tax dispute with motor vehicle franchise dealer Mike Appel & Gatto. The taxpayer sued the tax collector for contempt of court. However, the two parties agreed later to vacate the order.