Malawi Revenue Authority (MRA) has effected a garnishee order against bank accounts belonging to three water boards for outstanding taxes amounting to about K16.3 billion, including penalties.
A garnishee order is typically issued when a creditor obtains a default judgement from a court or other authority against a debtor allowing the creditor to issue a court order that instructs a bank or financial institution to redirect the debtor’s wages or holdings to the creditor that is owed money. Once a garnishee order has been issued, the debtor’s bank or financial institution is legally obligated to comply with it.
The government agency responsible for assessment, collection and accounting for tax revenues obtained the garnishment order against Southern Region Water Board (SRWB), Central Region Water Board (CRWB) and Northern Region Water Board (NRWB) last week after they allegedly failed to settle their domestic taxes.
MRA is demanding K6 939 397 205. 89 from the NRWB, comprising K3 887 823 221.90 outstanding amount and K3 051 573 984 as charges on the outstanding tax. From CRWB, MRA is claiming K5 451 633 775.15 which includes K2 114 568 113.94 outstanding amount and K3 337 065 661.22 being charges on the unpaid tax while SRWB is being asked to settle K4 006 687 081.72, covering K2 707 640 394.39 outstanding tax and charges amounting to K1 299 046 687.33.
In a notice of appointment as garnishee dated March 12 2020 signed by deputy commissioner, Large Taxpayer Office Rainnie Vokhiwa, MRA has advised several commercial banks in the country to collect the said amounts from the three water boards’ accounts and remit them to the institution under the provisions of the Section 81(1) of the Taxation Act and Section 39 (a) of the Value Added Tax Act.
Reads the order in part: “Whereby the above-named, believed to have money with you, is indebted for domestic taxes as stated below… you are required to remit to Malawi Revenue Authority the under-mentioned total amount due.”
MRA says in the event of termination of contract without the garnishee order not being settled in full, any money due to the water boards up to the total amount still outstanding must be forwarded to it.
“If the agent [bank] parts with any money due to the debtor after receiving this notice directly or indirectly, other than paying to MRA, the agent becomes liable for the tax payable.
“Full indemnity is afforded the agent against any action by the taxpayer for recovery of the amount paid to MRA under the appointment,” reads the notice further.
When contacted yesterday, MRA spokesperson Steve Kapoloma said he could not comment as he was in a meeting.
Spokespersons for NRWB and SRWB Edward Nyirenda and Rita Makwangwala, respectively, also declined to comment, saying they had not seen a copy of the garnishment order.
But on his part, CRWB spokesperson Zephaniah Mitunda said the board had been informed of the matter by one of the banks but “we have not been served with a copy of the order”.
The development comes at a time when the aggregated money several government ministries, departments and agencies (MDAs) owe the three water boards, including Blantyre Water Board (BWB) and Lilongwe Water Board (LWB), has risen to K23.1 billion.
As of December last year, the country’s five water utility bodies were owed K23.1 billion by MDAs, with major culprits being the Malawi Defence Force (MDF) and Malawi Police Service (MPS), State Residences, Malawi Prison Service and ministries of Health and Education, Science and Technology.
A letter dated July 22 2019 written by the Water Employees Trade Union to the Comptroller of Statutory Corporations indicated that SRWB was owed K6.16 billion, LWB is owed K6.70 billion, BWB is owed K3.99 billion while NRWB and CRWB are owed K3.66 billion and K3.10 billion, respectively.
But in December 2019, Ministry of Agriculture, Irrigation and Water Development Principal Secretary Gray Nyandule Phiri told a joint sector review in Lilongwe that government would not settle the K23.1 billion water bills but instead all the defaulting MDAs were directed to be on pre-paid billing and the water boards will be deducting funds from water purchases until all outstanding bills are cleared.