Vehicle tax evasion haunts institutions

Tax evasion syndicates have driven some institutions and individuals on the verge of losing multimillion kwacha vehicles they purchased on the black market with the belief that import duty was paid, Nation on Sunday has established.

Chibuku Products Limited, Civil Society Education Coalition (Csec) and Senior Chief Malemia of Nsanje have confirmed in separate interviews that they are among the owners of 174 vehicles Malawi Revenue Authority (MRA) has put up for auction between this month and September.

The unsuspecting victims only learnt that the first owners evaded duty after the Malawi Revenue Authority (MRA) impounded the vehicles.

Despite evading duty, the fraudsters managed to secure dubious tax payment documents to fool the Directorate of Road Traffic and Safety Services (DTRSS) to register the vehicles.

Like in a movie, the vehicle dealers cannot be traced and the new owners are battling with tax authorities who are demanding millions of kwacha as duty and penalties for tax law violations.  

In  response to a questionnaire on Monday, Chibuku business development, corporate and legal affairs manager Gloria Zimba said they bought two vehicles in 2018 and the owner provided all documents to prove that all due processes to import and register the vehicles were followed.

The vehicles bought at K15 million each were a Toyota Hilux registration DA 3103 and a Mazda Double Cabin registration CP 5679.

She explained: “Indeed, we had bought the vehicles for our managers in September 2018. We made all the payment transactions through the bank on trust that these vehicles indeed had duty fully paid.”

Nearly a year later, Zimba said MRA wrote her company demanding K33 million as duty and penalties.

“In June 2019, we got a letter from MRA demanding duty of K25 million plus penalty of K7.9 million. We appealed against this to MRA.  On the appeal response, only the penalty was waived,” she said.

Zimba blamed the scam on MRA and DTRSS for not setting up robust systems to wade off fraudsters.

She said: “We feel the system was loose as [the man who sold us the vehicle] was able to have all vehicle sale documents, including blue books, change of ownership, clearance with the aid of internal parties at both MRA and Road Traffic Directorate.”

Zimba explained that they commenced a legal case against the seller, but he disappeared after a warrant of arrest was issued against him.

On his part, Csec executive director Benedicto Kondowe explained that their car in question, a Toyota Hilux, was confiscated after MRA discovered that duty was not paid when it was imported.

He said in an interview: “A certain donor gave us money to buy an already registered vehicle. We found one and we bought it. Four years later, MRA confiscated it, saying it evaded tax.

“We were innocent buyers and did not commit any crime. Our expectation was that MRA will take to task the first owner and not us. The duty is just excessive so we won’t bother redeeming it.”

Senior Chief Malemia told Nation on Sunday that he bought a Mitsubishi Hover from someone within the country and he was told that he has to pay K2 million as duty which after negotiations was reduced to K1 million.

He explained: “I used it for eight years before it was impounded on grounds that duty was not paid.”

However, MRA head of corporate affairs Steven Kapoloma in an interview on Thursday blamed the buyers for purchasing “dubiously-cleared vehicles”, saying they did not consult the tax authorities to verify if the vehicles were in their system.

He said most of the people who evaded tax started selling the vehicles after MRA integrated its system with that of DTRSS in which all vehicles were expected to be checked in the MRA system before they get certificates of fitness and other traffic documents.

Kapoloma dismissed allegations that MRA staff might have been part of the syndicate that was issuing fake duty clearances, saying it was done by outsiders.

“Unfortunately, some Road Traffic officials could not differentiate between fake and real duty clearances. So, they ended up registering these vehicles. But with the current system, we will not have such incidents again,” said Kapoloma.

In a separate interview, DRTSS spokesperson Angelina Makwecha said they were still investigating the matter.

MRA’s auction notice posted on its website said the vehicles being sold are those that have overstayed and whose owners have failed to pay duty.

The tax authority is “poised to recover due tax revenues as well as ensuring that MRA stations are not congested with uncleared goods and vehicles which creates space challenges for new imports.”