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Lawyer Mabvuto Hara on Wednedsay challenged the Malawi Revenue Authority (MRA) to cite the law that allows a president to buy duty free vehicles for use by a political party, arguing that the Vat Act which President Bingu wa Mutharika used for the five vehicles he bought for his party, DPP, does not give such a privilege.
“MRA should work according to the law and not to justify that which is unlawful,” said Hara who is also president of the Malawi Law Society.
He was reacting to MRA statement published by our sister paper The Nation on Monday which said the President acquired the vehicles through provisions in the Value Added Tax (Vat) and Customs and Excise Tariff customs procedure code 4071.418.
The MRA statement followed revelations by Weekend Nation last week that Mutharika in March sent Deputy Minister of Lands Rashid Gaffar to CFAO Malawi to buy five Nissan pick-ups duty free which ended up on the DPP fleet.
Weekend Nation wondered why Mutharika was allowed such a privilege when the same MRA dragged former president Bakili Muluzi for allegedly purchasing vehicles duty free for the use of UDF.
Hara was quoted in the story as having said the Presidents and Benefits Act Section 4 as read with part one of the referral schedule allows the President to buy items duty free as long as they are for personal use.
But when MRA explained in their press release that Mutharika acquired the vehicles through provisions in the Value Added Tax (Vat) and Customs and Excise Tariff, Customs Procedure Code 4071.418 and not the Presidents and Benefits Act, Hara argued that those provisions only allow the purchase of goods duty free for official use.
Said Hara: “The Vat Act MRA is talking about says relief on Vat shall be for goods and services for the official use of the President and Vice-President of the Republic of Malawi. The vehicles are being used by DPP, is that official use of the President?”
Section 23 of the Vat Act states that there shall be relief from Value Added Tax on taxable supply of the individuals, organisations and businesses specified in the Third Schedule.
The Third Schedule of the Vat Act reads: “Goods and Services for the official use of the President of the Republic of Malawi; (b) the Vice President of the Republic of Malawi”.
Hara said even code 4071.418 in the Customs and Excise tariff says “Goods for the use of the President of the Republic of Malawi”.
Hara said if MRA thinks that what they have done is lawful they should cite the law that supports their position.
“MRA should allow all political parties to buy vehicles duty free if they are convinced that what they are doing is correct. They know the vehicles are being used by DPP but they want to justify that which is wrong. The vehicles that are being used by DPP are liable for duty,” he said.
MRA in 2004 took former president Bakili Muluzi to task for having not paid duty for over 100 vehicles he bought in his name but were used by his United Democratic Front (UDF). High Court Judge Healey Potani is yet to rule on the matter.
In their statement MRA said they are not aware how Mutharika is using the vehicles.
Asked what they would do now that they know it is DPP that is using the vehicles, MRA Acting Public Relations and Tax Payer Education Manager Steven Kapoloma said on Wednesday he would not answer until Treasury formally explains the matter to Public Accounts Committee of Parliament.
On Thursday MRA officials told a meeting of the Committee that President Bingu wa Mutharika did not tell the authority that he would donate to his Democratic Progressive Party (DPP) the five Nissan pick-ups.
Secretary to the Treasury Randson Mwadiwa, MRA commissioner-general James Phiri and Mpango were appearing before the committee following an earlier demand on Monday that Treasury explains Mutharika’s duty free cars. Mwadiwa had promised to get in touch with MRA officials on the issue.
Following pressure from Pac for the MRA to explain why Mutharika did not pay duty on the vehicles donated to the DPP, Mpango told the committee yesterday that the authority cleared the cars because the First Citizen said he would use them as President of the Republic.
Mpango said the clearance was in line with the Customs and Excise Duty Act which allows the President to import goods and buy from bonded stocks without paying duty and Value Added Tax (VAT).
But the committee queried Mpango whether or not the use of the cars by the President extends to a political party.
Situsi Nkhoma, a Pac member, asked Mpango whether or not MRA, after realising that Mutharika did not use the vehicles for personal use, will follow up on the issue.
Mpango said when the application was being made, MRA was not given all the facts, arguing it would be difficult to do anything in absence of such details.
Pac first vice-chairman Aleke Banda said going by media reports, it was a known fact that the vehicles were donated to a political party, demanding to know MRA’s next course of action.
Mpango told the committee that MRA would follow up on the matter to establish as to whether or not the vehicles were donated [to the DPP].
Aleke said the committee expects a report on MRA’s findings regarding the usage of the vehicles as pledged by Mpango.
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