Malawi MPs against inheritance tax: ‘Leave the dead to rest in peace’

Members of Parliament spoke against taxing an estate after death, saying it is unfair, and called on government to leave the dead to rest in peace.

Jooma: Tax have to be

Jooma: Taxes have to be convinient

MPs spoke against people paying death duty when contributing to the Estates Duty (Amendment) Bill in Parliament tabled by Minister of Finance, Economic Planning and Development Goodall Gondwe.

Most MPs described estates duty as legalised property grabbing and appealed for its abolishment.

People’s Party (PP) spokesperson on legal affairs Ralph Mhone said the revised threshold did not take into account the tax contribution.

Zomba Malosa MP, Roy Kachale Banda (PP) said he was “totally against any inheritance tax in any form or fashion.”

He said: “The reason I am against it is because of one question. Who are we taxing? Are we taxing the deceased or are we taxing the survivors? If we are taxing the deceased… the assumption is that taxes have already been paid on this property. For example, if a person builds a house, we assume that the person is building that house using money from business, which has already been taxed using income tax or from employment emoluments, which have already been taxed using Pay As You Earn.

“So, we must also then consider the amount of tax that we are going to charge on that estate duty. Now if we are taxing the survivors, sometimes the survivors are minors who are incapable of paying tax in this country. “

Malawi Congress Party (MCP) MP for Dowa East, Richard Chimwendo Banda called on government to “completely abolish taxes of people that have died in this country. “

He said: “I do not see the reason why government should still follow people after they have died and maybe they are the only bread winners in the house. At the end of the day, it is the family and the children that are going to suffer. I don’t know why government wants to collect taxes from people that are dead. “

In her contributions, United Democratic Front (UDF) MP for Mangochi South, Lilian Patel asked the Minister of Finance to link the bill to inheritance.

“What is happening now when a person dies and leaves a house to his children, is that before the Administrator General administers the estate, he assesses the value of the estate and asks the beneficiaries of this estate to pay tax before the estate is administered.

“As a result, if you as a parent dies and leave a house to your school going children, they will have nowhere to stay; and because the tax man has followed you all the way to the grave, they end up selling that house which they were staying in, to give the money to the Administrator General to administer the estate,” said Patel.

She added: “Minister of Finance, please can you find a way. I know we have to pay taxes. You pay taxes from the first day you start working. All your life you are paying taxes. You try to get property for your kids, but the tax man still follows you to the grave and the kids suffer. “

PP ‘s MP for Mangochi Monkey Bay , Ralph Jooma  asserted that tax “has to be convenient.”

“You have to be able to take away something that you have made to pay government. Now if you just inherit a house, where do you get that money that government is requesting for when you have just inherited and staying in that very house?.

“Mr Speaker, Sir, I think there is an element of double taxation. In all ways there is an element of double taxation and the best we can do is to abolish completely the estate duty tax in this country,” Jooma said.

Adding his voice to the contributions, Frank Mwenifumbo an Independent MP for Karonga Central said it is “a very unfair bill” to the general welfare of the citizenry of this country.

“We are rated as one of the poorest countries in the world and as such, what it means is that very few families can afford to earn enough money or income to build properties such as houses.

“And, if we can be honest with ourselves, Mr Speaker, Sir, on average, very few Malawians own property as it was reflected by the Minister of Gender, Children, Disability and Social Welfare when she encouraged women that they should own properties. In Malawi, very few women own property,” said Mwenefumbo.

He said the Estate taxws tends to stifle the very efforts by government to make sure that as many women as possible have property.

However, Minister of Justice and Constitutional Affairs Samuel Tembenu clarified that the government was not imposing tax, but complimenting the Deceased Estates, Wills and Inheritance Act.

“What we have here are just consequential amendments following the passage of that Act and actually they are meant to compliment what was done after that passage. Therefore, the purpose of this bill is not to impose new taxes as it were but to compliment what was done, so that that Act is properly implemented,” said Tembenu

Tembenu said views by the MPs would be properly placed when government brings in a bill to either revise the Estate Duty Act completely as an overhaul .

But Dedza South West MP Clement Mlombwa (MCP)  said the bill is trying to empower the government through the Administrator General to grab the deceased property, saying Malawians are already heavily taxed.

“This is one of the legislations that this House should not allow to become part of the laws of this land. We should think of the people we have left in our homes that they can hardly afford this. In other words, when I die my relations will not afford to pay that particular tax that will be accrued on my property,” he said.

Finance Minister Gondwe explained that historically, estate duty did not originate in Malawi.

“Estate duty like most taxes, originated elsewhere and one reason why these estate duties were conceived, is a fact that there was particularly in England, a time when there was gross income inequalities where some people died with huge wealth and others died as paupers. And at that time, there was an enormous amount that had to be done in England and there was hardly any revenue at all. So what was done was to look at how the government could raise resources to make up for the requirements of budgets,” said Gondwe.

Gondwe said time will come “to look at the totality of our taxes in the country and see whether what we require or the tax system that we have is appropriate in terms of the amounts that it generates. “

He informed the House that the procedure for assessment of estate duty was that the rates and threshold value were too low.

“Currently, estates duty is levied on property whose value is in excess of K30 000. In light of the depreciation of the Malawi kwacha, the value of the estates duty has been eroded. People who ordinarily would have not paid estates duty are doing so and estates duty has become exorbitant,” said Gondwe.

The Finance Minister warned that abolishing the duty would mean the government would have to find other sources of revenue in place of the duty.

Parliament approved the revision of the threshold at which estate duty is paid from K30 000 ($51.07) to K5 million ($8,512.09) in keeping with the devaluation of the currency.

This means that Malawians will now be paying the 10 percent estates duty on the value of property exceeding K5 million ($8,512.09).

The bill was eventually passed with a minor amendment on the schedules.

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33 thoughts on “Malawi MPs against inheritance tax: ‘Leave the dead to rest in peace’”

  1. akuka says:

    A goodal mwatha nzeru mukufunabe kuwakama aMalawi osauka inu musakukhoma nsonkho olo ndi 1% yomwe zMawa mudzidzati tasauka pambuyo pa zaka zina 50? Apatu palibe nzeru!!

  2. wa ku Simba says:

    I am thinking the this report leaves a lot to be desired. It’s almost pathetic.
    There is no substance as to “educating” readers regarding the salient points in the current law. The internet literati are very interested because many have real estate, and other property, they would like to be inherited by specific people.

    Wanga Gwede, please re-visit this subject and tell us, even in point form, what they law says and the counterpoints as currently proposed by Minister Gondwe.
    You can see the comments are just meandering through the whole issue. Just a few pointers:-

    Is the law about all property, or just real (estate) property?
    How about plain money – would a million Kwacha left to be inherited be taxed this way too?
    Is this tax applicable to a basic residences in the village, or only on “registered” ones?
    How about if there is no will (and by customary implication, the property belongs to the whole family, rather than an individual?). This is important because there may NOT be a “legal” inheritance to talk about.
    What exactly are the tax rates; are they graduated, etc? And how do they compare with the proposed ones?
    When does the tax kick in – at time of death, or on sale of the property?

    I know there are many questions only a lawyer can answer with confidence. But you could have done better, iwe Gwede. You’ve done better before.
    There should be NO room for half baked stories here.

  3. Ncholo says:

    Another area of concern is the pension scheme. While working one is deducted 30% PAYE. After retiring govt gets another 30% from the same money that was already taxed. Is this not robbery?

    From your salary govt gets 30% PAYE. Buy anything from the shop, 17.5% vat. 30+17.5=47.5% to govt. Is this not robbery?

  4. kangulu says:

    DZIKO NGATI LAKUKANIKANI KUYENDETSA, PATSANI ENA AYENDETSEKO CHIFUKWA ANTHU AMENE AKUVUTIKA NDI AKUMUDZI PAMENE INU MUKUCGITA KUSANKHA CHAKUDYA, MA ALLOWANCE KUPATSA NDI GALU WOLONDERA PANYUMBA PANU AMENE

  5. KHWAMBA says:

    MIMBA ZANU NONSE ANTHU OPENGA KWAMBIRI

  6. vuto says:

    ZIMENEZO NDIYE ZOPUSA KODI MUFUNA MISONKHO INGATI? ANTHU CHISAUKIRENICHO INU NKUMAFUNA MISONKHO PA CHILICHONSE, KODI CHIFUKWA INU MA MP SIMUDULIDWA MISONKHO? MUSAIWALE MUNALEMBEDWA NTCHITO NDI A MALAWI NDIPO KUKUCHOTSANI NKOSAVUTA ASK JOYCE BANDA, TIZAONANA 2019 ZIPANGANI MAGANIZO ANU WOPUSAWO SHUPITI

  7. Issa says:

    The issue here is abolishment and not revision. Munthu akamwalira asamalipire msonkho. You who are calling those seeking clarification as being below par should feel ashamed because inu mukufotokodza zabodza dzosagwirizana.

  8. Kenkkk says:

    In uk for example You pay inheritance tax only when you sell the property which you have inherited, say a house. If you decide to live in it or rent it out( you pay normal tax on rental income) you don’t pay inheritance tax but when you decide to sell it, then once sold, the govt takes its share of inheritance tax. Again there are threshold value limits, for example you don’t pay if your house realized on the market a value below the threshold value. Similarly with investment stock market shares someone inherits. By the way inheritance tax can also arise when a living Person passes his wealth or assets to say his or her children.

    The problem with the Malawi situation the way I understand it is that, inheritance tax is paid even when the asset hasn’t been sold by the person who has inherited it, so how is he going to pay inheritance tax on the asset which for example he wants to use or keep it for himself or family? They will only have money to pay inheritance when they have sold the asset not when they haven’t sold it. So the govt is actually forcing people to sell inherited assets to pay inheritance tax, especially for those not well off. Moreover, the valuation barometer is the actual sale not just a valuation estimate when the property hasn’t been sold, the govt could exaggerate the estate value to get more tax or indeed the heirs could underestimate the value so that they pay less tax. So only a market sale determines the true value of an asset.

    The raising of the threshold value to 5mn is welcome as more people will be taken out of taxation and enjoy the inheritance, more money in their pockets, especially in rural areas where property values are low.

    Then there is estate duty which I don’t understand it. In uk they have stamp duty which anyone selling a house with a value beyond a given threshold value limit, has to pay this stamp duty to the govt. No stamp duty is paid if the house value is below the threshold value. The threshold value is at the moment £300,000 and a person pays 3% stamp duty on that, increasing steadily at different bands, if your property is more valuable. Again this is paid only when someone sells his or her house. If you don’t sell nothing is paid.

    But in Malawi it seems this estate duty is paid even when you don’t sell the property, just living in your house or renting it out. This is double taxation because people pay rates as well for the local councils, for owning or living in own house.

    So this legislation needs to be more refined in terms of how and when to pay inheritance and estate duty. How are they calculated?

  9. Jimbo says:

    No such word as ‘abolishment’; should be ‘abolition’. If writing English. please make sure to use the correct words. As regards inheritance tax, this is a means of distributing wealth fairly instead of leaving it in the hands of a small minority. Of course MPs are against it; they are some of the wealthy minority.

  10. Mulyawaka says:

    The tax man is only empowered by the law maker to collect tax. Change the law and remove the estate duty and you will not see him asking for that tax when you are in your grave.

    Ulesi wathu uwu ukutipweteka because we don’t add value to our many products in order to export and earn forex. Govt should be in the forefront encouraging locals to form companies and give them tax holidays for the first 2 years in order to settle down. When large companies are crumbling, Govt should anchor them because these companies pay tax, reduce unemployment etc.
    Govt should lead in forming companies by asking for capital from intending shareholders.

  11. Concerned Citizen says:

    I fear for our country. Comments by our leaders (in all the arms of government), people who I assume are better informed of the financial and economic status of our nation, appear to be in the dark.

    If we the common man does not pay these taxes, then who will pay for those Land Cruisers, VXs, planes, external travel …?

    The Minister of Finance needs to be truthful with the nation and not dig us into an even deeper hole which we cannot climb out of.

  12. GRM says:

    Aaaaaa? Abale? You have argued well. Koma Why passing the bill? Mwawalandatu kale ana anga katundu apa!!!

  13. [email protected] says:

    Baba wa boy you got it wrong and I can’t blame you because it could be you are basing this from the reporters point of view. The said idiots the mps as you put it wanted government either abolish it or increase the threshold from 30 000 to 15 000 000 and it was approved that way . It was increased from 30 000 to 10 000 000 sorry Mr Know it all

  14. BigMan says:

    Dull MPs

  15. sapitwa says:

    The deceased estate has got to be valued and tax imposed fairly on the gains made on the estate.You cant abolish tax totally on this bracket because you have already heard from the minister of finance that government will have to find another source to recover this loss. That will be any ordinary working class will pay the shortfall. Think carefully guys, you are trapping yourselves.

  16. losco says:

    Those of u who understands it better, pls help me.Does it mean that if my house is valued at less than 5milliion I am not entitled paying City or town rates?

  17. Kanthu Ako!! says:

    And we wonder why we are not developing?

    Government is trying to remove people from the tax bracket, and MPs are arguing? who are they representing?

    So these Mps including a lawyer I must add, were arguing for the threshold to remain at K30,000? What idiots!! It took the minister to explain what the tax is all about for them to understand?

    Guys with this calibre of MP, the country can not move, they are even asking “are we taxing the dead? Is it the dead that are inheriting?

    Mabvuto alipo mMalawi.

    1. peter says:

      Why should the deceased estate be taxed in the first place? From what Goodal said this tax had its background in western countries where they had some problems with taxes as a lot of properties were in the hands of the families who inherited the wealth after the bread winner had died. So in the context of Malawi, what problems are we solving if we tax a little that somebody has left? Are we busy solving the western countries problems hoping that our problems will be solved by somebody else? This law is useless and must be adopted when Malawians have wealth worth taxing after death!

  18. Nampuruma says:

    They should have increased the threshold to K15 million osati K5 million.

    1. Khuth'upa o'Machemba says:

      More than that, Nampuruma. In the 25-30 Million range, for primary residence real estate property anyway. Distinguishing from investment property.

  19. mariana says:

    at times it is better to keep quiet and be suspected for a fool other than speak out your mind and clear all the doubt. The car I am driving today, I paid duty. You mean to say I die tomorrow then someone shall have to pay duty on the same car? Let us use our brains folks.

    Assuming you give me a car on which duty is already paid for, I will certainly not pay duty again because you are still alive. Inheriting the same car after you are gone attracts duty! Truly I need to be schooled on this

    1. Baba wa Boy says:

      You should have followed your own advice of keeping quiet, you have cleared all doubt about your own foolishness.

      Inheritance tax is a tax on income. If someone leaves you a car in their will,(a bad example though) you have a potential income of the value of the car. But only if the car is worth MK5,000,000. Before now, you could have been charged tax if the car was worth MK300,000, and your Stupid MPs were refusing to raise it to MK5,000,000.

      I do not think you can be schooled on this, your understanding as shown by your comment is very much bellow par.

  20. Afana Peter says:

    zofunika basi dziko lingatani maluzi ake amenewa

  21. TONDEWADULA says:

    yauziru amanja.

  22. Mr Phee says:

    Kikikikkkkkk

  23. Chithaphwi says:

    I remember there was a time when our currency was 2 to 1 against the US dollar and taxes were not that bad. Is it too difficul for governments today to learn, at least one or two lessons from such previous government’s achievements?

  24. ine says:

    Most retirees will be victimized with this Bill. They built or bought their houses when they were working 20/30 years ago. The value of the houses was as u put it K30000 but the pension pay has not gone up significantly. Now the values of the properties is in the region of K20-40m! Where will they get the money to pay for the duty? Pliz go back negotiate with donors otherwise we will soon start paying duty on chipepeso pa maliro.

  25. mapwevupwevu says:

    So, you just made noise only to pass it!

  26. Milward Malidadi says:

    This is not about the dead but the living! The dead are not buried with their property, it is passed over to the living who ‘gain’ in return. There is nothing like double taxation here. What type of tax has been ‘doubled’ here? None! Malemuwo analipira inheritance tax ali moyo? No! Its the same as claiming that one is suffering double taxation by virtue of paying VAT after paying PAYE. There is nothing like that!

  27. Achimidzimidzi says:

    Am failing to understand this tax. when you buy building material you pay tax and then another tax when you are dead, on the same house?

    Dead person giving money to buy drugs for the living. It sounds sarcastic.

  28. Jasper Mtegha says:

    DPP govt is broke and has run out of ideas! Soon they will introduce penis tax. Any male above 18 regardless of whether he is in school will have to pay penis tax. Then it will be breast tax for women. Where and when will this madness end?

  29. Nyezerera Boy says:

    Desperate Gvnt,, wina adzakhapidwa ndithu

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