SIKU Transport ‘shuts down’: MRA impounds 100 vehicles for tax evasion

Business has come to a standstill at SIKU Transport after the public tax collector, the Malawi Revenue Authority (MRA), impounded close to 100 vehicles on Monday and Tuesday.

The development follows the transport company’s failure to pay Value Added Tax (VAT) and Withholding Tax liabilities exceeding K856 million (about $2.1m).

MRA officers accompanied by five armed camouflaged police officers invaded SIKU Group of Companies’ offices at Makata industrial area on Monday morning to serve a distress order directly to Managing Director Abdul Rashid where they also sealed the gate and demanded blue books for all cars that belong to the company.

After a brief discussion the team proceeded to seize every vehicle that was around including those that entered when they were already within the premises.

Siku Transport vehicles parked at MRA offices at Msonkho House

Siku Transport vehicles parked at MRA offices at Msonkho House

On the first day, about 42 vehicles were impounded in Blantyre and more than 10 at its Lilongwe offices.

More vehicles were seized on Tuesday but this time it was only those MRA officers encountered along the roads.

The cars included saloons, tracks, double cabins, land cruisers and vans. Only coasters were spared because they were away on hire.

A source at SIKU Transport told Nyasa Times, the situation was tense as well as woeful when the officers impounded every vehicle even those used by bosses.

“All official vehicles for bosses’ such as the MD [Abdul Rashid], the operations director and finance director are gone except the one for the Chairman and Founder of SIKU Group of Companies Abdul Rashid Suleman, who was away in Mangochi then,” said a company source.

The development has resulted in the transportation firm losing in excess of K15million, according to source.

MRA is mandated by Sections 39 and 40 of the VAT Act to sell the cars after 14 days if the owner does not redeem them by paying the money.

According to MRA, the action followed the warrant by the High Court to enable the tax administration to recover the money which includes penalties and interest.

The case dates back to August 2011 when the transporter was subjected to a verification audit following a VAT inspection exercise a month earlier.

An audit report revealed that the company had VAT and Withholding Tax liabilities exceeding K391 million.

However, SIKU Transport objected to this and engaged MMK International to challenge the matter in court.

And in November 2011, the liabilities were reduced to K134 million which SIKU agreed to settle and paid over K49 million in six installments.

However, the company later claimed K32 million in excess VAT and applied for a waiver of penalties which MRA refused to grant awaiting settlement of the principal amount.

Last year, SIKU was subjected to further investigations which revealed that it did not collect K32 million in excess VAT as earlier claimed and K12 million was deducted from the original claim.

As a result, MRA re-calculated the adjustments and took into consideration earlier payments and demanded over K308 million from the original assessment in August 2011.

Again the company rushed to court in September 2012 to challenge amount as it wanted sales from its sub-contractors to be included in the calculation of VAT.

And following delays to settle the tax liabilities, a final notice of intention to distrain on the property of SIKU Transport was issued and the company rushed to court to seek an injunction again.

In April this year, the company admitted that VAT calculations should not take into account sub-contracted sales resulting in tax liabilities then exceeded K928 million after re-calculations.

But prior to this, SIKU had paid over K72 million in tax liabilities which was then subtracted from total liabilities, bringing the grand total to K856, 478, 356.00.

The tax collecting body also garnished bank accounts of SIKU Transport and personal accounts of its directors and major customers in an attempt to recover the tax liabilities.

MRA Corporate Affairs Manager, Wilma Chalulu, said this time they only targeted vehicles but they can seize anything including buildings or warehouses.

As we went to press, directors were running up and down obtain a court injunction to stop MRA from enforcing the order while hearing of the case is expected to come before the High Court in Blantyre next week.

SIKU has also applied for judicial review at the High Court’s Commercial Division where it complained that MRA’s action was unreasonable, unethical and unprofessional and not befitting a revenue authority as it was crippling the company’s operations.

With its popular slogan ‘Here today there tomorrow’, SIKU Transport is one of Malawi’s major transporters of everything with a fleet of about 200 vehicles.

And the development has greatly affected the Peoples Shops (PTC) as they are their main contractors and everyday they transport assorted groceries and other merchandises to their different shops across the country.

One of the siku vehicles parked at Msonkho House

One of the siku vehicles parked at Msonkho House

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