Malawi Speaker MsowoyaLilongwe, November 17, 2015: Members of Parliament Monday passed bill number 11 of 2014, after a heated debate from both opposition and government sides of the August House.

 

During its second reading, Minister of Finance, Goodall Gondwe said the depreciation of the kwacha over the years has had a negative impact on the inheritance procedures for members of the deceased family tends to inherit after the demise of the household’s bread winner.

 

 

According to Gondwe, currently, when a person dies, the administrator general undertakes an evaluation procedure to determine value of properties left behind.

“When this process is done, deceased estates in excess of K30, 000 faces the estate duty.

 

“However, In view of the current depreciation of the kwacha, the bill seeks to extend duty from the current K30, 000 to an excess of K5 million,” said Gondwe.

Amongst others, this was one of the elements that brought in different suggestions and recommendations amongst the members of parliament.

 

Member of Parliament for Nkhatabay central, Raphael Mhone said family members in this kind of situation tend to get pressurized to raise funds to pay tax so that they inherit a deceased estate.

 

 

He also said some of them reach the point of selling part of the property like houses and or cars to inherit the estate. “On paper, this is called an estate duty but in fact it is an inheritance tax,” said he.

 

There were numerous suggestions with some members asking government to raise the threshold to K10 million, or K20 million and with others like Nkhotakota north east representative Martha Lunji Chanjo asking the threshold to be raised to K40 million or even above in what she said would be a move to safeguard the family.

 

She further suggested that government could also consider exempting tax to a deceased estate which has fewer properties like just one house and maybe consider taxing deceased estates that have two or more houses.

 

Member for Dowa East Richard Banda however had a totally different suggestion to make:

“Completely abolish the duty on people who have died. I do not

know why people should be paying this. I do not support the bill and we should totally abolish it,” said he.

 

In his remarks, Gondwe said government understood of all the concerns members had raised. He said people had to understand that the estate duty did not originate in Malawi but rather in England, He said one reason for its formation was the concern of the inequality amongst deceased estate where some had a lot of money and others did not.

 

He said that was not the time to abolish the bill. “We are in that position where we will have lots of things to do and little revenue to cover.

 

“Soon we will have to sit down and look at the totality and see if the tax system is in relation to what we have. We will then have to come with other relevant papers to decide on that and see how we could raise funds from other sources,” said Gondwe.

 

 

Subsequently, the bill was passed with an amended figure of an excess of K10 million. Gondwe stressed that people needed not to worry as according to the requirements of the penal code, the taxation would be in Kwacha and not in pounds (British).

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