DEBT WRITE OFF

INTRODUCTION

• INCLUDED IN THE TAX DEBT IS UNCOLLECTIBLE AND DOUBTFUL DEBTS

THEREBY RESULTING IN UNREALISTIC TARGETS
• AUTHORITY TO WRITE OFF DEBT IS UNDER SECTION 79 OF TAA
• POWER TO WRITE DEBT RESTS WITH MINISTER OF FINANCE IN ACCORDANCE
WITH PUBLIC FINANCE MANAGEMENT ACT
 REASONS WHY DEBTS MAY BECOME
UNCOLLECTIBLE CONT’D

• TAXPAYER IS DECEASED IN CASE OF INDIVIDUAL TAXPAYERS

• CLOSURE OF BUSINESSES OR COMPANIES
• TAXPAYERS, BOTH COMPANIES AND INDIVIDUALS, FACING BANKRUPTCY, INSOLVENCY AND/OR
LIQUIDATION WHERE A TAXPAYER ABSCONDS (FOR INSTANCE, WHEN A TAXPAYER LEAVES SECRETLY
AND HURRIEDLY TO AVOID ENFORCEMENT AND LEGAL ACTION PERTAINING TO TAXES)
• THE TAXPAYER IS FACING FINANCIAL HARDSHIPS DUE TO BEING INCAPACITATED, TOO SICK, ETC.
• DEBTS FOR TAXPAYERS WHO HAVE NOT TRANSACTED WITH MALAWI REVENUE AUTHORITY (MRA) IN
THE PAST THREE YEARS (INACTIVE TAXPAYERS).
 DECLARATION OF INACTIVE/DORMANT
CASES

• REVIEW A CASE BEFORE DECLARING IT DORMANT OR INACTIVE, MAY USE INFO

FROM MEDIA, THIRD PARTY OR FROM THE TAXPAYERS THEMSELVES, THE
INFORMATION SHOULD BE REVIEWED AND VERIFIED BEFORE THE CASE IS
DECLARED DORMANT OR INACTIVE.
• CONDUCT A DILIGENT SEARCH FOR THE TAXPAYER AND/OR HIS ASSETS HAS
TO BE DONE TO SEE IF THE DEBT CAN BE CLEARED THROUGH DISPOSAL OF
THE TAXPAYER’S ASSETS.
• IF UNSUCCESSFUL TAX IS IRRECOVERABLE AND THEREFORE DUE FOR A WRITE-
OFF.
 PROCEDURES FOR PROCESSING A
WRITE-OFF AT STATION LEVEL
CASE VERIFICATION
• EVERY CASE HAS TO BE VERIFIED FOLLOWING THE STEPS BELOW TO GET MORE DETAILS:
• STEPS AND GUIDELINES:
• OFFICERS HAVE TO CARRY OUT VERIFICATION VISITS WITH PROPER VERIFICATION
FORMS AND OTHER RELATED DOCUMENTS E.G. PRINT OUTS.
• DURING THE INTERVIEW AND IF IT IS DISCOVERED THAT;
• TAXPAYER IS DECEASED, REQUEST DEATH CERTIFICATE AND MAKE A COPY.
• IF THERE IS NO DEATH CERTIFICATE, ASK THE CHIEF, OR AREA REPRESENTATIVE OR A
RELATION TO SIGN A STANDARD LETTER .
 CASE VERIFICATION CONT’D

• BUSINESS OR COMPANY IS CLOSED

• FOR INDIVIDUALS, OWNER SHOULD WRITE TO MRA PROVIDING DETAILS OF CLOSURE
• FOR COMPANIES, CASE OFFICERS SHOULD REQUEST FOR AND MAKE COPIES OF CLOSURE
DOCUMENTS
• WHERE THERE IS NO INFORMATION, REGISTRAR OF COMPANIES OR RELEVANT THIRD
PARTIES SHOULD BE CONTACTED FOR POSSIBILITY OF MORE INFORMATION
•
• TAXPAYERS, BOTH COMPANIES AND INDIVIDUALS, FACING BANKRUPTCY, INSOLVENCY
AND/OR LIQUIDATION
 CASE VERIFICATION CONT’D

• COPIES OF DOCUMENTATION SHOULD BE COLLECTED

• IN CASE OF LIQUIDATION, CASE OFFICERS SHOULD CONTACT
LIQUIDATOR TO FIND OUT MORE INFORMATION AND OBTAIN
DOCUMENTATION
• WHERE A TAXPAYER ABSCONDS
• CONTACT DETAILS OF PROVIDERS OF INFORMATION SHOULD BE
RECORDED
• THE BUSINESS LITERALLY CLOSED
 CASE VERIFICATION CONT’D

• WHERE TAXPAYER IS FACING FINANCIAL HARDSHIPS DUE TO BEING

INCAPACITATED, TOO SICK, TOO OLD, ETC. AND THERE IS NO ONE WHO IS
RUNNING THE BUSINESS.
• CONTACT DETAILS OF INFORMATION PROVIDERS SHOULD BE COLLECTED.
• CASE OFFICERS SHOULD USE JUDGEMENT ON CASES WHERE TAXPAYER IS
VISIBLY SICK, INCAPACITATED, ETC AND BOTH OFFICERS ON THE CASE
SHOULD SIGN STATING REASONS ON JUDGEMENT.
• IF PLAUSIBLE AVAILABLE DOCUMENTATION ATTESTING ON TO THE HARDSHIP
SHOULD BE COLLECTED
• ISSUES OF TAXPAYERS WHO ARE VERIFIED AS INACTIVE WILL BE HANDLED AS
ANALYSIS OF VERIFICATION FORMS AT THE
HEAD OFFICE
• FOR TAXPAYERS DISCOVERED TO BE ACTIVE, ENFORCEMENT ACTION
TO COLLECT DEBT SHOULD COMMENCE
• IF BUSINESS HAS BEEN TAKEN OVER BY SOMEONE, THE PERSON HAS
TO BE REGISTERED AFTER ACQUIRING NECESSARY DOCUMENTATION.
• TAXPAYERS REQUIRING MIGRATION FROM INCOME TAX TO TURN OVER
TAX (TOT) OR VICE VERSA SHOULD BE NOTED AND APPROPRIATE
ACTION TAKEN
ANALYSIS OF VERIFICATION FORMS AT THE
HEAD OFFICE CONT’D
• IN CASES WHERE A WRITE-OFF IS RECOMMENDED, THE CASE OFFICER
SHOULD COMPLETE WRITE-OFF FORMS FOR EACH TAXPAYER
• STATION MANAGER SHOULD STRICTLY ENSURE THAT CASES WITH
ISSUES SUCH AS FIGURES NOT BALANCING IN SUMMARIES, TAXPAYER
IDENTIFICATION NUMBER (TPIN) MISMATCHES, ETC., ARE SENT BACK
TO THE CASE OFFICER FOR CORRECTIONS BEFORE SUBMISSION TO
HEAD OFFICE.
 MAPPED PROCESSES

Analyse the verification

• Visit last known business forms
location • If taxpayer is active, demand
payment of debt
Case Identified • Get 3rd party information • If deceased and business is
on taxpayer taken over by someone
• Fill out verification form process/amend registration
• if there is need to change tax
type from income tax to TOT,
process for migration to be
followed

For cases requiring write-

Station Manager offs:
checks forms • Officer completes write off forms and
• If no errors found, drafts summary sheet and submits to Team
memo to head office Leade
(DCO), and sends together
with required forms • Team Leader checks, if ok submits to
• If errors found, returns to
Station Manage
team leader/case officer
• If not ok, sends back to officer for
review