Wednesday, October 4, 2023

Local millionaire wins round one in tax brawl with BURS

The Botswana Unified Revenue Service (BURS) on Monday rushed to return vehicles and other assets that they had confiscated from Mabiza Plant Hire, a local contractor, in pursuit of a P2.3 million tax bill. This was after they were issued with contempt proceedings for failing to abide by a court order issued by Lobatse High Court Judge David Newman.

BURS and MPH first clashed on November 16th, after BURS employees raided MPH offices and confiscated files, computers and memory sticks. They also attached a plot 20467 in Block 3, a farm in Kgatleng, and MPH motor vehicles. They also froze MPH’s bank accounts and issued a garnish order to its clients and creditors, through which any monies owed to MPH would be paid directly to BURS.

Through attorney Victor Ramalepa, Reggie Mabiza, the owner of MPH, made an urgent application to the High Court, seeking for the sanctions to be lifted. Justice Newman later ruled in favour of MPH, and issued an order for the garnish to be set aside.

After BURS delayed to obey the court order, MPH wrote a strongly worded letter to the Commissioner General, threatening him with contempt proceedings, punitive legal costs and committal to prison of all the officers responsible for the violation of the court order. BURS hastened to comply, and Mabiza has confirmed that things are returning to normalcy at MPH.

In papers filed before the courts, Mabiza said the BURS employees had inside knowledge of his company’s operations, as they seemed to be well acquainted with the layout of his office, and where to find everything that they were after. In subsequent visits to BURS, Mabiza was shown pictures of his house by one Kaone Molapo, who also vowed to confiscate Mabiza’s house and cars.

The meetings were recorded, and Molapo stands accused of uttering malicious threats to Mabiza. During the meetings, said Mabiza, Molapo uttered words like “I am going to flatten you”, and “I am going to close this company down”.

“There were no irregularities on may tax accounts. MPH has only two major clients, government and Botswana Power Corporation, which would make it easy for BURS to verify information that was provided by members of my accounting staff. It is clear that BURS employees were biased against me,” said Mabiza.

MPH was later furnished with an interim assessment, which indicated that the audit had not been finalised and the owed tax as indicated in the statement was not certain. Mabiza argued that he could not make any meaningful objection to the interim assessment as it did not have sufficient detail. He faulted BURS for failing to include details of the amounts owed and their source.

“The interim assessment was served one day after the garnishee orders. The issuing of the garnishee orders before the interim assessment effectively invalidates the garnishee proceedings because the correct procedure was not followed,” said Mabiza.

He denied owing BURS P2.3 million as his company had made a turnover of P68 million from 2009 to date. Of that amount, P 11 million is not yet ready for invoice, such that output VAT can be levied on P57 million.

“MPH can make an input VAT counter claim of about P41 million, leaving turnover output subject to VAT at P16 million. This would equate to roughly P1.6 million owing in output VAT, of which P1.2 million has been paid. If there is any tax owed, it would not exceed P400 000. Verification of the figures stated above would be easy as MPH has only two clients, which are government and BPC,” argued Mabiza.

He said the P2.3 million stated by BURS is absurd and patently unreasonable as it represents a turnover far in excess of P68 million. He also accused BURS of failing to provide him with copies of the documents they confiscated, as per the VAT Act.

“I was unable to process salaries for my staff in November, and they are yet to be paid for that month. BURS were malicious, and they violated my rights as a tax payer. Mr. Molapo’s malice invalidates any actions taken by him,” he said.

In his ruling Justice Newman ordered BURS to return all MPH assets, unfreeze bank accounts and lift the garnishees on creditors. He also ordered MPH to pay BURS P300 000 per month until the matter is resolved.


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