Doctor loses N$22m tax battle

A MEDICAL doctor whose bank accounts were virtually emptied by Namibia’s tax authorities two months ago has lost the first round of his legal quest to have more than N$22 million returned to him.

Oshakati-based Dr Livingstone David Mugimu will now urgently appeal to the Supreme Court to have the close to N$22,2 million returned that the Ministry of Finance took from his bank accounts in March, his lawyer, Sisa Namandje, indicated yesterday.

Uganda-born Mugimu suffered a setback in his attempt to have his millions returned in the Windhoek High Court on Friday. Deputy judge president Hosea Angula dismissed an urgent application in which Mugimu sought an order against the Bank of Namibia to repay him the money that had been paid into a government account at the central bank after it was taken from his accounts at Bank Windhoek, on an instruction from the commissioner of inland revenue.

Mugimu had sued the minister of finance, the commissioner of inland revenue, the Bank of Namibia, Bank Windhoek, and the prosecutor general in an attempt to have the money returned to him.

In an affidavit in support of his application, Mugimu charged that the commissioner of inland revenue’s instruction to Bank Windhoek to have money in his two bank accounts paid directly to inland revenue was invasive, draconian, irrational, unreasonable and unfair.

According to the Ministry of Finance, Mugimu has been underdeclaring his income for years in a bid to evade tax, and owes the state N$17,7 million in unpaid taxes, an additional N$17,7 million in penalties, and interest of more than N$2,5 million – for a total tax bill of N$37,9 million.

However, Mugimu, who claimed more than N$26 million from the Public Service Employees Medical Aid Scheme (PSEMAS) over the past two years, states in an affidavit that the ministry’s figures of his income over recent years are wrong, exceeding income paid into his business account from 2014 to 2017 by N$10,8 million, and do not take into account deductions he was allowed to make from his income.

With Mugimu claiming that the money seized from his accounts was savings, commissioner of inland revenue Justus Mwafongwe, in a countering affidavit, states that according to Mugimu’s tax returns, he earned just over N$6 million after tax over the 23 years he has been working as a doctor in Namibia. With earnings like that, it was impossible for Mugimu to have accumulated savings of more than N$23 million, Mwafongwe states.

Mwafongwe said Mugimu’s tax affairs were investigated after tax authorities were alerted that there were major discrepancies between his income, as declared on his annual tax returns, and the amounts of money paid to him by PSEMAS from 2014 to the end of 2016.

In an investigation report by the Bank of Namibia’s Financial Intelligence Centre, it is stated that Mugimu received payments totalling about N$26,6 million from PSEMAS from the start of 2015 to March 2017.

Bank statements included in the report indicate that PSEMAS payments to Mugimu included an amount of almost N$1,5 million in December last year, N$1,7 million in October 2016, N$2,1 million in August 2016, N$2,1 million in June 2016, N$2,7 million in April 2016, N$2,1 million in February last year, N$1,7 million in December 2015, N$1,2 million in November 2015, N$1,2 million in October 2015, and N$1,5 million in July 2015.

Sisa Namandje represented Mugimu when arguments were heard three weeks ago, while the minister of finance and commissioner of inland revenue were represented by government lawyer Mathias Kashindi.