Firms owing tax issued good standing certificates

THE finance ministry issued good standing certificates to companies which owe government taxes for the 2015/16 financial year.

This was reflected in auditor general Junias Kandjeke’s report, where he said this was caused by sloppiness on the part of the ministry.

Good standing certificates are normally given to companies which do not owe government any money.

Kandjeke stated that the ministry’s financial statements showed that “companies filed nil tax returns” – but have rendered services to various offices, ministries and agencies – and “to whom payments amounting to over N$12 million were made for the year under review”.

This, he added, could be likened to tax evasion schemes “used by the companies in not declaring their income to the receiver [finance ministry]”.

“I have evidence of payments made to the concerned companies for services rendered, but no evidence of the submission of tax returns by such companies,” Kandjeke stressed yesterday.

He also mentioned that a certain department at the finance ministry acquired about 100 cartridges worth over N$360 000, but the goods purchased were not reconciled in the counter book “as there was no counter book provided for audit purposes”.

Kandjeke described this as a waste of public funds.

The ministry’s permanent secretary, Ericah Shafudah’s, comments as contained in Kandjeke’s report indicated that the implicated companies were under investigation.

Shafudah added that the ministry had also centralised the procurement of common items to avoid wasting funds.

Finance minister Calle Schlettwein told yesterday that they were aware of the companies which evade tax, and that the ministry made an effort to implement a tax incentive scheme to improve revenue collection.

“Well, we were on record some time ago talking about tax arrears, and we said they had accumulated to N$4 billion net tax.

“We implemented the tax incentive scheme, and so far we have collected about N$500 million,” he noted, adding that the tax incentive scheme was not that successful.

Schlettwein said the ministry’s first incentive programme to write off a portion of the interest on outstanding tax, as well as penalties, will end in March next year.

He, however, said the issuance of good standing certificates to tax defaulters who had not informed the ministry that they were going to pay their arrears was a mistake, if it happened, and that the ministry will make a follow-up with the officials responsible.

“If a company in arrears has arranged to pay tax, we say they are okay again, and then we issue them with good standing certificates,” he continued.

Shafudah could not comment on the matter yesterday, but referred to the commissioner of inland revenue, Justus Mafongwe, who also failed to comment on questions emailed to him by the time of going to print.

Kandjeke furthermore described the ministry’s audit committee as dysfunctional. This dysfunctional committee would thus affect the development and improvement of the internal audit department’s mandate.

This also affects the monitoring and review of the effectiveness of the internal audit department.

On the audit committee, Schlettwein said the ministry was working on strengthening the internal structure of the ministry, including the internal audit committee to make sure that effective audit reviews are carried out.