Govt chasing N$219m tax owed by Langer Heinrich

THE finance ministry is investigating how an Australian multi-national mining corporation, Paladin Energy, failed to pay N$219 million in taxes to the government from the sale of shares in a Namibian uranium mine.

The shares were sold to a Chinese state-owned nuclear company.

“We would like to further clarify that the Namibian tax authorities are aware of this case and other similar cases involving transfer pricing and profit shifting into tax heavens,” finance minister Calle Schlettwein said in a statement late on Thursday.

Schlettwein said government has contacted the Mauritius tax authorities to obtain additional financial information on suspected taxable income, such as bank statements and companies’ group structures, as well as any other relevant information and was awaiting their response.

The taxing of profit on the sale of shares by a company holding a mineral licence or mineral right was introduced through the Income Tax Act on 30 December 2011, Schlettwein said.

He added that the law required a company to include in its gross income any amount received or accrued as a result of a direct or indirect sale of shares if such company holds a mineral licence or mineral right.

“This is applicable whether the transaction has taken place inside or outside Namibia or whether the sale was a direct or indirect acquisition,” he said.

An investigation by and UK-based journalism organisation Finance Uncovered revealed that Australian mining company Paladin Energy pocketed N$665 million after selling shares in the Langer Heinrich uranium mine through a Mauritius-based offshore company.

Paladin sold a 25% stake in the mine to the China National Nuclear Corporation for about N$2 billion, netting the company a healthy windfall, and recording a N$665 million profit – attributed to the sale of shares.

However, not a cent in tax on this profit was paid to the Namibian government.

Paladin argued that using an offshore holding company meant they were not liable to pay tax in Namibia. Tax on the proceeds of the sale would have amounted to N$219 million.

Namibia is the world’s fourth largest uranium producer, which is mainly used in nuclear power plants, and to manufacture nuclear weapons.