NAMIBIA Revenue Agency (Namra) says they will investigate businesses which have submitted zero-tax returns, following suspicions of widespread tax evasion in the business community.
Namra commissioner Sam Shivute says certain companies have been evading taxes by declaring zero profits, despite continuing to trade and making significant profits.
Namra has revealed that from 2017 to date, 56 881 taxpayers or businesses submitted a staggering 172 021 zero-tax returns for income tax, while 16 001 taxpayers submitted 138 245 zero-tax returns for value-added tax (VAT) for the same period.
“Therefore, Namra is establishing an investigative team as from 1 July to determine the validity of the submitted zero tax returns,” Shivute says.
He says some businesses which have submitted zero-tax returns have continued to trade and make profits – even securing multimillion-dollar tenders from the government and public enterprises.
In the meantime, Namra urges all businesses registered for tax purposes which have erroneously submitted zero-tax returns, whether for income tax or VAT, to immediately contact the agency’s offices nationwide.
Shivute says these businesses are strongly encouraged to revise their returns, make the necessary payments, or arrange payment plans before the deadline of 30 June.
“In the event that no revision is made by the taxpayer by the end of next month and an audit establishes that there are amounts owing in respect of the various taxes, Namra will then invoke the applicable recovery framework, which, among others, include the appointment of third-party agents and litigation,” the commissioner says.
‘MAINTAIN CARROT APPROACH’
While SME Compete director Danny Meyer welcomes Namra’s decision to scrutinise zero-tax returns, he questions whether the move is the best use of the agency’s resources.
Acknowledging that there are valid reasons for zero-tax returns, Meyer is critical of businesses that abuse the provision, and suggests that Namra deal decisively with such companies if they are already known to the agency.
“Does it really warrant the expense of establishing an investigative unit?”
In Meyer’s view, the establishment of an investigative team may not be necessary and may not be the best use of the agency’s resources.
Instead, Namra should focus on running information and taxpayer education programmes, which could lead to more voluntary compliance, he says.
Meyer also urges Namra to maintain an ‘assist, guide, and support’ approach to taxpayers, as it has gained credibility for being a helpful and supportive agency.
“Every effort must be made to maintain the carrot approach rather than adopting a big stick method when it comes to encouraging compliance,” he says.
Meanwhile, Namra is currently running a revised tax amnesty programme which could see over N$53 billion in interest and penalties written off.
Labour expert Herbert Jauch says writing off debt can be justified in some cases where individuals or organisations are struggling to survive and are truly unable to pay their debt.
However, if the debt write-off also covers corporations and allows them to avoid paying taxes, which are urgently needed to fund important services, it is a problematic move.
Jauch also welcomes the government’s plans to introduce zero tax for those who earn less than the N$50 000 to N$100 000 tax bracket.
He believes this measure will assist lower middle-income earners.
“Given the rising costs of living and the enormous levels of unemployment, this measure will assist lower middle-income earners to use their small incomes to keep themselves and their families/households afloat,” Jauch says.
Namra administers several tax codes on behalf of the state, including the Income Tax Act, Value-Added Tax Act, Export Levy
Act, Customs and Excise Act, Petroleum Taxation Act, Stamp Duties Act and the Transfer Duties Act.
Last month, Namra spokesperson Steven Ndorokaze said there are over 800 000 registered taxpayers in the country, of which only about 57% are tax compliant, and there are efforts to shift this figure to at least 80% to 90%.
Namra has been in operation for two years and is yet to release its annual report and financial statements for the 2021/22 financial year.
Iipumbu Shiimi, the minister of finance and public enterprises, has reportedly given the agency an extension to delay the submission of the annual report, and not within six months of the end of the financial year.
Hi I’m a independent investigative journalism, I will like to a list of the companies that register no tax return because I have information regarding a certain company with numerous tax issue