The Namibia Revenue Agency (NamRA) has come out guns blazing against fishing companies and multinationals for not paying enough taxes into the country’s coffers.
Sam Shivute, the national tax collector’s Commissioner and CEO, said companies in the fishing sector as well as other multinationals – top foreign currency earners – are using a number of scams to avoid paying the correct amount of taxes to the government.
“You find that a fishing company has been operating in the sector for about 20 years but pays very little tax because they always declare losses,” he told The Brief.
Shivute added that the same applies to multi-nationals that employ dirty tricks such as transfer pricing as well as illicit financial flows to take their huge profits running into billions out of Namibia.
“Transfer pricing is where you have, for example, a multinational trading with related companies and as a result profit is shifted from Namibia to that jurisdiction where tax rates are lower. As a result, the government loses a lot through unpaid revenue,” he said, adding that the transfer pricing scourge has been around way before independence.
“There are many formal businesses from where the state is not getting fair taxes through thin capitalization, transfer pricing and illicit financial flows. We are talking about billions not coming to the state.”
The NamRa boss noted that his organisation has established a division to deal with the transfer pricing menace, and plans are underway to empower and capacitate the unit.
“We are also working with the African Tax Administration Forum to strengthen this unit,” said Shivute.
Although NamRA is concentrating on cases where the state is losing billions, all non-compliant taxpayers will have their time with the tax authorities, he said.
According Shivute Namibia has a 52% tax compliance rate, with 48% possible tax payers not compliant.
Shivute said NamRa has devised a strategy, which has already been approved, to ensure the implementation of optimizing revenue collection.
“No one is condoned. For those who decide not to comply with the tax law it will not be business as usual. There will be consequences,” he warned.
As a way of ensuring compliance, NamRa will intensify lifestyle audits on various individuals across the country.
“If banks pick up any suspicious transaction they can report it to the Anti-Corruption Commission, the police or NamRa. Even members of the public can report any person appearing to be living beyond their means and investigations will be instituted.
“The Financial Intelligence Centre (FIC) has done a lot of work in reporting suspicious transactions and investigations have been carried out.”
He said to enforce compliance, tax payers were given a chance to make arrangements for payments but in extreme cases where taxpayers appear to be unwilling to pay their tax obligation, NamRA can approach a third-party holding funds belonging to the taxpayer, for that third party to hand over the funds to the revenue agency.
Commenting on allegations that Chinese business people are not paying taxes, Shivute said NamRA did not look at nationalities in terms of tax compliance but at different economic sectors.
“We focus on whether people are tax compliant, whether they are foreigners or Namibians,” he said.
He said NamRA had taken the right decision under the law when it confiscated and destroyed counterfeit goods, a development which sparked an uproar recently.
“Since independence counterfeit goods have always been confiscated and destroyed. Unfortunately, when this happened on 10 May this year some opportunists took advantage of it to come up with a false narrative,” he said.
He said the destroyed goods were not confiscated from Namibians but from foreigners, with one foreign business person in Kunene having goods worth N$3.5 million confiscated.
“It was not Namibians who were targeted but everyone who broke the law,” he added.
Shivute said the revenue agency will embark on an aggressive public education in all regions so that Namibians realise that the country belongs to the people and that they must pay taxes for the country’s organs to function properly.
