The Namibia Revenue Agency (NamRA) says the construction sector owes it N$2.6 billion in tax arrears, leading to revenue loss by the tax collector.
The tax collector encouraged defaulting businesses to come forward and make debt repayment arrangements.
The agency’s database indicates that there are 14,330 construction companies registered, employing 6,916 individuals.
And in 2022, NamRA collected N$357 million, of which N$77 million was income tax, while employers paid N$27 million.
“We have noted a culture of companies submitting zero returns that includes local, foreign and multinationals, which is very concerning. Thus, we’re calling for an end because the arm of the law is long, and we shall catch up with them,” NamRA Commissioner Sam Shivute said on Tuesday.
“There were people who thought they were untouchable when summoned, but they forgot we have the power to deduct from their accounts straight into the State coffers. Therefore, if you have challenges, approach us so that we make a workable arrangement.”
Meanwhile, the Institute of Namibian Quantity Surveyors (INQS) complained over delays in the processing of Value Added Tax (VAT) refunds, which it says takes 6 to 12 months. A situation that affects the businesses’ financial standing.
“These delays eat into the businesses’ operation and performance. Therefore, we ask for the acceleration of this process. Also, as industry players, we have realised that there is a lack of awareness. Education is, therefore, important for everyone to understand,” said INQS board member Sister Kasheela.
These remarks were made at a stakeholder engagement between NamRA and the construction industry on Tuesday.
Kasheela added that it was very difficult to get responses from the agency, as they are sent from pillar to post when making inquiries.
Meanwhile, NamRA Chief Legal Officer Nadine Du Preez said the meeting was called after the agency observed complexities related to VAT and to create awareness of various tax reforms and compliance thereof.
Du Preez sought to clarify the taxation on residential and commercial property issues where developers or contractors are confused about when they should include tax. She said residential property built from scratch is zero-rated, while a 15% VAT standard rate is charged on commercial or mixed-use buildings.
“It came to our attention that some contractors charge 15% on residential properties. It’s wrong, as such properties are zero-rated. Unless the building is used for both residential and commercial purposes, then it can be charged or when such property is being renovated,” Du Preez said.
VAT will, therefore, be charged by architects, attorneys, quantity surveyors and subcontractors to the main contractor of the residential property, which also extends to the commercial charge of 15% but the contractor will not charge the homeowner.
In addition, she said income tax, stamp duty and transfer duty are other taxes that apply to the construction sector.
Stakeholders were also informed that customs and excise duties will be applicable if goods are imported from outside the Southern African Customs Union. Du Preez, therefore, urged companies to seek a ruling status before importing so that they are well aware of the consequences relating to the goods.
On the other hand, Shivute said it was pertinent to engage the sector to avoid operating on assumptions.
“We do not want to think we know how the sector works, while it is not the case, we would like to hear what is happening within, and also be told of what the sector expects from us, including challenges they experience. Therefore, we are a team. Hence, we need to know each other if we are all to win in our respective spheres while marching towards a common goal,” he stressed.
