Namibia’s tax policies are under increased scrutiny, with analysts and industry experts raising concerns about the efficiency of revenue collection processes ,when it comes to processing tax refunds.
Namib Mills’ risk and compliance manager Cameron Kotze questioned the efficiency of the Namibia Revenue Agency (NamRA) in processing tax refunds, urging the government to consider introducing capital gains tax incentives as part of reforms to streamline the system and stimulate economic growth.
Kotze expressed concerns about the time taken by NamRA to handle tax refunds and emphasised the potential benefits of capital tax incentives in boosting government revenue.
“The longer we wait for capital gains tax, the less tax we’re going to get. Remember, there’s a base cost. I think the boat has sailed. You know maybe now with the oil and gas there’s going to be some rich people. So that is a potential source of revenue. That the government can look at. But I think they’ve waited too long to introduce the tax,” Kotze told an Economic Association of Namibia pre-budget event.
He further highlighted the importance of ensuring that the expenses incurred in collecting the tax should be less than the income generated, emphasising the complexity of implementing such a tax.
Kotze also noted that there is already a form of capital gains tax in place when selling oil, gas, or mining licences, indicating that Namibia has some elements of this taxation in its legislation.
He further urged the Ministry of Finance and Public Enterprises to conduct a comprehensive review of the tax system.
The analyst emphasised the need for adjustments in the tax tables to account for fiscal drag, a phenomenon where individuals land in higher tax brackets due to inflationary increases in income.
“In the Ministry of Finance itself, a comprehensive look at the tax system is supposed to happen. So I hope there will be an opportunity to make inputs into that review, because if you look at the spending side, especially in the October midterm review, where the Minister did allude to the fact that inflationary increases led directly to some of the overspending that we’ve seen or spending in excess of what was originally budgeted,” Kotze explained.
He further pointed out the inconsistency in handling inflationary adjustments when considering spending and tax tables.
Kotze said for adjustments in tax tables to account for fiscal drag, ensuring that individuals are not inadvertently pushed into higher tax brackets solely due to inflation-driven salary increases.
This comes as tax relief for individuals and corporates is expected, which will comprise increasing the tax exemption threshold for individuals from N$50,000 to N$100,000.
FNB Namibia Economist Ruusa Nandago said the tax relief for individuals will be a welcome development as it will ease the pressure on lower-income households from the accelerated inflation seen over the past two years.
“Secondly, there is an expectation of reducing the corporate tax rate from 32% to 31%. This is a good first step to making Namibia a more competitive environment for investment,” she added.
NamRA paid out refunds worth N$4.8 billion for the April-September period.
