By Confidente Reporter
GOVERNMENT is set once again to issue Certificates of Good Standing to its service providers with overdue tax returns provided they enter into a payment plan with the Department of Inland Revenue the Minister of Finance, Calle Schlettwein has said.
This development comes almost two months after the Ministry of Finance had ordered that Government service providers were now required to submit a valid Certificate of Good Standing with the Inland Revenue Department with their invoices, for them to be paid.
The move by Government aimed at forcing a majority of its service providers that owe it money in tax returns is said to have led to an uproar by the service providers made up mostly of small businesses and tenderpreneurs.
Schlettwein said Government had a change of heart in order not to make it too difficult for its service providers.
“We want to improve the system. We don’t want to make it too difficult for our people who are offering a service to Government. However under the new arrangement that will come into place these service providers who owe Government taxes will be issued with Certificates of Good Standing provided they enter into a payment plan which they will not deapproach the department of Inland Revenue and fault on,” Schlettwein said.
However the Minister of Finance was quick to say that if a service provider defaults on the payment plan on outstanding taxes owed, Government will take action against them.
The Commissioner of the Inland Revenue Department, Justus Mwafongwe, reiterated what Schlettwein said adding that his department still has a challenge of people not complying with their payment plans after they are issued with a Certificate of Good Standing.
“In the past we would give Certificates of Good Standing to companies who owed tax under an arrangement that they would pay the tax once they are paid money but people kept on defaulting. Last year we decided to only give Certificates of Good Standing to those who do not owe anything to Inland Revenue. However, with that people started complaining again.
“A new directive will be issued soon to go back to the old set up but this time we will be very strict if you just default we will revoke the payment agreement and you have to pay your account in full before government can do any business with you,” Mwafongwe said.
Namibia has been experiencing a volatile economic climate due to various macro-economic factors that include a weaker currency, low revenue from the Southern African Customs Union (SACU) and poor performance of economies of the country’s major trading partners.
This has led to Government freezing the filling of any civil service vacancies this year in a bid to raise at least N$750 million needed in drought relief aid to urgently feed nearly 600 000 people.
As part of stringent fiscal consolidation measures Government through the Ministry of Finance now requires ministries to formulate monthly budgets where they outline what they intend to use the requested money for before Treasury approves and subsequently releases the funds to the ministries.
These measures come hot on the heels of another Government decision in June to slash the national budget by 7.4 percent which translates to N$4.9 billion from the N$67 billion national budget barely three months after it was presented.
The Ministry of Finance has also cut the projected 2017/18 national budget by 3.1 percent.
To add to Government’s woes it is also struggling with a budget deficit that stands at 8,3 percent of gross domestic product in 2015/16. This is above Government’s five percent target.
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