By Patience Nyangove
A whooping 55 211 Namibian companies owe Inland Revenue about N$3.3 billion in tax arrears, while 15 foreign companies owe N$15.7 million to the taxman.
This was confirmed by Commissioner for Inland Revenue, Justus Mwafongwe, this week, who also revealed that from February to date, during which a tax amnesty and incentive period has been running so far, only N$148 million had been paid to the Ministry of Finance, out of a principle amount of N$4 billion owed by all tax defaulters.
The tax incentive period comes to an end on 31 July, and includes the Ministry of Finance writing off N$12 billion in penalties and interest, which are attached to the principle debt of N$4 billion.
Defaulters are still liable to pay 20 percent of the interest and penalties during the duration of the incentive programme, which with the principle amount, sees government targeting N$5.1 billion for collection.
“To date, the ministry has collected N$148 217 905, since the launch of the tax incentive programme in February. This translates into a mere 2.9 percent of the overall target of N$ 51 64 748 912,” Mwafongwe said.
“There are about 55 226 companies with outstanding taxes. Of these, 55 211 are local companies, and they owe a combined amount of about N$ 3.3 billion in taxes, while 15 foreign companies owe about N$15.7 million.”
Mwafongwe also disclosed that so far 9 371 arrears accounts have been settled by both individuals and businesses, since February.
He added that as from 1 August, the ministry will issue final demand letters, attach assets, and engage debt collectors, among other methods, to recover the money owed.
“The following will be employed from the 1 August: The issuance of final demand letters, and when no response is received within 14 days, third parties will be appointed to collect the tax debt. The third parties are banks, employers, taxpayer debtor collectors, etc. If no full recovery is made, garnishee orders will be issued, and lastly, assets will be attached,” Mwafongwe said.
“Taxpayers, who are in arrears, are urged to take this incentive programme very seriously. After the deadline of 31 July, the Ministry of Finance will use the full force of the law, to recover all it is owed. This will include the appointment of third parties as agents, the attachment of assets and the auctioning off thereof, as well as the issuing of garnishee orders against bank accounts. Taxpayers, who owe the ministry after the deadline, will be blacklisted and prevented from participating in public procurement,” he added.
Namibia Chamber of Commerce and Industry (NCCI) Northern Branch Chairperson, Tomas Iindji, last month poured scorn on the Finance Ministry’s threats to blacklist, attach the assets and apply for garnishee orders, against the accounts of business people, who owe government tax, saying such actions would lead to the collapse of many companies, and massive retrenchments.
Iindji also told Confidente that government owed a number of their members a substantial amount of money, for services rendered.
Northern business people have been reported to be among the majority of tax defaulters in the country.
Schlettwein said earlier this year that the taxpayer population for the ministry’s Oshakati Inland Revenue Regional Office contrasts vastly with the amount of tax paid by the North. According to tax administration information, the Oshakati regional office has the second highest tax register in the country, after Windhoek, but in terms of tax collection, the northern office is said to be in fifth place out of the eight tax regions. Schlettwein noted that during the 2015/16 financial year, only N$36.86 million was collected by the northern office, while the total taxpayer register stood at 81 114, which equated to N$450 being collected from each taxpayer.
Out of the total number of taxpayers for the whole tax region, only 22 taxpayers are huge payers.
“Government needs to come to the party. We don’t have a problem with the action they are taking, but they need to be realistic. Our members have a lot of money that they are owed by government and State-owned enterprises, yet government wants to take action against us, when it owes us as well. We need to sit down and engage each other, since some of these arrears come a long way,” Iindji said.
He added that there was a need for some of their members to commit themselves to clearing their outstanding tax debts.
“We are also trying to engage with our members, to pay their outstanding tax. The problem is also that when some of our members entered into business, years ago, they had no knowledge of accounting and the keeping of financial records, so this issue of outstanding taxes is not entirely of their own making.
“So if government takes any drastic measures, this will lead to about 60 percent of businesses retrenching workers in the North, and they will retrench by 100 percent,” Iindji added.
Confidente. Lifting the Lid. Copyright © 2015