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D-Day for tax-payers as Tax Amnesty deadline looms …while Schlettwein warns that there won’t be any postponement

27/02/2018
by Kelvin Chiringa
Business

The tax amnesty deadline is almost two weeks away and companies are expected to have paid the tax man following the lifting of the deadline last year, yet some are not optimistic of treasury yielding convincing results due to the rough patch the economy is on.

The amnesty was introduced February of financial year 2017 during which tax payers that were in arrears were granted a breather where by 80% of the total interest and penalties was lifted off in a bid to recover a N$4 billion amount.

Yet despite the respite, Calle Schlettwein was dealt a blow in the face when his ministry only managed to get a paltry N$242.78 million five months after the inception of the amnesty. 

A local weekly reported last year that in terms of companies, over 55 200 Namibian firms owed Inland Revenue about N$3.3 bil­lion in tax arrears, while 15 foreign companies owed N$15.7 million to the taxman.

 However as more and more companies failed to pay their dues, the Namibia Chamber of Commerce and Industry (NCCI) moved in to engage the minister and forestall any move to begin penalising companies which according to the chamber could potentially have a cataclysmic effect to the private sector. 

The minister was thus forced to lift the July 31st deadline and set it to this year on the 11th of March, thus providing a time-frame within which the ministry’s permanent secretary, Ericah Shafudah, was optimistic would be sufficient to get the required N$4 billion. 

Shafudah’s optimism was further buoyed by the fact that treasury had made payments of outstanding invoices, which acted as some form of breather for cash-constrained companies. 

Speaking to The Villager this week, Schlettwein was adamant that even if push came to shove and companies fail to pay what they owed, he would not postpone the deadline.

“No, no, for now not. The incentive scheme is coming to an end, it is not to be perpetuated infinity. It’s not. It comes to an end and then the normal penalties and interest as per the Act are applicable.”

Pressed if he would resort to attachment of assets this coming month after the deadline in case of defaulters, the minister said that would be considered as a last resort. 

“No it’s not that simple. You should not jump to conclusions. Now what the tax incentive says is you are giving a chance to pay your capital in full at a reduced interest rate and without penalties. So if that comes to an end, then you still pay your capital but now with interest and with penalties. There is nothing of asset attachment as yet. Only if you are defaulting. That is a possibility but it is the last resort,” he said.

However, the minister promised to get back to this publication with a figure of the total collections made so far since July last year when the deadline was lifted.

Former NCCI boss, Tarah Shaanika who was vocal last year over the effects of “punishing companies for defaulting”, has also voiced his pessimism over chances of the minister being successful in recovering the owed amount this year.

He said the conditions of last year are still very much present in this year and companies may fail to honour their debts.

  “I doubt very much that they will be successful,” he said.

 He has also blasted the new Procurement Act for arm-twisting local contractors by demanding bid-bonds and thus making them to not equally compete for tenders to get the needed cash flow that covers for their debts as well.

NCCI said it was aware that there were a number of businesses in 2017 that were disputing the figures of the receiver of revenue as far as the tax liabilities are concerned.

It is not clear wither these issues have been ironed out or not.

Twilight Capital Director, Mally Likukela, also warned last year that a deadline to coerce companies to pay tax creates an unnecessary panic and an artificial fear in the economy.

“That panic can lead to negative sentiment by even potential investors that want to come to Namibia,” he told The Villager.