Finance minister Calle Schlettwein has kept his fingers crossed that the powers that be in the European union will finanally remove the tax-haven tag from Namibia which poses serious trouble for the economy in attracting foreign investment.
In his budget presentation last week, Schlettwein stamped that while it has been an unfortunate error that Namibia has been classified by the European Union as a tax haven, this is to the contrary.
This is inspite of the fact the the European Ambassador to Namibia last year engaged journalists clarifying that the listing did not suggest that Namibia was a tax haven.
“The Council decision of the EU 28 member states categorised Namibia as a country with a non-cooperative tax jurisdiction. The list is temporary, and is based on the fact that Namibia did not respond to the questions posted,” she explained.
Namibia is allegedly found offside by the EU member states for not joining both the Global Forum on Transparency and Exchange of Information for Tax purposes as well as to sign, ratify and participate in the OECD Multilateral Convention on Mutual Administrative Assistance on tax matters.
She had been forced into clarifying the issue after global news agencies carried bold headlines that the Southern African open economy had been labeled a tax haven.
He did inform the August house that Namibia was now engaging the EU authorities and that he trusted that Namibia will be eventually delisted.
This will be the umpteenth time the minister will be maintaining his unwavering position as the country remains listed as a potential habours for illicit financial flows.
“Tax havens by their nature wield below average or zero tax rates and used as a conduit for transfer pricing. Multinational companies would tend to establish their principal office in tax haves to serve as conduits for transfer pricing and tax planning activities.”
“We do not subscribe to the subjective classification of Namibia as a tax haven because we are not. In fact, Namibia as a resource-based economy is wary of the pervasive transfer pricing, illicit financial flows and misinvoicing prevalent on the African continent which leads to an estimated US$50 billion illicit financial flows from the continent annually, based on the evidence from the African Union Report by Former President Thabo Mbeki Report,” explained the minister.
He said that as a resource based economy and a transparent sovereign, Namibia stands to benefit from international tax cooperation and exchange of information for tax purposes.