Natural resourceÔÇÖs taxes coming soon

Government remains resolute to enhance its revenue collection at all costs and is steadfast to introduce differentiated rates on the export of all natural resources as past expansionary national budgets meant to boost the country’s economy are finally taking their toll on State expenditure.
The new taxes to be charged on biotic and abiotic natural resources destined for markets outside the country will range between 0% and 2% and will be introduced later this year.
The Deputy Minister of Finance, Calle Schlettwein informed The Villager this week that plans are well on course to introduce the new taxes by the end of this year but allayed fears that Namibia is becoming a country heavily dependent on taxes to collect revenue.
While Schlettwein stressed that the new taxes will affect both the living and non-living natural resources, it is evidently clear that the new rates are aimed at the mining sector.
The mining sector vehemently protested attempts by the Government to introduce tax amendments last year that would have seen the zero-rating of value-added tax (VAT) on the export of raw materials abolished and be replaced with a 15% VAT rate.
A further five percent levy on the export of raw materials was also proposed by the treasury while it wanted an increase in corporate income tax rates for non-diamond mining activities to 44% from 37.5%.
The Secretary-General of the Namibian Chamber of Commerce and Industry (NCCI), Tarah Shaanika said that the Chamber understands through the Ministry of Finance that the new intended tax regime could mostly concentrate on the mining sector.
“We do not have a problem with the new proposed tax regime as long as they (treasury) take into consideration that it is difficult and, at times, almost impossible to add value to some natural products in the mining sector such as uranium,” Shaanika said.
He argued that Namibia would essentially need to set up a nuclear power plant to fully add value to uranium in the country.
According to Shaanika, the Chamber has widely been consulted on the proposed taxes and that Government has since been briefed on the concerns of the NCCI.
Schlettwein, on his part, noted that the Government is being careful not to over-tax industries and thus, create a negative influence on the investment climate in the country but would rather want to remain competitive with other investment destinations, especially in the Southern African Development Community (Sadc) region.
He further said while mining will be one of the targets, other sectors such as agriculture and forestry will also be in the loop for such taxes.
Shaanika, however, feels that the livestock industry would not be hit much by the new taxes as they are already subject to an on-hoof export levy.
The deputy minister said it is difficult to quantify the target amount as the treasury would like to acquire from the new taxes on an annual basis, given that the ministry is still in consultations with the various production sectors to tag rates onto specific raw materials.
He stressed that the new taxes are introduced to ensure that the country is compensated for lost opportunities denied through the disruption of the value chain through exporting of raw goods.
“These natural resources, living or non-living, form part of the economic wealth of the country and we must make sure that we get part of the value of those products back into the country that we are currently not getting,” he asserted.
He could also not put a date on when the new piece of legislation will be introduced in Parliament for deliberations and final promulgation.