The Namibia Chamber of Commerce Industry (NCCI) has welcomed finance minister Ipumbu Shiimi’s move to agree to some of the private sector suggestions and proposals on how to improve the economy.
The Chamber’s chief executive officer, Charity Mwiya in a statement released this week indicated that the government hasn’t been forthcoming on the private sector’s suggestions on how to stimulate growth.
“Advice proffered to government by the private over the years has all too often been conveniently ignored,” Mwiya noted.
However, Shiimi’s Mid-year Budget Review has also come with some interventions that will be implemented as suggested by the private sector.
Embracing the private sector’s recommendations, Mwiya stated “is a good start”.
Mwiya added that although not all recommendations made to the government to create a pro-growth environment have been addressed, Shiimi’s announcements are positive and welcomed by the private sector where many businesses are still struggling to recover following the past two disruptive years.
In the Medium-Term Budget Review presented by Shiimi in parliament on Tuesday, the minister announced that the non-mining company tax rate will be reduced by two percentage points, one percent annually over the two outer years of the next Medium-Term Expenditure Framework.
This will leave enterprises with some extra profit for reinvestment or distribution as dividends, increasing the income of the owners- enabling them to spend more (stimulating demand) or save more.
Although the domestic corporate tax (32 percent) remains higher in comparison to neighbouring countries after the announcement, effectively the tax rate reduces to 31 percent in FY2024/25 and to 30 percent in FY2025/26.
Mwiya explained that the NCCI as a representative of the business community has recommended to the government in the past and repeated earlier this year, that further reductions are required to achieve taxation parity with other countries in the SADC economic bloc.
Since economic progress does not only depend on companies alone, especially the Namibian economy which is driven by consumption compared to investment- Shiimi has also announced that the state has agreed to the private sector suggestion.
The suggestion was to stimulate aggregate demand boosting the disposable income of low-income earners, who are currently being strangled by inflation as prices keep rising monthly.
The government has committed to increasing the threshold for Income Tax on Individuals from the current N$50 000 to N$100,000 thereby providing relief for low-income earners.
The Chamber has also applauded the move.
Shiimi has also updated that the government is fast-tracking the implementation of a Business Rescue Fund which the private sector representative indicated is another commendable development.
The fund’s launch is slated for November when the procurement process for a pool of business rescue consultants will start.
Initially, the fund’s focus will be Development Bank of Namibia (DBN) clients, but it will be broadened to include other lending institutions, by a further allocation of funds in the 2023/4 fiscal year.
Concerning other recommendations, Mwiya says NCCI asked for the write-off of the prescribed debt of road users.
She says despite indications that amendments will be made to the Road Fund Administration (RFA) Act to facilitate such write-offs, reportedly bureaucracy is the cause of a delay.
Mwiya also touched on voluntary registrations, saying that the Chamber also recommended that compulsory registration for value-added tax (VAT) be applied to businesses with an annual turnover exceeding N$1 million.
In fixing the operating environment for entrepreneurs and investors, Mwiya said consideration should be given to introducing a lower business tax rate for small enterprises with an annual turnover not exceeding N$2 million.
Regarding the new guideline for issuing Good Standing Certificates, Mwiya has indicated that they have surveyed inputs from their members.
“Based on feedback received from members, guidelines for this were submitted to the tax collection authority NamRA to improve tax compliance,” she stated.
Mwiya concluded that she hopes the responsiveness demonstrated by finance minister Shiimi will be emulated by NamRA and going forward by other public sector entities who serve the business community. Email: firstname.lastname@example.org