Government has launched a blitz to investigate possible serious tax evasion from 22 major companies, closed corporations and politically connected business people with the aim of expediting tax collection and improving revenue collection.
The investigations are being steered by Tax Intelligence and Investigation Unit (TIICU) of the Inland Revenue Department (IRD) and partly the Namibian police.
Minister of Finance Calle Schlettwein did not means his words this week saying the government will invoke the law on those that are caught defaulting and will seek an interdict to attach assets for heavy defaulters in a bid to recover their dues.
“There are serious laws in place and once investigations are done the state with the order from the court will seize assets of the companies that are currently under investigations. Tax evasion is a serious crime as it affect the economy of the country and hinders development,” Schlettwein said.
Director of Inland Revenue in the Ministry of Finance, Justus Mwafongwe also confirmed the investigations saying, “ Since January, 22 serious suspected cases of tax evasion have been recorded and are under investigation by TIICU. Some criminal cases have been registered with Namibian police as a result of this investigation. The investigations are still under way, therefore it is possible at this time to determine the tax amount that will be collected once the investigation and audits are completed.”
Mwafongwe explained that cases that were detected since January involve large corporates, individuals and close corporations.
“In all cases, these are persons who commit these irregularities either acting for themselves or on behalf of companies whether as employees, owners, directors or representatives,” Mwafongwe said.
Investigation also show that major transgressions include: withholding employees’ tax (PAYE) and charged Value Added Tax (VAT); under-declaration or non-disclosure of income; overstating expenses; manipulation of inter-company transactions; transfer pricing and Thin Capitalization; fraudulent claiming of tax refund; and failure to register for tax purposes.
“Heavy punishments are netted out for tax evasion, these can take the form of penalty imposition ranging from 10% to 200% as well as criminal prosecution that may lead to imprisonment. Inland Revenue Department continues to implement measures that enable us to detect and therefore punish those that are found to be engaging in acts of tax evasion,” Mwafongwe said.
Commenting on the issue, Chief Executive Officer of Namibia Chamber of Commerce and Industry NCCI, Tarah Shaanika, encouraged businesses to oblige by the law.
“The NCCI therefore does not encourage non-compliance with that legal obligation on the part of our members. However we have noticed that many small to medium entrepreneurs find it difficult to comply with tax legislations because of the complex nature of tax forms that need to be completed before payments are made. Some members also do not understand what to do with regards to taxation. Therefor some of them end up accumulating tax liabilities which makes it difficult for them to comply,” Shaanika said.
He added that NCCI will soon launched a series of tax education roadshows throughout the country to educate members of NCCI on tax matters.
Director of Small and Medium Enterprise’s (SMEs) Compete, Danny Meyers believes that compliance with statutory obligations related to conducting business is not only a legal requirement, but it is the right thing to do.
“It is the responsibility of every entrepreneur and business entity, irrespective of the size of an enterprise or its location, be it Namibian-owned or under foreign ownership, to adhere to the laws of the land. There must be no deviation and it is responsibility of those who select to conduct business, to treat this obligation with the seriousness it deserves. In summary, to abide by the laws as it pertains to taxation, employment of labour, social security commission and workmen’s compensation compliance, among others. At a local level, comply with municipal by-laws and especially the ones related to trading hours, noise disturbance and pollution or disposal of waste,” Meyer said.
He also added that, “The state must follow-up with regular training activity all over the country. Not only done when a trade fair or expo is held in a town, but routinely during the course of a year.”
An SME business woman who spoke on condition of anonymity told, The Villager that it is not fair for them to be paying tax while others are not paying, it should be very citizens responsibility to pay their due.