Government lobbied for faster VAT refunds ...as companies takes issue with slow systems
Businesses operating in Namibia have expressed their concern at the pace at which Input Vat claim refunds are made by the Ministry of Finance, citing that the process is slow and as result companies’ looses millions of dollars while waiting.
It has emerged that a desk audit by the Ministry of Finance is always required for every Input VAT claim exceeding N$ 15 000.
These outstanding Input VAT claims which normally take more than four months to be settled, according to the business owners, have huge negative cash flow implications for the companies.
This is especially the problem for local manufacturers with significant export business as they reclaim Vat every two months on items that they export.
“If a large company for example have to claim N$500 000 in VAT refunds from the Ministry every the months and the process drags on for six months, than we are talking about N$1,5m the company would have used for other operations that is still in the ministry’s hands,” said Hennie Fourie, Chief Executive officer of the Namibia Manufacturers Association (NMA).
To this end, together with the Institute of Chartered Accountants of Namibia (ICAN) has engaged the Ministry of Finance to fast track the refund process.
The parties met the Deputy Minister of Finance, Calle Schlettwein, recently at which the ministry indicated that it is now busy with the implementation of new procedures to change the VAT refund systems for the better.
“We had a fruitful meeting with the Minister and are very happy with the current developments at the Ministry regarding this matter,” Fourie said.
The Minister confirmed to The Villager that he met the parties and they deliberated on the matter. He said the Ministry has build a backlog in Vat Tax refunds and further confirmed that such backlogs and the subsequent delays in VAT repayments can lead to serious cash-flow problems for businesses operating in Namibia.
Said Schlettwein; “We discussed the entire process and on how it could be better streamlined in order to make it effective for all parties.”
In discussion held in 2010 and in earlier 2011, between the line Ministry and the business people, according to the NMA, the Ministry of Finance promised to replace the present system of mandatory Input VAT Audits with another system.
The new system, the NMA said, entailed that taxpayers without any tax queries during the past year will not be audited with every input VAT claim.
The previous discussions also concluded that possibilities existed in which large firms which are regularly audited, are not audited with every input VAT claim.
This system was, however, in its infancy and a database of firms with good experience in this regard was to be created by an established committee.
However, this week Schlettwein said that his Ministry had agreed that the auditing process of Vat Input claims is at times a lengthy one but maintained that there was no way that certain companies will be exempted from the process.
“There will be no exemptions for any company from the auditing process. We all agreed at the meeting that there are still a lot of risks in involved because not everybody is honest, thus the auditing process should be there regardless,” Schlettwein said.
It also emerged that the Ministry was busy expanding the large taxpayers division with the aim to handle large taxpayers from all regions in Namibia and to expedite refunds for these firms.
It has also come to the attention of this newspaper that, the ministry of finance and the local manufacturers have entered into an agreement to have consultative and informative meetings every. This was revealed by the deputy of finance. At these platforms, he said, the manufactures will get the opportunity to make suggestions and proposals to the ministry as to how both parties can work together for the common good of the local economy.
“We believe that manufacturers are central to the welfare of the country’s economy and will contribute positively to issues like unemployment hence the creation of a value chain for local manufacturers is imperative,” he said.
Speaking of manufacturers, Team Namibia, a marketing for locally manufactured products which was established by organised businesses in consultation with government continues to operate without a General Manager, and this is said to remain the status quo until next year. This was confirmed by its chairman Tarah Shaanika this week.
“We have made several offers and every time we seem to have found they are poached by a more lucrative deal somewhere else. But the recruitment process is ongoing and currently the brand is run by and executive committee,” Shaanika said.
The Villager reported earlier on that the local brand was facing financial difficulties and was in dire need of a cash injection to the tune of N$10m from Government.
Shaanika revealed that they are looking into having meetings with government on the matter in the coming week.