NEW investment rules that will provide guidelines on how asset management and long-term insurance companies will invest five percent of their investments in unlisted companies (not listed on the Namibian Stock Exchange) will be gazetted in two weeks, the Minister of Finance Saara Kuugongelwa-Amadhila said yesterday.
The minister said the government has realised that there a lot of risks and potential areas were money could be lost through such investments and has decided to come up with guidelines to mitigate potential losses. Asset managers and insurance companies are already required to invest 35% of investments locally.
Kuugongelwa-Amadhila said the new rules, known as Regulation 29, have already been submitted to the Ministry of Justice and are expected to be published in two weeks.
Last year, the government amended the Long Term and Pension Fund Acts to make provision for them to invest five percent in unlisted companies.
"We are trying to promote investments and at the same time balance things, we don't want to allow speculators to take advantage," she said.
Kuugongelwa-Amadhila said despite the guidelines, directors and executives will still be held liable on the running of the companies under the provisions of the Companies Act.
Commenting on a proposed new mining export levy, she said the purposes of the new levy will be presented to Cabinet next week. Asked if the mining industry will be happy with the new levy, Kuugongelwa-Amadhila said it is "difficult to please everyone" but added that as Minister of Finance, she is mandated to come up with taxes deemed appropriate for the country. She said mining companies also agree that the tax needs to be adjusted although they have differed with the ministry on the level of the rates.
She said with high levels of poverty and unemployment in Namibia, it was in the interest of the mining companies to operate in a peaceful environment and said taxes help the government fulfill its developmental objectives.
Asked if the new tax will not scare away investors, she said Namibia remains a very lucrative destination for mining companies. She said if the argument by the mining companies is that the new levy will affect their profitability, this could be because of negative market conditions on the international markets and not on high taxes in Namibia.
She added that it was important for both Namibia and the mining companies to equally benefit from the country's mineral resources.
The ministry plans to put up a special mining unit within the large taxpayers office, Commissioner of Inland Revenue Department Sam Shivute said in an interview last month.
The Department of Inland Revenue now has three directorates consisting of the large taxpayers directorate, the small and medium taxpayers directorate and the administration, legal and support directorate. The objective of the mining unit is to provide the best possible tax practices and valuable services to enable proper management of the fiscal domain of the mining sector.
Other changes to be undertaken during the current Medium Term Expenditure Framework include the introduction of environmental taxes through punitive taxation for environmentally damaging activities, Shivute said
He said that the draft amendment bill imposing Transfer Duty shares and members interest of companies and close corporations holding property and mineral licenses is being reviewed.
He said the increase in the VAT threshold and imposing criteria to qualify for VAT import account and voluntary VAT registration is at the drafting stage.
The ministry is also reviewing existing trust legislation and making reporting of transactions mandatory as part of measures to counter tax avoidance schemes.