Namibia Joins International Taxation Initiative

Namibia has joined a consortium of over 130 countries seeking to tackle tax avoidance, improve the unity of international tax rules, and ensure a more transparent international tax environment.

This was revealed by the Organisation for Economic Cooperation and Development (OECD) last Friday in an announcement made on its website.

Namibia's joining follows the European Union's listing of countries which were non-cooperating in 2017 around the strengthening of local taxation rules in combating tax avoidance, which in certain cases fosters illicit financial flows and money laundering.

The EU removed Namibia from the list in 2018 after the government made sufficient commitments to address the taxation concerns. Among the commitments made were subscribing to an inclusive framework, or implementing the base erosion and profit shifting (BEPS) minimum standards.

The Namibian reported in June this year that Cabinet had directed the finance ministry to ensure that such commitments were attended to within this year.

The BEPS project was founded in 2012 to address tax planning strategies used by multinational enterprises which exploit gaps and mismatches in tax rules to avoid paying tax.

"Developing countries' higher reliance on corporate income tax means they suffer from BEPS disproportionately. These practices cost countries US$100-US$240 billion in lost revenue annually", read an explainer on the OECD website.

The 15-action plan initiative addresses taxation challenges arising from digitalisation, limitation of interest deductions, harmful tax practices, the prevention of treaty abuse, permanent establishments, transfer pricing and mis-pricing, mutual agreement procedures, as well as multilateral instruments and mandatory disclosure for countries, amongst others.

Minister of finance, Calle Schlettwein said in his budget speech this year that his ministry would be working on measures which would ensure tax loopholes costing government are closed off.

"Key tax administration reforms will be implemented, such as leveraging regional and international tax cooperation as a mechanism to enhance national technical capacity in various areas of tax administration such as transfer pricing and illicit financial flows," he stated.

BENEFITS

According to the OECD, the joining of countries such as Namibia ensures inclusiveness and participation in the development of international standards on corporate taxation.

"As such, capacity-building support for developing countries is core to the inclusive framework, prioritising active, equal participation in the BEPS process, " the explainer added.

Other benefits include the deployment of tax inspectors without borders that aid in building tax audit capacity around the world, as well as assist developing countries to successfully implement their BEPS priorities.

The OECD has 130 countries worldwide subscribed to its BEPS inclusive framework, with over 20 African countries such as South Africa, Zambia, Angola, Botswana and Mauritius also involved, while the Global Forum on Transparency and Exchange of Information for Tax Purposes has 154 members.

Email: lazarus@namibian.com.naTwitter: @Lasarus_A

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