The government has advised companies that might not have funds to pay tax because of the effect of the coronavirus on their cash flow to get loans from commercial banks and pay their dues.
This was said by finance minister Iipumbu Shiimi, who announced the government's economic stimulus and relief package on Wednesday, meant to lessen the impact of the 21-day lockdown due to the Covid-19 pandemic on the Namibian economy and households.
More than N$8,1 billion has been made available as of now, comprising N$5,9 billion for businesses, households and cash flow acceleration payments for services rendered to the government, and N$2,3 billion for additional support guaranteed by the government.
This offer is not quite what the industry, analysts and business sector representatives have proposed.
Cirrus Capital, the Economic Association of Namibia, Deloitte Namibia and the Namibia Chamber of Commerce and Industry had proposed that government suspend employee taxes temporarily and reduce corporate tax, but Shiimi and his team have refused to heed that call.
"Businesses need to pay tax, because that money would be spent on some of the interventions," Shiimi said.
While the suspension of taxes for about three months would enable businesses to survive and keep jobs, as proposed, Shiimi and his team are rather sending companies to the bank to take loans and pay tax.
These loans, he said, would be guaranteed by the government, but only up to a certain amount.
"Such businesses can borrow an amount equal to a 12th of their tax payment in the previous tax year to be repaid after one year. The interest rate will be concessional, below prime, on the back of the government guarantee," he said.
The above guarantee would be N$470 million for corporate tax and N$1,1 billion for employee taxes, and applications for these loans would need to be made via the commercial banks.
There was no mention of taxes such as value added tax and import duties, and the assumption is these are set to continue as usual.
Shiimi, however, said the government would speed up the release of VAT refunds, but audits are set to continue digitally.
According to the national budget documents, the government is expecting to receive an estimated N$7,4 billion in corporate tax this year, N$12,8 billion from value added tax and at least N$14 billion from individuals in the form of employee and personal tax.
Officials within the finance ministry have said further interventions would be made if the situation deteriorates.
Several business people took to social media saying if only the government would have attended to issues like VAT refunds before the coronavirus pandemic, there would be no need for the current intervention.
"Timely refunds of VAT as well as timely payment of supplies would have saved many companies during the economic decline and we would perhaps have left companies with stronger cash flows to cushion during these unprecedented difficult times ahead," businesswoman and former deputy executive director in the finance ministry Ally Angula said on Twitter.