Namibia: Tax Collection 'Without Fear or Favour' - Shivute

25 September 2020

SAM Shivute, commissioner of the newly established Namibia Revenue Agency, has said the agency will collect taxes without fear or favour when it becomes operational.

The former police detective also promised to dedicate special attention to profit shifting and transfer pricing to avoid further base erosion.

He has earned the badge of being the agency's founding commissioner, and made the above statements yesterday, following his official introduction as the Namibia Revenue Agency's (NamRA) head by minister of finance Iipumu Shiimi.

Shivute said he would be working towards ensuring the broadening of the local tax base - an important aspect for Namibia to achieve financial sovereignty, he said.

"NamRA will ensure that everyone, and I mean everyone, pays their fair share of taxes. Base erosion and profit-shifting cases, with special focus on transfer pricing, will receive special attention like it has never happened before," he said.

Shivute did not explain how profit shifting would be tackled, but the subscription of Namibia to the global initiative on the prevention of base erosion and profit shifting is expected to give him and the team some muscle.

Examples of severe profit shifting include some under which has been known as the #Fishrot scandal.

Early this year Icelandic company Samherji, one of the companies that benefited from the country's marine riches, appeared to have reduced its taxable profits in Namibia by sending hefty fees to its companies in other jurisdictions - this being one way to shift profits.

An analysis of the leaked files by Finance Uncovered, as well as public documents and the company's financial statements, suggest Samherji used various techniques to reduce taxes in Namibia by shifting money to low-tax destinations like Cyprus and Mauritius.

Early this month the country's Financial Intelligence Centre in its annual report indicated that among potential crimes they flagged tax evasion, fraud and corruption as the most common predicate offences to money laundering.

"The trend remained unchanged during the period under review," they said.

Apart from profit shifting and transfer pricing, Shivute also indicated an intensive taxpayer education programme as one of the routes that would be utilised to ensure voluntary compliance to the tax codes is brought to par.

He said financial sovereignty is a prerequisite for an effective state.

Shivute said this can also be achieved by improving voluntary tax compliance, driving tax morality, ensuring efficient administration of tax laws, including trade facilitation, and ensuring maximum revenue collection.

The new agency commissioner said it will need to take full advantage of the current digital innovations in pursuit of enhancing service delivery and revenue collection.

He stressed the importance of ensuring that sufficient revenue is collected to help stimulate economic growth and development in Namibia.

"For the time being, allow us to focus on the preparatory activities for the readiness of NamRA, and I will report to you after 90 days in office as to what we have achieved during that period," Shivute said.

Meanwhile, Shiimi said the revenue agency will constitute a transformation of the current Inland Revenue Department (IRD) and the Directorate of Customs and Excise into a new semi-autonomous revenue agency outside the public service.

"Before day one of NamRA, which will be determined and announced to the public in advance, the NamRA Act (Act No. 12 of 2017) will not be in force and NamRA as an institution does not yet exist," he said.

Until such a date is announced, the finance minister said tax and customs and excise functions and the day-to-day operations will continue to be provided by the two existing departments.

NamRa is considered to be the saviour of the country which is struggling to fund its budget. However, if not well established, its inefficiency in collection or a narrow tax base will continue to put a strain on development.

Due to insufficient tax collection, amongst factors such as low economic growth, the national budget will the government will continue presenting the begging bowl. An uphill task awaits Shivute.

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