Abolish EPZ regime by 2021 – EU tells Namibia

Home National Abolish EPZ regime by 2021 – EU tells Namibia

WINDHOEK- Following engagements at both political and technical levels, the European Union (EU) gave Namibia a set of criteria to commit to, before being considered for removal from the list as a tax haven.
One of the four given criteria is for Namibia to amend or abolish the country’s Export Processing Zone (EPZ) regime, not later than 2021. 

These formed part of discussions of a political dialogue between the Namibian government and the EU yesterday, among other issues.

Namibia is among one of the few countries still on the EU’s blacklist as a possible tax haven.
Namibia has been listed by the EU as a non-cooperative jurisdiction on tax matters, based on information collected by the EU on the country’s EPZ, which was found not to be in line with international tax standards.

However, Finance Minister, Calle Schlettwein has over time criticised its listing as unjust, saying Namibia is clearly, by any objective criteria, not a tax haven. 

He said the listing is unjust, prejudiced, partisan, discriminatory and biased.
Namibia government adopted a policy for the establishment of an EPZ regime to serve as a tax haven for export-oriented manufacturing enterprises in the country, in exchange for technology transfer, capital inflow, skills development and job creation. 

This policy decision was translated into law through the passage in Parliament of the Export Processing Zone Act (Act No. 9 of 1995). 

The implementation of this initiative started in 1996 with the aim to facilitate imports of foreign productive capital and technology as well as the transfer of technical and industrial skills to the local workforce.
It also aims to contribute towards an increased share contribution of the manufacturing (industrial) sector to job creation, the country’s gross domestic product (GDP) and exports of manufactured goods; and enhance the diversification of the local economy.

Other issues on the agenda include the political situation in the EU, Namibia, Southern Africa; economic and trade relations as well as development cooperation EU-Namibia; global issues of mutual interest and, safety and security or police issues.

The political dialogue comprising of various international and local delegates was officially opened by International Relations and Cooperation Deputy Minister Christine //Hoebes, and the EU Ambassador to Namibia Jana Hybaskova.

//Hoebes and Hybaskova pledged that both parties shall regularly engage in a comprehensive, balanced and deep political dialogue leading to commitments on both sides as stipulated in line with Article 8 of the Cotonou Partnership Agreement.

Hence the dialogue yesterday as a follow up meeting which took place on July 13, 2017.
The purpose is to strengthen political and economic relations between Namibia and the EU and agree on future cooperation between the two partners.

Other criteria the EU gave Namibia as contained in briefing notes indicates the country should join the Global Forum on Tax Transparency and Exchange of Information by 2019.

The third criteria stipulate that Namibia must accede to the Organisation for Economic Cooperation and Development (OECD) Convection on Mutual Administrative Assistance on Tax Matters by 2019.
The fourth criteria require Namibia to join the Inclusive Framework on Base Erosion and profit Shifting (BEPS), or commit to its minimum standard by 2019.

“The Namibian government has written to the EU council giving its commitment to fulfil the above-stated criteria, subject to parliamentary approval. The commitment by Namibia will be assessed by the EU business conduct and a response will be communicated,” Nadine Du Prezz from the Finance ministry said as part of Namibia’s response regarding the listing.

Equally, she noted internal processes to assess the benefits and risk associated with joining these various forums as well as abolishing the EPZ regime will be undertaken. 

According to the briefing notes, the code of conduct group requires specific time lines commitment and, in this respect, Namibia has since committed to meet the EU criteria by end of 2019.

It further reads that at present Namibia awaits feedback from the EU code of conduct group.
Moreover, it shows that Namibia may wish to reassure the EU on its desire to be removed from the list, based on the commitment it has given and request the EU to clearly state the process that Namibia may follow.