By Mathias Haufiku

WINDHOEK - All mining companies in Namibia will from now on be classified as large taxpayers, regardless of whether they fall below the N$75 million annual turnover threshold, said the Minister of Finance Saara Kuugongelwa-Amadhila, when she launched the Large Taxpayers Office in Windhoek on Monday this week. This was met with great approval from the Chamber of Mines, the Institute of Chartered Accountants of Namibia and the Namibia Manufacturing Association. 

According to the minister, the criteria for selecting large taxpayers is based on the threshold of an annual turnover of N$75 million or more, but regardless of the turnover, all mining companies will be classified as large taxpayers. “The Large Taxpayers Office will have a dedicated unit for mining taxation and develop capacity in other specialised industries including technical capacity in Transfer Policing and Thin Capitalisation,” she said.

The new mining unit in the Large Taxpayers Office would ensure the quality of taxation service rendered to mining sector and is expected to create capacity to undertake intensive and continuous business process improvement that would result in optimisation of revenue collection, effective control of tax avoidance and tax evasion and identification of areas of risk.   

The minister also indicated that only 560 of the country’s 500 000 taxpayers are large taxpayers, who contributed 55 percent of total tax revenue in 2013 from 53 percent contribution in 2012. 

The new office, which will be headed by Justice Mwafongwe, will open to the public next Monday, providing one-stop shop services in the administration and compliance functions such as taxpayer service, audit and debt management, returns and payments processing and compliance enforcement pertaining to large taxpayers.

Brian Black, the chairperson of the Namibia Manufacturers Association, welcomed the new move. “To give special attention to bigger taxpayers because as businesses, they also have channels to serve their larger customers. Realising frustration the manufacturers deal with, this is a step in the right direction,” said Black.

Vice president of the Chamber of Mines of Namibia, Kombadayedu Kapwanga, also supported the ministry’s new move and lauded government for working towards broadening the tax base. “If the tax is big on a small cake you do not get as much revenue compared to smaller tax on a bigger cake,” said Kapwanga.

Chief Executive Officer of the Institute of Chartered Accountants of Namibia, Koos du Toit, also applauded the move and said it will create greater efficiency, which “will make our lives much better and hopefully improve tax collection.”

“In March [she] talked about doing more with less and the e-filing is a way to do that. The strategy of taking the large taxpayers office and using it as a pilot study is the way to go because you can sort out problems before it goes into full scale operations,” said Du Toit.

The large taxpayers contributed more than half of the country’s total tax revenue in 2012 and 2013, 53 and 55 percent respectively, she said.

“The segregation of taxpayers facilitates is a focused approach on a specific group of taxpayers and enable the administration to effectively serve the taxpayers and develop specialised skills and competency among staff,” the minister said. 

Kuugongelwa-Amadhila said the ministry’s decision to adopt a taxpayers segmentation administration approach which classifies taxpayers into groups of large, medium and small taxpayers is aimed to ensure that the functional-based taxpayer service, which involves the provision of integrated tax services, is implemented successfully. 

During the finance ministry’s budget allocation debate in April, Kuugongelwa-Amadhila said she remains hopeful that when a dedicated semi-autonomous tax office is established and all tax reforms implemented, local revenue collection would increase its share as a proportion of the Gross Domestic Product (GDP).

Du Toit also lauded the ministry for focusing on educating taxpayers, saying “that is the only way to increase the cake [tax base], I hope that the education include business morals and ethics so that individuals feel bound to play their part in contributing in the form of taxes.”