The establishment and operationalisation of NamRA is anticipated to significantly improve transparency in Namibia’s tax collection efforts.
One of the major targets for NamRA is to increase the State’s revenue from the N$52 billion expected during the 2021/22 financial year.
This amount is already N$6 billion less than the N$58 billion collected during the 2020/21 financial year.
The establishment of NamRA stems from a conscious decision by Cabinet to transform the existing in-house departments of Inland Revenue and Customs & Excise within the Ministry of Finance into the semi-autonomous tax administration body.
NamRA was established against Namibia’s record of an already high revenue-to-GDP collection rate by the government, averaging 32% of GDP when Southern African Customs Union (SACU) receipts are included, or some 22%, excluding SACU receipts.
To gain insight into NamRA’s operations, New Era’s Senior Business Journalist, Edgar Brandt (EB), recently interviewed NamRA’s first-ever commissioner, Sam Shivute (SS), who was appointed last year, and who has already emphasised that revenue collection must be optimised.
EB: Now that you have taken over the reins of NamRA, what will/ are the priority areas you will immediately focus on?
SS: The main focus areas are as follows:
a) Improved voluntary compliance, and increased revenue collection through fair, efficient and effective revenue collection processes. Expanding on the technological gains to make it easier for taxpayers and traders to comply and pay their fair share of taxes due to the State.
b) Another priority area is to optimise organisational efficiency, service delivery and cost-effectiveness through building and transforming the diversity of skills and people for the sustainability of NamRA. NamRA is to be a high-performance centre built on efficiency and integrity. We will focus on implementing a modern operational performance management system through a clearly defined competency framework and job descriptions for operational efficiency.
c) Focus on providing customs and excise services that facilitate trade, maximising revenue collection and protecting Namibian borders from the illegal importation and exportation of goods, and address the aspect of under- declaration.
d) Promote a conducive working environment for our staff, and ensure that NamRA staff members are engaged, capacitated and motivated to serve with passion.
e) Strengthen capacity for administering international taxation. The international taxation landscape is ever-evolving and complex, which requires developing capacity for the exchange of information for tax purposes. We will pay more attention to issues related to the abuse of transfer pricing.
EB: What are the major challenges currently facing NamRA, both on an operational and policy level?
SS: Economic slowdowns always pose a challenge to revenue performance. Some of the challenges are the importation of illicit goods into our country, low tax morale among some sectors of our society, non-declaration, under-declaration, misclassification during the imports and exports of goods, and lack of capacity in some critical functional areas.
NamRA’s solution to this is the implementation of robust risk-based enforcement strategies, improved tax and customs operations, improved service delivery, improved taxpayers’ education programmes and redesigning, as well as improving and implementing standard operating procedures. The efficient utilisation of resources will allow a holistic and balanced approach to managing the operations of NamRA, and addressing the identified challenges.
EB: Have all the technical issues facing the Integrated Tax Administration System (ITAS) been ironed out, and if not, what are some of the glitches still affecting ITAS?
SS: ITAS is stable and operational. There are, however, some glitches on certain modules in the system such as the taxpayer accounting module and the return module. The IT department within NamRA is being set up to ensure that all IT aspects of ITAS and ASYCUDA are fixed and addressed promptly. Assessments and monitoring are carried out, enabling the capability for the rapid discovery and rectification of issues. This is to ensure the optimal performance of the ITAS and ASYCUDA systems.
EB: How do you expect the operationalisation of NamRA to impact Namibia’s revenue collection during the current financial year and subsequent years?
SS: As stated by His Excellency, President Hage G Geingob during the launch of NamRA on 7 April 2021, the establishment of NamRA is central to the country’s domestic resources’ mobilisation agenda. The Covid-19 pandemic has had a severe impact on revenue collection. A gradual recovery in revenue collection is expected over the medium term. I am confident that NamRA will achieve optimal revenue collection.
The operationalisation of NamRA and modernising the tax, customs and excise administration of Namibia will have a positive impact on revenue collection. Despite the negative effect of the pandemic, there have been a number of revenue leakages and cases of non-compliance. We will start right away with the closure of the identified leakages, and encourage voluntary compliance. We will also apply the law to enforce compliance.
EB: Do you feel that the different tax categories, such as individual and corporate taxpayers in Namibia all contribute their fair to state coffers, or what changes would you like to see in the country’s tax regime?
SS: In any tax jurisdiction, there are compliant and non-compliant taxpayers, whether individual or corporate taxpayers. It is the mandate and duty of NamRA to effectively enforce the tax, customs and excise laws. NamRA is to advise the Ministry of Finance, as the custodian of tax policy, on detected loopholes and weaknesses to address such where disproportions in tax contributions among taxpayers exist.
NamRA will continue working with various Namibian institutions, law enforcement agencies and financial institutions to ensure compliance with tax laws, as well as engaging international forums to combat base erosion and profit shifting among multinationals. NamRA will serve its clients with passion, and at the same time ensure that tax and customs and excise laws are adhered to.
EB: In your opinion, how will Namibia’s tax revenue be impacted if the informal economy is obliged to pay tax as per the stipulated tax thresholds?
SS: If all taxpayers in Namibia pay the required dues, it will result in improved revenue collection. It is important that all sectors and taxpayers who are legally liable for tax, and not only the informal sector, abide by the rules and pay their taxes due to create equity of the tax system and improved tax revenue collection.
EB: Are there any plans afoot at NamRA to include the informal economy in the tax regime?
SS: NamRA administers and enforces the tax and customs and excise laws as mandated by the Namibia Revenue Agency Act No 12 of 2017. Informal sector operators form part of the Namibian economy and the Namibian taxpayer base. Any trader, whether from the informal sector or not, earning more than N$50 000 annually, is liable to pay tax by law. NamRA is not at liberty to exclude any sector from complying with the tax laws, and will enforce the tax laws as prescribed.
EB: What other relief measures is NamRA contemplating in light of the devastating economic impact by Covid-19, and the prolonged recession that crippled the domestic economy even before the pandemic?
SS: The mandate of NamRA is limited to tax administration. Our role is to administer the tax, customs and excise laws.
All tax policy-related matters are strictly for the Ministry of Finance to decide. NamRA is not legally allowed to discuss tax policy matters.
EB: The tax relief programme also states that “no capital amount owing (sic) to Inland Revenue Department shall be written off…”. In this regard, how or where do you expect taxpayers to come up with this capital, given that many are already struggling to make ends meet and put food on the table?Should they take loans, or what options do you believe taxpayers have to raise the required capital?
SS: Capital tax amounts are not permitted to be written off under the tax laws of Namibia. Capital tax amounts which taxpayers defaulted to pay are legally payable to the fiscus. In light of the difficult economic times, the Electronic Tax Relief Programme was introduced to lessen the burden on those taxpayers with outstanding amounts.
I would like to encourage individual and corporate taxpayers to grab this rare opportunity with open hands. Participate in the programme. Settle your capital amount. Make arrangements to settle your debt.
We are here to serve you with passion.