WINDHOEK – While no new taxes were proposed yesterday by Finance Minister Calle Schlettwein, he mentioned that his ministry had made detailed income tax proposals available for further consultation. According to him, concerns were raised that some of the proposed changes will put additional strain on the already weak economy instead of stimulating growth.
To this effect, said Schlettwein, the Receiver of Revenue will place emphasis on the refinement of taxing foreign income of Namibian residents, providing for specific taxation of trusts, phasing out ineffective tax incentives, introducing thin capitalisation rules to combat transfer pricing on interest paid on foreign loans, and taxing the commercial income of charitable, religious and educational institutions.
“I have announced several tax policy proposals in the FY2018/19 Budget, with the objective of partially generating replacement revenue due to continued significant declines in SACU revenue. The proposals also seek to strengthen equity and progressivity of the tax system. I need to reiterate the fact that the proposals are still being consulted on, since being announced during the tabling of the current budget in March this year,” said Schlettwein.
He further noted that government is looking at incentivising contractual savings by increasing the threshold of tax-deductible pension and annuity contributions.
“After an initial round of consultations, we had made detailed income tax proposals available for further stakeholder consultation. During the said consultations, concerns have been raised on aspects that may place additional pressure on the economy instead of stimulating growth and confidence. Of course, we need to be responsive to these concerns and will, therefore, provide adequate time for consultation and stakeholder input,” said Schlettwein.
He however added that tax policy measures to bring all potential taxpayers in the tax net and equally taxing all units generating similar taxable income must continue.
“Our efforts to improve tax administration and compliance as well as efforts to collect outstanding tax arrears due to the Receiver equally have to remain high priorities. We are looking forward to the revised tax proposals that will flow out of the Working Group Forum which we, together with private sector stakeholders, have established. The intent of our tax proposals must remain to improve and stabilise our revenue base, while at the same time ensuring that the Namibian economy remains an attractive and competitive investment home,” said Schlettwein.
He continued that in the light of these objectives, the ministry is now scrutinising proposals to improve equality within the tax system, while ensuring a progressive tax system.
“We are looking at incentivising contractual savings by increasing the threshold of tax-deductible pension and annuity contributions, avoiding unsustainable tax increases on individuals, maintaining current provisions for loss provisions in the Income Tax Act, and avoiding unintended consequences on the proposed withholding tax on domestic dividend tax,” he continued.
“Namibia supports the tax movement to eliminate base erosion and profit shifting created by transfer pricing. The key to success in this regard is to tailor transfer pricing legislative measures and develop transfer pricing audit capacity. Most countries have started modestly and built their transfer pricing legislation and systems progressively over decades and are still in the process of improving them, and that too applies to Namibia. We have already progressed on transfer pricing audits under the Large Taxpayers and Investigations Unit of the Receiver of Revenue.”
Schlettwein noted that Namibia’s primary industries will anchor economic recovery over the medium-term. After posting robust growth of 10.6 percent in 2017, the primary industries are estimated to grow by about 5.7 percent in 2018 as production ramp-up by Husab Uranium Mine reaches full capacity, with the agricultural sector expected to further support the outlook.
Fish processing activities remain subdued, with a contraction of about 8.0 percent this year on account of high cost of fishing and stock pressures. Over the medium term, growth in primary industries is expected to moderate to 3.2 on average over the MTEF, reflecting onshore diamond production constraints, depressed uranium prices and as output from the mining sector normalizes to long-term trend. Also, secondary industries output is expected to remain in contractionary territory due to recessionary pressures in the manufacturing and construction sectors over this year, while the tertiary services sector, which accounts for over 57 percent of GDP and is key to economic recovery, is estimated to continue experiencing recessionary pressures this year, posting an estimated contraction of about 1.4 percent, owing to continued weak domestic consumption demand weighing on the wholesale and retail sector and fiscal consolidation effects across the public sector. In the best-case scenario, this sector is only expected to ease out of recessionary pressures in 2019. Over the MTEF, growth for the tertiary services sector is projected to hover around 1.9 percent.
Commenting on yesterday’s budget review, the executive chairman of one of the largest private-sector employers, Sven Thieme, of the Ohlthaver & List Group, said: “Our view is that we believe the review of the mid-term budget is the most appropriate, given the state of our economy. We are also relieved that no further tax amendments have been proposed. We believe, like never before, all possible amendments need to be properly consulted to ensure we achieve renewed economic growth.”
2018-10-26 10:13:10 | 1 years ago