2006-01-23Staff Report 2 "PRIOR to independence and up to 1998, a number of Namibian residents became members of the Master Adaptor Retirement Annuity Fund, which was underwritten by Southern Life Association Limited. The Namibian members were under the impression that they were members of a fund which is registered and approved for taxation in the Republic of Namibia only to become aware of the ... operation and administration of the said fund when the writer hereof instituted a court action against Momentum in 2005. The retirement industry is regulated by the Pension Funds Act No. 24 of 1956 and the Incone Tax Act No. 24 of 1981. Both these legislations prescribe that all retirement funds must be registered with the Registrar of Pension Funds before any fund may do pension business. For a retirement fund to enjoy the tax concessions provided for in the Income Tax Act, the minister must approve it. A thorough investigation has been conducted into the activities of the Master Adaptor Retirement Annuity Fund and the findings are most disturbing and threaten the sovereignty of our country: - The fund was never registered in the Republic of Namibia; - The fund was never approved for taxation in the Republic of Namibia; - Inland Revenue and Namfisa afforded the status of registered and approved fund to the Master Adaptor Retirement Annuity Fund in contravention of the Pension Funds Act and the Income Tax Act. The Receiver of Revenue has allowed the contributions made by individuals to this fund as a deduction from income to determine the taxable income for each individual taxpayer, in contravention of the Income Tax Act, 1981; - The total annual contributions which were deducted as tax deductions contributions are +/- N$6,7 million; - To add insult to injury without a formal transfer Under Section 14 of the Pension Funds Act - Momentum 'Transferred"" the Master Adaptor Retirement Annuity Fund's assets to a South African registered and approved fund MM Retirement Annuity Fund since 2001 - this fund now issues tax certificates to Namibian members in contravention of the Income Tax Act, 1981; - Namfisa and Inland Revenue misconstrued the provisions in the Pensions Fund Act and Income Tax Act governing recognition of retirement annuity funds and the tax concessions available - the purpose of the legislations was derived from the need to protect the member and the fiscus. Southern Life and Momentum were using an unregistered fund to gain an improper advantage for themselves at the expense of the Namibian Government and its fiscal policy; - For only the past ten (10) years, the Namibian Government suffered revenue of +/-N$67 million in a form of forfeited taxes for a ... retirement annuity fund, which was not entitled to enjoy tax concessions provided for in the Income Tax Act, 1981. In addition, the Namibian Government lost revenue on the tax-free lump sum payouts, which we estimated at N$30 000 per annuitant, which gives us a total loss of N$360 million - total estimated at N$427 million. What is open to debate is who should be held responsible for the ... activities of this fund - is it Momentum, or Namfisa or Inland Revenue or collective and jointly? Hendrik Christian Katutura" 2006-01-23Staff Report 2
