A N$15.2 million tax refund scam uncovered by the Namibia Revenue Agency and revealed at the end of March this year, has now more than doubled to N$36 million.
NamRA on Friday said the illegal payment of refunds of millions of dollars was being perpetrated by a criminal syndicate.
During a media briefing, NamRA commissioner Sam Shivute stated that the astronomical figure is expected to increase even further as investigations are still ongoing.
About 409 taxpayers from 17 institutions have so far been identified as recipients of fraudulently claimed income tax refunds.
Shivute said by 28 February 2022, 43 166 natural persons were registered as provisional taxpayers, being a person deriving any amount as income which does not constitute remuneration. From March 2018 to February 2022, only 6 268 of these taxpayers claimed and received tax refunds for the different types of taxes, being worth more than N$950 million.
Of the above stated amount, N$496 million was paid out in the form of income tax refunds to 4 746 taxpayers.
“This group of taxpayers remains the
subject of the continuing investigation, which in some instances has been concluded and criminal cases have been lodged with the Namibian Police,” Shivute stated.
The commissioner added that evidence gathered also points to the involvement of
about five NamRA staff members who were involved in the processing of the dubious refunds, while there are others who also benefited and are still under investigation.
Of the five, one staff member already resigned, one is on suspension while a third retired. The two other staff members are still employed by the revenue agency, pending investigations.
Shivute explained that the modus operandi
of the scam was for several individual taxpayers’ profiles to be changed, mostly with the assistance of taxpayer representatives and/or bookkeepers, to provisional taxpayers’ status. These profile changes are associated with taxpayers earning income from additional sources such as farming, which is separate from their regular employment.
Then, subsequently, revised returns would be submitted with inflated deductions,
resulting in tax refunds becoming due to the affected taxpayer.
The NamRA chief said the scam originated long before the revenue agency came into existence, and that the illegal doings came to the fore as activities escalated in 2019, causing NamRA to commence with an investigation.
The taxpayers involved apparently fall within the N$250 000 to N$350 000 income bracket, and are involved in different sectors.
The commissioner thus encouraged those who might have unwittingly benefited from
the scam to engage NamRA offices countrywide to aid the investigation in exposing the true masterminds of the scam.
As an immediate intervention, the agency said it will invoke Section 91 of the Income Tax Act 1981 to recover paid refunds where the facts show no basis for such claims, by appointing financial institutions and employers as agents to collect such amounts.
As a mitigating measure, the processing of all tax refund claims for individual provisional taxpayers were halted with immediate effect following the detection of the scam until 30 June 2022.
This moratorium was lifted for taxpayers not part of the target group, and hence such claims were processed on Friday. The payment suspension was intended to determine the full extent of the scam and its real impact on the public purse.