Windhoek
The Revenue Agency, which was approved by Cabinet in September 2013, will become operational in the next budget year. In line with the Cabinet decision, the agency will enjoy a semi-autonomous status, be funded by the government and accountable to the minister of finance.
This was confirmed by Finance Minister Calle Schlettwein on Friday during a meeting with his staff. He said “the agency we have been calling and waiting for is coming.”
The main objective of establishing the Revenue Agency is to improve operational efficiency in revenue administration through scaling-up staff skills and productivity as well as offering a platform for the ongoing tax reforms to enable the Namibian tax system to keep abreast with complexities and changes in the tax and business environment.
The mandate of the agency is the assessment and collection of taxes and duties and the deposit of collected revenue into the state account.
In addition, the agency will be responsible for the enforcement of the applicable provisions of revenue laws and the provision of customs and excise services.
The policy function remains with the Ministry of Finance (tax policy, customs and excise policy, research and economic appraisal of tax and customs and excise policy), while the agency will be under the policy direction and supervision of the minister.
The minister shall appoint the board of directors and its chairperson for a term of three years. The board will assist the minister to ensure the performance of the agency is optimal through monitoring and enforcement of performance targets and adherence to corporate ethics.
The minister will also appoint the commissioner who will be the chief executive officer responsible for coordinating and managing the daily activities of the agency.
The agency’s operations will be funded through government budget appropriations, based on costed and prioritised programmes. The annual report with audited financial statements is to be annually tabled in parliament.
In exercising its operational autonomy, the agency will adopt its own internal policies separate from those of the public service to achieve efficiency and effectiveness of service delivery. This includes, among others, financial, IT, procurement, risk management and human resources policies to enable the agency to be able to attract and retain critical skills.
“As I have stated, the tax policy function will remain with the ministry. A new tax policy unit will be established in the ministry in order to strengthen the function of tax and customs and excise policy formulation, and economic appraisal of such policies,” said Schlettwein.
While the Namibian economy has performed relatively well in the past years, in part because of sustained budgetary support to economic activities, growth is however slowing down significantly, from 5.3 percent recorded last year to about 4 percent, or even lower, this year. The slowdown in economic activity is due to external as well as domestic factors that impact the rather small and open local economy.
“In this environment, therefore, domestic resources mobilisation in the form of enhanced revenue collection and tax administrative reforms are critical to finance the country’s development agenda. Our results-based performance is critical to achieve and surpass the budgeted revenue collection targets that we have set for ourselves. This is possible only if we abandon the business-as-usual approach, become increasingly proactive, innovative and visible in revenue collection and provision of taxpayer services,” said Schlettwein.
He added that with this mind-set and new framework of conducting duties, the Internal Revenue Department (IRD) and customs and excise staff are expected to conduct targeted field operations to ensure that all juristic persons are registered for tax purposes,
and ensure that all entities who should pay tax are indeed paying taxes.
“For all fairness of the tax system, this is an obligation for which each of our regional offices and each IRD and customs and excise manager should hit the ground running, and monitor progress on a weekly basis, leverage third party information to plug tax avoidance and tax evasion opportunities, as well as strengthen tax assessment activity. And we should implement the new tax proposals that were approved and are due for implementation, lest we continue to forego revenue from these streams. This is especially in regard to the CO2 emission tax and export levies,” Schlettwein stated.
Following the Cabinet decision in September 2013 to establish a Revenue Agency, the minister of finance constituted a task team in February 2014 to assist in undertaking the required measures to bring about the establishment of the Revenue Agency over a 36-month calendar.
The ministry, with the assistance of the task team, completed the policy framework that underpins and defines the institutional and governance structure of the agency, including transitional provisions. The provisions of the policy framework formed the foundation for drafting the establishing act of the envisaged Revenue Agency. The policy framework was approved by Cabinet in 2015.
The finance ministry also completed the Draft Layman’s Bill for the Revenue Agency, which was approved by Cabinet in March 2016 and cleared by the Cabinet Committee on Legislation on August 04, 2016.
The Bill will be submitted for legal scrutiny, clearance and tabling in parliament during the September/October 2016 session.
Meanwhile, the task team is continuing with activities in the Transitional Plan in order to ensure seamless transition, once the act comes into force.
“To date, we have received three technical missions – one from the Macroeconomic and Financial Management Institute of Eastern and Southern Africa (MEFMI) and two from the International Monetary Fund (IMF) through AFRITAC-South in Mauritius. These missions worked with the task team in conducting interviews with key stakeholders on the operational readiness of the Revenue Agency and to provide guidance on the next steps,” Schlettwein explained. He added that his ministry intends tapping into further assistance from other stakeholders and the donor community to accelerate the transitional work, including with the National Treasury of South Africa and the South African Revenue Service.
“We will strengthen the composition and specialisation of the task team with personnel from within and outside the ministry to accelerate the finalisation of the deliverables and the consultation with key stakeholders, such as the regional staff of IRD and customs and excise as well as the labour unions,” Schlettwein added.