Namibia should limit taxes – PWC

In order to manage ease of paying taxes, it is important for government to limit the number of taxes, tax payments and other administrative processes, Tax Partner at PriceWaterhouse Coopers (PWC), Stefan Hugo told the Economist.
“As echoed by a number of speakers during the recent ‘Invest in Namibia’ conference, it is crucial for a small economy like Namibia to go the extra mile on ease of doing business, for it to remain competitive and for the economy to grow optimally. I hope to see more simplification and a reduced tax administrative burden in future Namibian tax reforms,” Hugo said.
This comes after the Minister of Finance, Calle Schlettwein disclosed in the National Assembly that the ministry has segmented taxpayers into various categories, to better manage and administer the provision of taxpayer services.
As such, the large taxpayers have been resorted under the Large Taxpayers Office (LTO), which is receiving technical assistance from Finland.
According to Hugo, the general feedback from taxpayers who deal with the LTO has been positive, with companies indicating that they are finding it easier to keep their tax affairs up to date.
The ministry has set an objective to improve enforcement and tax collections under the existing tax legislation, after which it will consider new tax legislation to broaden and deepen the Namibian tax base. Hugo applauded the finance ministry for putting its focus first on improving collections before considering new legislation. However, he said it is important that when this filters through to operational levels at Inland Revenue, the focus should be on collecting taxes from people who were not paying their taxes before and not only by increasing aggression on already compliant taxpayers.
“As taxpayers our concern always is whether the country is getting sufficient value for our money paid in taxes. Although spending is not entirely in the Minister of Finance’s hands, the revisions to spending budgets is an important start to this. One should compliment the Finance Minister for taking these tough decisions,” Hugo said.
The other form of segmentation of taxpayers is to be enabled with the proposed presumptive tax for the informal sector.
The ministry is of the view that some informal businesses generate income above tax thresholds, but do not pay taxes as they do not have the capacity to deal with the technical nature of tax returns or do not have the resources to pay someone to assist with this. The proposed presumptive tax would therefore be a simplified tax calculation which would make it easier for these informal businesses to calculate and pay taxes.
“Both of these developments represent adjustments to the tax system to better align with taxpayers’ circumstances and make it easier for them to pay taxes. If this is included as a goal with further segmentation of taxpayers it will be a positive development in my view,” Hugo told the Economist.