Export levies by November
The Ministry of Finance will soon publish proposals for the hotly contested export levies, The Economist has established. Minister Saara Kuugongelwa-Amadhila told The Economist Wednesday that her ministry will in the next two months announce proposals of the differentiated export levies despite the concern from the mining industry.
She said: “I am now finalising the process of determining the rates. I will consider the views expressed by the industry and any information gathered during the consultations, including those gathered during the visits to various industries. We should be able to announce some proposals within the next two months or so.” However, she stressed that it is not mandatory for her to accept specific industry views.
“Any view will be considered only on merit, to the extent that it is considered to serve the best interest of the state,” she said.
The minister said while the law vests the power in her to determine the rates, she had, however, conducted wide consultations with the industry, “in the spirit of our government policy of openness and consultations.”
The Chamber of Mines president Mark Dawe recently told The Economist that the profitability of large mining companies is being challenged owing to the “short-sightedness of the Ministry of Finance.” He said the ministry keeps on trying to improve its revenue flow by taxing an industry that is already over-taxed.
“Namibia’s taxation rate for mining companies is one of the highest in the world when viewed as an overall “effective tax” or cost to company, which includes royalties on gross sales, taxes to shareholders and profits tax. The latter, at 37.5% is simply unattractive to investors. When viewed as a total effective taxation rate, government is simply taking too much.
“This is the reason we have had only two new mines starting up in Namibia in the past 20 years. When viewed against the background that some mines have shut down, there is effectively no growth in our industry, despite Namibia being a stable, accountable democracy and a great place to do business,” Dawe said.
However the minister shot back, saying there is no evidence of such claims by the chamber. She said: “They have expressed that view to me but I have seen no evidence of that. This country offers the most lucrative tax incentives ever and that reduces the effective taxes rates significantly. Besides, the levies are very low since they are capped at 2% and were preceded by an impact analysis.”
Early this year, Minister Saara Kuugongelwa–Amadhila said she was confident that by the end of the first quarter of this year, her ministry will approach Parliament with proposals for the different levies that will be charged on the resources affected despite spirited resistance from the Chamber of Mines.
“The chamber is objecting to the 0 to 2% range that we have proposed but we think it is fair and balanced. So we will proceed to determine the rates for the different products despite their objections,” she said at the time