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Institute of Chartered Accountants says Namibia not a ‘Tax haven’

Institute of Chartered Accountants says Namibia not a ‘Tax haven’

The government and economic analysts have come out strongly against the European Union for blacklisting Namibia as a non-cooperative jurisdictions on tax, which could result in loss of funding from the union.

The Institute of Chartered Accountants of Namibia (ICAN), said the blacklisting is unfair as Namibia is not a tax haven.

“Tax havens are globally recognised as countries that offer offshore tax structures and arrangements aimed at attracting profits without real underlying economic substance and by offering very low income and transactions tax rates. Namibia’s tax framework is based on taxing Namibian source income to which a relatively high corporate income tax rate is applied. Non-mining companies are taxed at 32%, hard rock mining companies at 37.5% and diamond mining companies are taxed at 55%,” Koos du Toit, Chief Executive Officer of ICAN said.

Du Toit added that the only tax incentives Namibia offers are limited to manufacturing companies who establish bona-fide operations in Namibia and are eligible for additional tax allowances and a reduced corporate tax rate for 10 years.

Mainly, the EU appears to have a concern that Namibia does not apply the minimum BEPS standards. However, added Du Toit, Namibia has specific domestic legislation which determines the taxable income of persons in respect of international transactions.

“This legislation attempts to ensure Namibia receives its fair share of income tax on cross border transactions where Namibian based businesses transact with related parties that are resident outside Namibia,” he added.

Namibia is also a member of the Common Monetary Area and exchange control is administered by the Bank of Namibia for the movement of funds to or from Namibia. The Bank of Namibia reviews applications from businesses who want to transfer funds to and from Namibia.

“ICAN holds the view that Namibia offers no offshore incentives or arrangements attracting profits without real economic substance whatsoever and that there is no basis to justify Namibia’s inclusion as a perceived tax haven,” Du Toit said.

On his part, the Minister of Finance, Calle Schlettwein, called upon the EU to correct what already has caused serious harm to Namibia’s reputation.

“Unfair actions such as this against small and vulnerable economies harm our people, diminish our chances to prosper and perpetuate inequality. This action by the EU authorities is against the very spirit of our cultures and cooperation efforts,” Schlettwein said.


 

 

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