Govt moots lower SME tax

By Hilary Mare

NECESSARY research and investigation will be made on the possibility of introducing a lower tax regime for small businesses as a means of encouraging entrepreneurship and business growth, Finance Minister Calle Schlettwein has said.

In his mid-year budget review policy statement presented in Parliament this week, Schlettwein also highlighted that research has to be concluded within one year to determine the impact on introducing several tax law amendments aimed at improving revenues from the extraction sectors.

“Tax policy and effective tax administration reforms are central to efficient domestic resources mobilization that is needed to finance sustainable development activities. In the context of a subdued economic environment, it is not the policy intention for general tax rate increases.

Such relief would encourage economic agents to produce and invest,” he said.

He further noted that as part of the FY2018/19 Budget and the current budget, specific tax policy proposals were proposed and a consultation process was done in respect of the proposals.

“As such amendments to the Income Tax Act, Value Added Tax Act and Export Levy Act are proposed to implement the proposals completed during the consultation process.

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These entail, among others the taxation of trusts and certain commercial entities, eliminating base eroding tax holidays and preferential tax rates accorded only to some manufacturers and exporters of manufactured goods for a more uniform treatment of taxpayers through the establishment of the Special Economic Zone, Eliminating certain base eroding exemptions and VAT zero-rating of certain goods.”

In addition, proposals are made for Namibia to join international fora for exchange of information for tax purposes and ratify the OECD Convention on Mutual Administrative Assistance as a means of collaboration in international tax matters.

Calle went on to say that the amendments to the Export Levy Act are designed to expand the levy base to cover additional products as a means to incentivize value addition locally adding that the impact of tax policies aimed at improving progressiveness need to be studied and recommendations made within one year.

“The key lever for efficiency of tax collection, trade facilitation and border protection lies in efficient tax and customs and excise administration.

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In this context, the launch of the Namibia Revenue Agency (NamRA) is rescheduled for March 2020, to allow for the finalization of the transitional processes and staff recruitment.

The operational strategy will be to finalize key milestones for the transition, leverage NamRA reforms and modernize the core services of domestic tax and customs and excise,” he said.

Schlettwein presented a budget review and the medium-term budget policy statement which placed a high premium on achieving economic recovery, sustainable growth and strengthening fiscal sustainability as the necessary conditions for economic progress and social transformation.

The review framework comprised three distinct policy actions which were first, to free up a resource envelope for re-allocation to alternative priority programmes within the appropriated expenditure ceiling enabling optimal provision of services in areas where shortfalls are anticipated and to achieve enhanced development outcomes, second, to ring-fence expenditure allocations to capital and development programmes as a way of enhancing growth consistent with sustainable fiscal policy, and third, to unveil integrated economic recovery and growth stimulus intervention measures to support short-run economic recovery and sustainable economic growth in the medium and the long-term.