The Minister of Finance, Saara Kuugongelwa Amadhila, has agreed with some critics that the pace of government debt is cause for concern despite maintaining in the national budget speech tabled last week the state is still doing more with less. Responding to presentations by financial experts during a budget breakfast meeting organised by tax and audit firm, Deloitte, the minister emphasised that even international credit rating agencies continue to give
During his presentation at the meeting, Namene Kalili,
Addressing numerous questions on the 2014/2015 budget, Kuugongelwa-Amadhila confirmed that the corporate tax rate for non-mining and non-manufacturing enterprises would reduce further with 1 percent. The current corporate tax rate is 33 percent and will therefore reduce to 32 percent, however the effective date of the change has not yet been finalised.
The rate change also has an impact on the rate of withholding tax on royalties. Once the corporate rate has changed, the withholding tax rate will change to 9.6 percent from the current 9.9 percent. This tax is applicable, for example, where a Namibian entity pays royalties for the use of a trademark registered by a non-Namibian entity.
The minister also confirmed that the export levy and environmental levy bills have been finalised and that these levies would soon be introduced. Export levies will be introduced on the exportat of minerals, fish and the like. The rate for a particular item will depend on the extent of local value-addition for the item.
Environmental levies will include carbon emission tax, levies on incandescent light bulbs and motor vehicle tyres. The minister did not elaborate on the applicable rates and when these levies would be applicable.
Generally, environmental levies are introduced as either a deterrent to pollution, to reduce environmentally harmful behaviour or to raise revenues. Also, in the past the minister mentioned plastic bags and cans. Based on this year's budget speech it seems if levies on these items will not be implemented at this stage.
Also confirmed, was the increase in the Value-Added Tax (VAT) registration threshold. The threshold is currently N$200 000 and has not been increased since the introduction of VAT in 2000. The proposed increase to N$500 000 will result in smaller enterprises not being required to register and will therefore reduce compliance administration and cost, both from a taxpayer and fiscal perspective.
On a tax administration and collection side, the minister said that current efforts to enhance efficiency and broaden the tax base would continue. She also confirmed the establishment of a semi-autonomous revenue collection agency. She said that such an agency should result in an increase in operational efficiency.
The ministry is investigating the introduction of a presumptive tax system for small businesses. This means that a taxpayer's income will be assumed and it will be taxed accordingly. Benefits of such a system are that it is a simple system, it reduces tax administration cost for the taxpayer and it is a stable source of income for government. Some challenges could include legal constraints, a perception of unfairness as expenses, tax losses and individual circumstances of the taxpayer are ignored. We will have to see how the investigation develops.
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