Large Taxpayer Office to open on Monday

WINDHOEK: The long-awaited Large Taxpayer Office (LTO) which will manage large taxpayers in Namibia, is set to open on Monday.

This was announced by Finance Minister Saara Kuugongelwa-Amadhila in a media statement issued on Wednesday.

The LTO is a new central tax office based in the capital under the Ministry of Finance.

It will be responsible for carrying out all administrative and compliance functions pertaining to large taxpayers, while small and medium taxpayers will be managed through regional tax offices.

These functions include taxpayer services, returns and payments’ processing, compliance enforcement as well as audit and debt management, which will be rolled-out to other offices later.

Kuugongelwa-Amadhila said the LTO will be used to pilot modernisation efforts such as fully-fledged self-assessment, electronic filing and client relationship management.

The LTO will have a dedicated unit for mining taxation, and develop capacity in other specialised industries, including technical capacity in the fields of transfer-pricing and thin capitalisation.

Transfer-pricing refers to a profit allocation method used to attribute a multinational corporation’s net profit (or loss) before tax to countries where it does business, while a company is said to be thinly-capitalised when its capital is made up of a greater proportion of debt than equity.

The minister noted that in most countries, large taxpayers, which are usually a small number of taxpayers, contribute not less than 50 per cent of the total tax revenue.

In Namibia, large taxpayers, which number about 560 out of the 500 000 taxpayers, contributed 53 per cent and 55 per cent of the total tax revenue in 2012 and 2013, respectively.

“The segmentation of taxpayers facilitates a focused approach on a specific group of taxpayers, and enables the administration to effectively serve the taxpayers and develop specialised skills and competencies amongst staff,” Kuugongelwa-Amadhila said.

Her ministry has been pursuing reforms of tax policy and tax administration with the objective of enhancing tax laws and improving efficiency in the administration of taxes.

Key reforms included the review of the Tax Policy, the modernisation of the tax system through the introduction of an Integrated Management Office to coordinate and oversee the implementation of various projects and the restructuring of Inland Revenue to allow for, amongst others, taxpayers’ segmentation and the establishment of specialised offices, based on functional taxpayer services.

Government has furthermore decided to transform the tax office into a semi-autonomous revenue agency in an effort to create opportunities to harness specialised skills and leverage on new technology.

On 30 January 2014, Kuugongelwa-Amadhila introduced the nine members of the task team on the establishment of a semi-autonomous revenue agency to assist with tax administration in Namibia.

The task team consists of the Deputy Permanent Secretary in the Ministry of Finance, I-Ben Nashandi (as chairperson); the technical advisor at the Bank of Namibia (BoN) Emile van Zyl; Head of the Tax Reform Project in the Ministry of Finance, Patty Karuaihe-Martin; the Deputy Director in the Ministry of Finance Penda Ithindi; and senior economist at the BoN, Bernie Zaaruka.

Other members are BoN economist Ntwala Mwilima; economist in the Ministry of Finance Salome Idhenga; control taxation officer in the Ministry of Finance Thandi Hambira; and deputy director in the Ministry of Finance, Nadine du Preez.