‘Tax compliance not negotiable’

Staff reporter – The good relations between Namibia and China are being compromised by “only a few” who operate outside the tax laws locally, according to finance minister Calle Schlettwein.Attending a discussion on tax administration, compliance and related matters hosted by the Embassy of the People’s Republic of China on Monday, Schlettwein said his ministry has evidence that some businesses operate on a cash basis and that is done with the deliberate aim not to pay tax. “This occurs to such an extent that such businesses do not maintain proper bookkeeping and some do not render sales receipts to their clients. This would be tantamount to tax evasion, an illegal practice therefore,” he said.The ministry also has evidence that “some businesses are in partnership with Namibians and that through such partnerships tax obligations are seriously neglected, sometimes even fraudulently so”.Schlettwein told China’s ambassador to Namibia, Zhang Yiming: “We are not living in a perfect world. I am equally aware of weaknesses in our tax administration and possible wrong doing, suspected corruption by our own officials.”MultinationalsThe finance ministry is furthermore aware that multinational companies misused their international operations to avoid tax in some tax jurisdictions and shift their profits - and with that their tax liabilities - into tax havens, he said. According to the minister, this is done through transfer pricing, profit shifting, thin capitalisation, and several other evasion and avoidance schemes. Double tax avoidance arrangements between countries are often the basis for such arrangements, he said.“The recently leaked ‘Paradise Papers’, but also the ‘Panama Papers’ and our own law suit against customs fraud are examples,” Schlettwein said.“We do understand that paying taxes is an unwanted expense for most, if not all businesses and we are therefore not surprised to find the practices of tax avoidance and tax evasion both being wide spread in Namibia,” he said.EconomyThe importance of taxation in economic development cannot be overemphasised, Schlettwein continued. “Our country faces developmental challenges of unemployment, poverty and income inequality. Sufficient tax revenue allows Government to ensure that these challenges are addressed through the budgetary allocation to economic and social sectors such as, education, infrastructure development and health sector. We can therefore not compromise on the collection of taxes.”Principles of equal treatment and fairness, whether individual or corporate tax payer, is anchored in the tax laws, he said. “Compliance with the tax laws are not negotiable.”Schlettwein said Namibia’s relations with China “have been excellent and we appreciate the input of Chinese businesses into the Namibian economy”. He appealed to the Chinese business community not cooperate with officials who solicit bribes, but to report them. “This is important for your integrity and your own interest and for our mutual benefit,” Schlettwein said.

‘Tax compliance not negotiable’

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Republikein 2025-06-18

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