…Govt reacts to Panama papers
Government says the country’s tax system is not entirely ‘useless’ to curb tax invasion, but conceded that much still needs to be done to curb tax evasion and capital outflows.
Countries all over the world are planning to step up the fight against tax evasion and money laundering as highlighted by the leaked
Panamanian documents that exposed billions of dollars in assets hidden in shell companies around the world.
Namibia is not being left behind, said the finance minister, adding that work still needs to be done “to pluck the holes”.
“We were busy reviewing our tax laws even before the release of the Panama Papers because we are aware of several outflows out of the country. We are following a multi-thronged approach,” said Schlettwein.
Schlettwein also indicated that government teamed up with an international group that deals with tax evasion and capital outflows.
“Despite such cooperation, of course we have to look at our own laws,” he said.
The finance minister also indicated that his ministry will soon proposed wide-ranging tax amendment laws in a bid to curb tax evasion.
“Our tax system is not completely useless, our tax system is reasonably satisfactory. But despite that, the world has changed and people are exploiting tax loopholes that is why we still have significant outflows. We must improve where law enforcement is concerned as well as tighten our system,” he said.
According to the Global Financial Integrity report released last December titled “Illicit Financial Flows from Developing Countries: 2004-2013” from 2004 to 2013, developing countries lost US$7.8 trillion to illicit outflows. The outflows increased at an average inflation-adjusted rate of 6.5% per year over the decade-significantly outpacing GDP growth.
The fraudulent misinvoicing of trade transactions was revealed to be the largest component of illicit financial flows from developing countries in the report, accounting for 83.4 percent of all illicit flows-highlighting that any effort to significantly curtail illicit financial flows must address trade misinvoicing.
The report also stated that The US$1.1 trillion that flowed illicitly out of developing countries in 2013 was greater than the combined total of foreign direct investment (FDI) and net official development assistance (ODA), which these economies received that year.
The Panama Papers that were released earlier this year exposeed how world leaders, celebrities, wealthy Individuals and even governments abuse secrecy jurisdictions of the global shadow financial system.
Following the release of the papers, Global Financial Integrity, a Washington, DC-based research and advisory organization, called on governments to collect and publish beneficial ownership information for accounts to limit future abuses.
Leaked documents from global law firm Mossack Fonseca revealed by the International Consortium of Investigative Journalists (ICIJ) bring to light a global shadow financial system for the rich and powerful of the world for many billions of dollars’ worth of transactions.
More than 11.5 million documents implicate familiar names with abuse of financial secrecy, including UBS, HSBC, Société Générale, Cyprus, Switzerland, and the British Virgin Islands.
The size of the leak is unprecedented, but the tricks Mossack Fonseca has allegedly used for its clients are neither new nor surprising.
Anonymous shell companies and the failure of governments to require lawyers, corporate service companies, or banks to collect beneficial ownership information on clients leave the door wide open for dirty money to flow around the globe virtually unhindered,” said the advisory firm.
Additional reporting by Global Financial Integrity