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Friday 18 October 2019
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Doing business in Namibia

We recently read about the latest World Bank ratings that measure various countries in terms of its Ease-to-Do-Business. Namibia slipped 4 places in these rankings and slipped from 164th to 170th in the rankings of Ease-of-Starting-a-Business.
 
Dr Quinton van Rooyen of Trustco Group started an interesting discussion on Facebook focussing on the principle that if we want to grow Namibia we will need to make is easier for people to start new businesses and to become economically active. The comments made on this discussion is very interesting and also very diverse.
 
I agree with the concerns raised by Dr van Rooyen regarding the ease of starting a business in Namibia. I am however of the opinion that continuing to do business in Namibia needs some urgent attention as well.
 
We have seen various investment promotion activities organised by Government towards the end of 2016. We note the strong drive in obtaining foreign investments and Government’s drive to ensure economic growth.
 
We are however concerned that once the investments are made and once the business have been started the process of assisting business to continue operating in Namibia does not get the same attention.
 
Let us use a few basic examples in order to try and explain our concerns:
• Are we really serious about corruption? Why are we focussing on claims for S&T allowances and driving around in Government vehicle over weekends and not on over-spending on infrastructure projects and tenders being allocated? Are we really focussing the attention of the Anti-Corruption Commission on the material matters? Not that the other matters are not wrong, not at all, but those can very easily be investigated by the particular Ministry internally and addressed. We read about the allegations against parties that receive tenders in the newspapers, but we never read about the convictions.
• Why does the Competition Commission of Namibia use threshold amounts of N$30 million and N$15 million as the basis of their involvement in transactions in Namibia? Basic property purchase transactions are not exempted from Competition Commission involvement, which makes the process of doing business in Namibia just longer and less effective. What would be anti-competitive about a sale of a property between two parties? Why are we focussing on small business mergers and business activity which only occupies time and increases the cost of doing business in Namibia? Should we not focus on the real anti-competitive actions of business in Namibia and investigate those? We know that the application process generates income for the Commission and the investigations are not a given source of income, but is that not supposed to be the purpose of the Commission?
• Why must taxpayers comply with various rules and deadlines in the tax legislation in Namibia, but the same is not applicable to the Receiver of Revenue. Why are income tax assessments not regularly issued, printed and forwarded to taxpayers, as per the requirements of the law? If one wants to know what your income tax status is, you need to visit the offices of the Receiver and ask for printed assessments. If the assessment was processed, but not forwarded to you as taxpayer, and you need to file an objection against the objection, you as taxpayer need to ask for condonation from the Receiver for submitting an objection after the objection period, but you never knew you were assessed?
• Why does our legislation not provide for prescription of income tax assessments? It is a basic principle in many countries that after a certain period an assessment prescribes and a taxpayer can accept that the assessment is closed and finalised, unless the Receiver can prove fraud. Business in Namibia can never be sure that everything is finalised since the Receiver can always open previous assessments for investigation and then it costs the taxpayer vast amounts of money and time looking for old documents. Business needs surety in policy and procedure to grow and expand and this process in Namibia does not provide for surety and clarity.
• Why must taxpayers spend money and time on ensuring that their tax records are updated and complete? If one has proof that documents have been submitted to the offices of the Receiver then the responsibility to use due care and process to ensure that the documents gets processed correctly and timeously lies with the Receiver and not the taxpayer. When will accountability be enforced in this process and when will the legislation start assisting the taxpayer in ensuring accountability?
• We need to ensure that our legislative changes take place quickly and effectively. How many budget speech proposals have been made over the past couple of years that have yet to be included in legislation? We have seen some changes last year, but many are still outstanding. Business needs to know what the legal framework is that they need to comply with and if changes are proposed but left to chance there are no policy surety available to business.
• We need good quality legislative drafting and wording. Some of our current legislative frameworks are old and sometimes outdated. Changes to these pieces of legislation have in some instances started, but the time that it takes to finalise is concerning. The wording of certain pieces of legislation drafted recently was also subject to various criticism and challenges. Why don’t we use a public comment system for new pieces of legislation before its get promulgated?
• We need access to information on a timely basis in Namibia. Government Gazette’s were previously available on the website www.parliament.gov.na. The website has however not been updated for months although Government Gazette’s have been issued.
• Why are the Income Tax Act and the Value Added Tax Act not available on the website of the Ministry of Finance? These are public documents and should be accessible to business to ensure compliance. One should not have to pay LexisNexis for access to Government Legislation.
 
The question may arise that is it fair and effective to be critical? Should one be negative about all these things? The answer is that we will need to be realistic and open to realise which areas need improvement.
 
We need to be conscious of the fact that the whole world are interested in investment and economic growth. If we want to compete we need to ensure that we do not only compete in getting the investment, but also compete in keeping the investment, both foreign and local.
 
Hennie Gous
hennie@comerciocap.com



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