Wednesday 21 April 2021
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Civil society opposes new tax regime

Extensive changes within the domestic tax system that has captured civic organisations into the tax net are expected to increase State revenues, however non-governmental organisations in the country are not in support of the changes.
Civic organisations such as churches, NGOs and several other non-profit making entities have been moonlighting for years without any need to pay taxes despite some of them venturing into commercial activities from which they have derived huge tax-free incomes.
Namibian NGOs are already faced with sustainability challenges considering the ongoing economic recession in the country. Unsurprisingly, the proposal by the Finance Minister, Calle Schlettwein to tax commercial activities of NGOs during the reading of the 2018/2019 budget speech in parliament was not received well by civil society.
Toni Hancox, Director of the Legal Assistance Centre (LAC) vehemently critiquedthe proposal.
“I see that the budget includes a motion that income derived from commercial activities of NGOs
should be taxed under normal corporate tax rates. In my view any funds obtained (whether from commercial activities or not) which are utilized purely for the objectives of the NGO, should not be taxed.  NGOs are not profit-making entities,” she said.
Hancox said NGOs in Namibia play a vital part in providing services, some which should actually be provided by government.
“NGOs are already struggling to source sufficient funds in this difficult economic climate and this places a further burden on them and may result in them not being able to sustain themselves.  Ultimately this will be to the detriment of all those who rely on NGOs for assistance in any number of ways. We would urge parliament not to approve such motion which has the potential to further stifle NGO activity,” she added.
A Deloitte report on the budget summarised that the proposed tax on commercial activities of charitable, religious and educational institutions requires careful consideration before implementing.
According to the report “Currently all income earned by registered religious, charitable and educational organisations of a pubic character whether or not supported by government grants are exempt from tax. The proposal will do away with the exemption on the income from commercial activities of such institutions.
Hence careful consideration should be given to the impact this could have on institutions that are supporting government efforts through education, health care etc. where commercial profits are reinvested to achieve objectives of these institutions”.
Women Action for Development (WAD) Director, Salatiel Shinedima equally critiqued the proposal by explaining that NGOs or Civil Society complements governments work. “To tax our commercial activities is taking away from surplus that could have been used for another year or project. This is because at the end of the day, we are not businesses that are profit motivated but there are incidents when surplus sums are left over after expenses but that does not mean we made a profit so now we need to be taxed” he argued.
According to Shinedima, WAD has been raising funds from external donors over the years. However due to the classification of Namibia as an upper middle-income country, many donors have withdrawn from the country. “This classification is truly not representative of the reality on the ground. As it assumes that Namibia is generating sufficient income to cater for its civil society activities. Nonetheless we now have to start looking within the country to solve our own social issues” he said.
Shinedima urged the private sector in the country to become intentional with strategically partnering with NGOs. “They should be willing to come on board for even 5-year agreements to ensure that we retain an active civil society. I am not saying the private sector is not partnering with us, but it could be more strategic to ensure sustainability” he appealed.

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