Closer look at VAT amendments

THE Minister of Finance, Saara Kuugongelwa-Amadhila, introduced the Value Added Tax Amendment Bill to Parliament on 22 June 2004.

The following amendments to the bill have been proposed. The amendments will be effective once the Act is published in the Government Gazette, unless otherwise stated.Patty Karuaihe-Martin, Partner within the Tax and Advisory Services Division at PricewaterhouseCoopers stated that with the introduction of VAT in Namibia, the principal Act only allowed a period of 24 months before all record keeping had to be kept in Namibia.The amendment to the Act now allows for the record keeping of certain documents to be outside Namibia for an indefinite period, provided certain requirements are met as stated in the act.According to Patty this comes as great relieve for most multinational companies doing business in Namibia.Namibia has appointed VAT Refund Administrators as from 1 September 2003 and an amendment to the VAT Act has been introduced empowering the Commissioner to allow agents to perform refunds on their behalf.The supply of goods designed, manufactured, adjusted or modified solely as aids or devices (excluding any vehicle other than an invalid carriage), as well as repair or maintenance services in respect of such aids or devices to any physically handicapped person who is blind, deaf, crippled or a chronic invalid in respect of such aids or devices will be zero-rated.Modification or adjustment services in respect of any vehicle intended for the use by any physically handicapped person would also be zero-rated.An import of goods (excluding a vehicle other than an invalid carriage) by any non-registered person designed, manufactured, adjusted or modified solely as aids to any handicapped person who is blind, deaf, crippled or a chronic invalid will be exempt from the date of publication of the proposed amendment in the Gazette.The import of goods which are donated to the State or any other body and which donation was approved by the Commissioner in consultation with the Minister of Finance will also be exempt from date of publication of the amendment in the Gazette.These services will be exempt of VAT.However, clarity on the definition of public transport is still an open question, which must be resolved.PricewaterhouseCoopers has been extensively involved in proposing amendments to the VAT Act in the Agriculture sector.The sale of livestock will be zero- rated.The indirect export of livestock as well as the sale of livestock to communal farmers will therefore all be zero- rated.Non-compliance to the VAT Act can be a very expensive mistake and urged all taxpayers to comply stating that where interest has been levied on penalties and such interest has been paid, no refund of such interest will be made in future where the penalties have been reversed.It is therefore important to review interest payments carefully before payment is made.Penalties will in future be levied at 10% per month from the first day after the due date.Previously penalties were phased in from 2.5% to 10% over a period of time.This article is provided by PricewaterhouseCoopers for information only.The amendments will be effective once the Act is published in the Government Gazette, unless otherwise stated.Patty Karuaihe-Martin, Partner within the Tax and Advisory Services Division at PricewaterhouseCoopers stated that with the introduction of VAT in Namibia, the principal Act only allowed a period of 24 months before all record keeping had to be kept in Namibia.The amendment to the Act now allows for the record keeping of certain documents to be outside Namibia for an indefinite period, provided certain requirements are met as stated in the act.According to Patty this comes as great relieve for most multinational companies doing business in Namibia.Namibia has appointed VAT Refund Administrators as from 1 September 2003 and an amendment to the VAT Act has been introduced empowering the Commissioner to allow agents to perform refunds on their behalf.The supply of goods designed, manufactured, adjusted or modified solely as aids or devices (excluding any vehicle other than an invalid carriage), as well as repair or maintenance services in respect of such aids or devices to any physically handicapped person who is blind, deaf, crippled or a chronic invalid in respect of such aids or devices will be zero-rated.Modification or adjustment services in respect of any vehicle intended for the use by any physically handicapped person would also be zero-rated.An import of goods (excluding a vehicle other than an invalid carriage) by any non-registered person designed, manufactured, adjusted or modified solely as aids to any handicapped person who is blind, deaf, crippled or a chronic invalid will be exempt from the date of publication of the proposed amendment in the Gazette.The import of goods which are donated to the State or any other body and which donation was approved by the Commissioner in consultation with the Minister of Finance will also be exempt from date of publication of the amendment in the Gazette.These services will be exempt of VAT.However, clarity on the definition of public transport is still an open question, which must be resolved. PricewaterhouseCoopers has been extensively involved in proposing amendments to the VAT Act in the Agriculture sector.The sale of livestock will be zero- rated.The indirect export of livestock as well as the sale of livestock to communal farmers will therefore all be zero- rated.Non-compliance to the VAT Act can be a very expensive mistake and urged all taxpayers to comply stating that where interest has been levied on penalties and such interest has been paid, no refund of such interest will be made in future where the penalties have been reversed.It is therefore important to review interest payments carefully before payment is made.Penalties will in future be levied at 10% per month from the first day after the due date.Previously penalties were phased in from 2.5% to 10% over a period of time.This article is provided by PricewaterhouseCoopers for information only.