Gold mines bleed state of millions

Namra fails to conduct thorough tax audits, report says

THE government is potentially losing millions in uncollected revenue from the gold mining sector as a result of poor tax audits or potential tax avoidance tactics from gold mines.

An audit conducted by the auditor general on gold mines in Namibia for the 2020, 2021 and 2022 calendar years shows while private mining companies report record-breaking production and consistent revenue, corporate tax paid has declined.

Auditor general Junias Kandjeke says gold mining companies’ turnover remained constant at about N$6 billion per year for the 2020, 2021 and 2022 calendar years.

Additionally, the export levy and royalties increased by 7% and 7%, respectively, from 2020 to 2022.

Despite these increases Kandjeke says the audit found that corporate tax paid decreased by 47.7% from N$807 million in 2020 to N$422 million during the same period.

“This reduction raised concerns about the efficiency and effectiveness in collecting tax revenue due to the state and indicated potential tax avoidance or under-reporting,” he says.

THE TAXMAN

The audit also identifies a lack of audits on gold mines by the Namibia Revenue Agency (Namra).

It refers to governance and operational gaps, citing the “absence of outputs/targets in the Ministry of Industries, Mines and Energy’s strategic plan and subsequent annual plans about the accurate collection of royalties.

“There were no tax audits on gold mines conducted by Namra, and there is a lack of reporting on related party transactions for gold mines.”

Kandjeke says Namra has failed to perform transfer pricing and thin capitalisation audits, which are critical for detecting illegal financial outflows and ensuring that transactions between related parties reflect fair market pricing

Discrepancies were recorded between the export data on the Namra Asycuda system and the mines ministry’s endorsed export permits.
The two systems did not reconcile.

The auditors say there were inconsistencies in how gold prices per ounce were determined on export permits, which could lead to misstated transaction values and inaccurate revenue collection.

MINISTRY ISSUES

Kandjeke says another area of concern was that the directorate of mines within the ministry could not provide evidence of risk identification for gold mines as required by its own 2019 risk framework.

This absence of risk management impairs the state’s ability to address issues unique to the gold industry, potentially leading to under-reported production and lost revenue.

The ministry has failed to implement the standard operating procedure for verifying monthly gold production, the report says.

Kandjeke says the ministry did not use the required reconciliation formula and instead relied on summary reports from mining companies without reviewing underlying evidence like stock records or production logs.

“There are inadequate controls to ensure the production volumes of gold mines are accurate and complete, and there is ineffective coordination between relevant stakeholders. This has led to a risk of fraud and corruption in relation to accurate and complete production volumes, which affect revenue collection,” he says.

MINES’ PERFORMANCE

Chamber of Mines of Namibia annual reports show that gold mining companies reported a combined turnover of about N$20 billion from 2020 to 2022.

This is a contribution of about 16% to the overall mining industry’s turnover.

The sector also accounted for a combined 4 335 direct and indirect jobs in 2020 and 2021.

The audit shows income from royalties increased from about N$220 million in 2020 to N$234 million in 2022.

It further records that “gold mining companies paid N$205.4 million export levies during the period under review,” contributing 24% of total export levies paid by the mining industry.

Namibia’s two operational gold mines are QKR Navachab Gold Mine and Otjikoto Gold Mine, operated by B2Gold.

The audit concluded that “there is a need for the government, through the Ministry of Industries, Mines and Energy and the Namibia Revenue Agency to strengthen their revenue collection initiatives to ensure that the state benefits maximally from the mining resources.”

These findings come at a time when Namibia’s gold output is reaching historic heights.

QKR Navachab, the country’s oldest open-pit mine, recorded the highest production in its history in 2023, with output increasing by 37% to 3 312kg of gold bullion.

Meanwhile, B2Gold’s Otjikoto Mine produced 199 000 ounces of gold in 2025.

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