Trade Verification System to curb ‘N$33 billion tax offences’

Namibia’s first trade verification system (TVS) is expected to reduce potential tax-related offences estimated at N$33 billion, the Ministry of Finance and Public Enterprises says.

The TVS, a collaboration between the Bank of Namibia (BoN) and the Namibia Revenue Agency (Namra), was officially launched in Windhoek yesterday.

Deputy executive director of economic policy in the ministry Oscar Capelao said the TVS is anticipated to address misconduct among importers, reduce fraudulent activities and enhance tax compliance.

“Namra’s commissioner indicated that tax compliance in Namibia was at 57%, and the TVS is just one of the tools that we will use to ensure there is improved decision-making due to timely data,” he said.

Capelao said the system is expected to reduce potential tax-related offences estimated at N$33 billion, as reported by the Financial Intelligence Centre.

“This system comes with a lot of benefits for the state, including a significant reduction in fraudulent VAT refund claims and improved taxpayer services,” he said.

Capelao said the system supports legislation such as the Currency and Exchanges Act, Exchange Control Regulations, Financial Intelligence Act, Customs and Excise Act amendments and VAT Act amendments.

Also speaking at the event, BoN deputy governor Leonie Dunn said as part of global trade, Namibia interacts with over 230 countries and territories annually and the TVS helps combat issues like trade-based money laundering and tax evasion, ensuring compliance with Namibia’s laws.

“The TVS benefits import/export businesses by promoting seamless and paperless processes.

It integrates data from Namibia Revenue Agency and Bank of Namibia systems, allowing real-time monitoring of financial transactions related to trade,” said Dunn.

TVS ensures greater operational efficiency, precision and control, particularly for commercial banks and strengthens anti-money laundering/combating the financing of terrorism/countering the proliferation of financing.

Dunn added that the system is not a public platform, but rather an intelligence tool.

“TVS is not a public platform; it is an intelligence gathering tool fed by Namra’s Automated System for Customs Data for the flow of goods and the BoN’s cross-border payment recording system for the flow of funds,” she said.

According to Dunn, this integration allows for instantaneous reconciliation of the movement of goods with the flow of funds, enabling timely intervention for any flagged anomalies.

She further said the nearest country to have a similar system is South Africa, which introduced it in 2011 and which only matches imports declared to payments made for such imports.

Dunn added that the system plays a pivotal role when it comes to Namibia’s affiliation with the Southern African Customs Union (Sacu).

“Since 2017, the country has received over N$110 billion based on the revenue sharing formula, a value greatly influenced by the accuracy of import and export declaration.” Without the accuracy of these declarations, less taxes risk being levied, impacting proceeds from Sacu and potentially hindering the economic and social development of Namibia,” added Dunn.

Once fully integrated, the system is poised to facilitate seamless and paperless trading processes.

“Entities such as commercial banks, clearing agents, Namra and BoN will gain access to the same documentation related to specific exports or imports, enhancing collaboration and efficiency,” she said.

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