Vat Penalties

Lethal If Ignored In this series of articles, Cameron Kotze the Tax Partner at Ernst and Young, discusses some topical tax issues for our readers.

The Value-Added Tax Act provides for lethal penalties should you ignore the provisions of the law. If you conduct a taxable activity (the supply of goods or services for an amount in money or money’s worth) and the value of the sales exceeds or you expect it to exceed N$200 000 in a twelve month period, section 15 of the Value-Added Tax Act obliges you to register for value-added tax.You are obliged to register for value-added tax within 21 days of exceeding the registration threshold.The onus is on you to register for this tax.If the value of your sales in a twelve month period is less than N$200 000, you can voluntarily register for value-added tax.Once you are registered on a voluntarily basis, you can apply for deregistration after a period of two years has expired.If you fail to register when required to in terms of the Act, a penalty of twice the amount of output tax on sales from the time when you should have registered until an application for registration is filed can be levied.No input tax is allowed when calculating this penalty.If you fail to submit a value-added tax return or import declaration when it is due, the penalty is N$100 per day for each day the return or import declaration remains outstanding.The penalty is limited to twice the amount of tax that is payable.If you fail to pay the tax when it is due, the penalty is 10 per cent of the tax payable for each month or part of the month the tax remains unpaid.The penalty is limited to the amount of the tax that is payable.In addition to this penalty, there is also interest payable on late payment of the tax unpaid at a rate of 20 per cent per year calculated on the straight line basis.The Value-Added Tax Act requires each person that is liable to register for value-added tax to maintain proper records.All original tax invoices received from suppliers, copies of tax invoices issued to customers and import and export documentation must be kept at an address in Namibia.In addition to this, the Value-Added Tax Act also requires a registered person to keep the accounting records relating to the Namibian trade at an address in Namibia unless the accounting system is linked to a central data base that is maintained outside Namibia at the head office of the Namibian operation.The Receiver of Revenue must be granted access on request within 24 hours of issue such a request.The penalty for failure to comply with the recordkeeping requirement of the Value-Added Tax Act is N$3 000 per day for each day that the taxpayer remains in default of this requirement of the Act.No penalties can be imposed under the provisions of the Value-Added Tax Act if the taxpayer has been convicted of an offence to comply with the provisions of the Value-Added Tax Act.Any intentional non-compliance results in a fine of N$8 000 of two years imprisonment or both.Even if you have a NIL tax return to submit, it must be submitted to avoid the imposition of penalties for failure to comply with the law.Make sure you are aware of the requirements of the Value-Added Tax – it is the right thing to do! Should readers have queries, they are invited to send them to cameron.kotze@za.ey.comIf you conduct a taxable activity (the supply of goods or services for an amount in money or money’s worth) and the value of the sales exceeds or you expect it to exceed N$200 000 in a twelve month period, section 15 of the Value-Added Tax Act obliges you to register for value-added tax.You are obliged to register for value-added tax within 21 days of exceeding the registration threshold.The onus is on you to register for this tax.If the value of your sales in a twelve month period is less than N$200 000, you can voluntarily register for value-added tax.Once you are registered on a voluntarily basis, you can apply for deregistration after a period of two years has expired.If you fail to register when required to in terms of the Act, a penalty of twice the amount of output tax on sales from the time when you should have registered until an application for registration is filed can be levied.No input tax is allowed when calculating this penalty.If you fail to submit a value-added tax return or import declaration when it is due, the penalty is N$100 per day for each day the return or import declaration remains outstanding.The penalty is limited to twice the amount of tax that is payable.If you fail to pay the tax when it is due, the penalty is 10 per cent of the tax payable for each month or part of the month the tax remains unpaid. The penalty is limited to the amount of the tax that is payable.In addition to this penalty, there is also interest payable on late payment of the tax unpaid at a rate of 20 per cent per year calculated on the straight line basis.The Value-Added Tax Act requires each person that is liable to register for value-added tax to maintain proper records.All original tax invoices received from suppliers, copies of tax invoices issued to customers and import and export documentation must be kept at an address in Namibia.In addition to this, the Value-Added Tax Act also requires a registered person to keep the accounting records relating to the Namibian trade at an address in Namibia unless the accounting system is linked to a central data base that is maintained outside Namibia at the head office of the Namibian operation.The Receiver of Revenue must be granted access on request within 24 hours of issue such a request.The penalty for failure to comply with the recordkeeping requirement of the Value-Added Tax Act is N$3 000 per day for each day that the taxpayer remains in default of this requirement of the Act.No penalties can be imposed under the provisions of the Value-Added Tax Act if the taxpayer has been convicted of an offence to comply with the provisions of the Value-Added Tax Act.Any intentional non-compliance results in a fine of N$8 000 of two years imprisonment or both.Even if you have a NIL tax return to submit, it must be submitted to avoid the imposition of penalties for failure to comply with the law.Make sure you are aware of the requirements of the Value-Added Tax – it is the right thing to do! Should readers have queries, they are invited to send them to cameron.kotze@za.ey.com