VAT relief for 23 000 SMEs welcomed by business community

Business representatives have welcomed the decision by finance and public enterprises minister Iipumbu Shiimi to exempt small to medium scale enterprises (SMEs) making less than N$1 million annually from paying value-added tax (VAT).

The move is expected to benefit 23 000 SMEs, Shiimi said in his budget speech on Wednesday.

Namibia Chamber of Commerce and Industry (NCCI) president Bisey /Uirab says the decision is a welcome development and will go a long way in allowing local businesses to reinvest their earnings.

“The minister’s decision is important in that it allows local businesses an opportunity to grow and reinvest their earnings in important aspects of growth and employment creation. As the NCCI, we welcome this decision and call on SME businesses to make sure that their tax needs are always in good order.

“An issue of compliance is one that needs to be followed up whenever the need arises. We applaud the government’s decision to create leeway for growth. This will also allow businesses to create employment opportunities for locals,” he says.

Shiimi raised the ceiling for businesses that are liable for paying VAT from the current N$500 000 to N$1 million, while announcing the N$101 billion budget, the country’s largest expenditure plan since independence.

Shiimi’s decision comes among a host of other measures, including lifting the threshold for the low pay-as-you-earn for individuals from N$50 000 to N$100 000.

The move has been lauded for improving the buying power of many Namibians.

“Increasing the threshold will relieve approximately 23 000 SMEs from VAT administration to focus on their core activities , while simultaneously freeing capacity at the Namibia Revenue Agency to focus on large taxpayers,” says Shiimi.

Namibia Investment Promotion and Development Board chief executive Nangula Uaandja says the budget reflects efforts to bolster economic growth by developing a conducive environment for micro, small and medium enterprises to thrive and create opportunities for employment.

“An increase in the VAT threshold will not only ease the administrative burden on small businesses, but will also accelerate their growth, by enabling them to compete effectively with a comparatively lower cost of providing goods and services and play a pivotal role in economic development,” says Uaandja.

According to Namibia Local Business Association vice president Peter Amadhila, the government needs to focus on generating revenue from the country’s natural resources, which are being shipped out with impunity by by foreigners.

“The government is talking about SMEs which no longer exist in the country.

This market segment has shrunk and perished due to lack of government support, resulting in the economic situation to be like this,” says Amadhila.

He says Namibians must stand up to fight the economic injustice the country is facing and address all relevant policies to ensure that natural resources benefit the country and its people.

Commenting on the issue on Desert Radio, economist Angelique Bock says Shiimi’s decision to offer a reprieve to small businesses is long overdue and will allow local businesses to have adequate capital to expand.

“Most local businesses stand to benefit from the decision by the minister as it allows them growth space and also gives them opportunities for expansion,” she says.