What’s Up With VAT?

An Open letter to the Ministry of Finance
I am fully aware that the Government needs extra revenue to be able to fund the Avid, OVD and Lameck millions, but to obtain such money from honest and law abiding citizens via dubious penalty and interest charges on their VAT and VAT import accounts, is not acceptable. Let me explain.

When I import goods from South Africa into Namibia, I have to pay Import VAT at a rate of 16.5%, which amount includes the upliftment factor of 10%, on the Value of import to the local Receiver of Revenue. According to section 12 of the VAT Act, this value means the price charged for the goods by the exporter. Say for example I order goods to the value of N$ 100 000.00. On that amount I have to pay N$16 500.00 as Import VAT. Yet when the goods arrive at my business, I notice that goods to the value of N$ 10 000.00 were shortsupplied. I immediately notify the exporter and demand to be credited for that amount and to be issued with a ‘ Tax Credit Note ” as well. I thus have effectively only imported goods to the value of N$ 90 000.00, thus reducing my VAT import liability by N$ 1 650.00. I adjust my accounting records accordingly and pay over N$ 14 850.00 on the 20th of the month following the date of import. According to generally accepted accounting and business principles, I have done everything legal. WRONG.First, the VAT Import department at your local Receiver of Revenue will notify you, that according to their records, you have underpaid an amount of N$ 1 650.00 and must immediately pay this together with 10% penalty and 20% interest per year. When you go to their offices and explain the shortfall, you are severely reprimanded that this can only be allowed if a SACU VOC form is submitted. This stands for ‘ Southern African Customs Union Voucher of Correction’. Nowhere has the taxpayer ever been notified of this requirement since VAT was introduced by the VAT Act 10 of 2000. So in order to avoid any more hassles, you fill in that form with a request not to have any penalties and interest levied against this ‘underpayment’ and expect that this matter has now been resolved. WRONG AGAIN.Next, you receive another letter from the Commissioner of Customs and Excise, advising you to prepare for an audit of your import and accounting documentation from 2006 until December 2008. Because you are a honest and law abiding citizen, you provide them with all that they require and wait for the results of this audit. Not once, have these inspectors walked out of a business without charging thousands of Dollars in penalties and interest. In the above case of importing N$ 100 000.00, they will penalise you 10% on the shortpayment of import VAT for each month or part thereof during which the payment remains outstanding ( Sec 68 (1)(iv) ), but will also not accept any reasoning that this amount has in fact been paid via my normal VAT output payment. As I have claimed N$ 1 650.00 less on the Output Vat payment form, the net Output VAT is N$ 1 650.00 higher than it would have been, had I received all my goods. Again these officials demand a SACU VOC form etc. This requirement has never ever been spelt out during the seminars and courses offered by the Ministry of Finance when VAT was introduced and has this system of penalising honest business people for bureaucratic little mistakes, raised the antagonistic feelings against the said department to untold levels. Just walk in at the VAT departments and observe the chaos going on.My request to the Ministry of Finance is that they inform the taxpayer in a more simple and understandable way and to apply the audits for compliance and not for penalisation. Let the people know via press releases or brochures what exactly is required from them if the scenario of shortsupplied goods or other differences paid to the exporter occurs. You are currently abusing these socalled requirements just to milk the already overburdened taxpayer out of even more tax monies. DisgruntledVia e-mailNOTE: Name and address supplied – Ed