Millions Lost Through Tax Fraud

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By Wezi Tjaronda WINDHOEK The Namibian fiscus has been deprived of millions of dollars by unscrupulous businesspersons who practise ring tripping. Ring tripping is a practice whereby goods leave the country but end up being sold locally, which means that business owners pocket the 15 percent charged in value added tax (VAT). This practice, according to information from the Ministry of Finance, is most prevalent at a number of border posts in the country especially at Oshikango, Ngoma and Katwitwi. The malpractice has led to the country losing millions in VAT, said a senior official in the ministry. A tax audit by the ministry at the Oshakati tax office, which covers Ondangwa and Oshikango, unearthed cases of tax evasion. The Oshakati office was the first to be investigated in a series of forensic audits that the ministry is undertaking. Yesterday, Finance Permanent Secretary Calle Schlettwein said a number of cases regarding customs and excise involving officials and businessmen in ring tripping were uncovered. Following these fraudulent activities, the ministry is investigating a number of taxpayers in the region in connection with this. A number of tax officials at the Inland Revenue offices as well as customs officials have been suspended while yet others are expected to be suspended. Schlettwein said compliance by taxpayers since the audits has increased in general to an extent that income tax on individuals, companies and VAT has shown growth if compared to the previous fiscal year. VAT, which the PS says has been declining in the previous fiscal years, increased by N$600 million at the end of January 2006. “VAT has declined in the previous fiscal years, which no doubt reflects the evasion that was prevalent during that time,” said he, adding that taxes on individuals and companies have also grown with N$206 million and N$355 million respectively. After the audit at the Oshakati tax office, the Windhoek office will be next to be investigated. The necessary arrangements with the Auditor General’s office, among others, have been done and taxpayers reporting to the Windhoek office will now receive visits. The ministry will in this regard make use of 16 private audit companies to do the work. While thanking people that are complying with tax and through their contributions assisting Namibia to become a better place, Schlettwein warned tax evaders not to expect any mercy from the taxman.