Windhoek-Finance Minister Calle Schlettwein has come out with guns blazing against the decision by the European Union (EU) to list Namibia among “the 17 non-cooperative tax jurisdictions”, a blacklist that has publicly named and shamed 17 countries “for failing to meet agreed tax good governance standards.”
“This unilateral action against Namibia by the EU is unjust, prejudiced, partisan, discriminatory and biased,” said a perplexed Schlettwein, who explained that Namibia’s only sin was failing to meet the deadline.
Namibia did not get any official communication for the deadline, as government was advised on different reporting dates, one on December 5 and the other on December 12.
According to the EU, the 17 countries on its blacklist are those whose tax regimes were deemed unable or unwilling to effectively control taxes and allowed illicit financial flows.
A memorandum on the listing says the 17 states – including Namibia – have harmful tax regimes that go against the principles of the EU code of conduct on harmful tax practices. Further, they either have not implemented, or did not commit to implementing the OECD base erosion and profit shifting minimum standards.
In addition, the countries are not transparent in their tax regimes, and the EU requires that countries comply with international standards on the automatic exchange of information, as well as information exchange on request.
Namibia meets all of those requirements, Schlettwein contends.
He said Namibia’s Inland Revenue officials had previously met with officials of the EU Embassy to Namibia to discuss the matter and seek clarification.
However, since local officials could not provide clarity on all the questions, it was agreed there would be a further engagement with local EU staff or EU tax experts from abroad. Namibia was later made aware of the deadline to inform the EU of the commitments to implement proposed actions or how Namibia would respond to the proposal.
The finance minister yesterday said the EU blacklisted the country as a tax haven, simply because Namibia did not sign up to four agreements that the EU “unilaterally created but expected Namibia to sign as a sovereignty.”
The EU is now using that against Namibia to conclude that it’s a tax haven, although Namibia gave the EU positive signals that it wants to join, but has not concluded the process as a sovereign nation.Factoring in all measures the country has put in place, including the tax legal framework containing anti-avoidance rules on transfer pricing and thin capitalisation, “the Namibian government emphatically rejects this assessment.”
Nevertheless, the country “commits to use its best endeavours to clarify outstanding questions and answers to correct this unfortunate misconception,” he added.
“We believe that we have not been treated equitably and call upon the EU to correct what has already caused serious harm to Namibia’s outstanding reputation as a politically stable democracy with rule of law-based institutions,” said a stumped Schlettwein.
“Unfair actions such as this against small and vulnerable economies harm our people, diminish our chances to prosper and perpetuate inequality. This action by the EU authorities is against the very spirit of our cultural and cooperation efforts,” he said.
The government has meanwhile scheduled an urgent a meeting with EU Ambassador in Namibia Jana Hybášková to take up the matter. “We will raise it at diplomatic level to ensure that the good relationship with the EU is not in jeopardy, but rather that we correct it.
“Whether we missed the deadline or not, factually it does not make us tax haven, or an uncooperative party. It does not. If you missed a deadline, then you should be alerted that you missed the deadline and that there are consequences – and not be classified as tax haven,” he countered.