New regulations for Tax payments

New regulations regarding the issuing of cheques to and by the Ministry of Finance was recently announced in the Government Gazette and will be effective from 10 June 2010.

The new regulations determine that a cheque should not be issued for more than N$ 500,000 to settle a Namibian account. It also states that a person shall not be allowed to split cheque payments into units of N$ 500,000 or less, where such multiple cheques are issued for the settlement of the same transaction to circumvent the above determination. Business and individuals in Namibia should consult with their banking institutions in order to determine how payments should be effected where such payments exceed the N$ 500,000 per transaction.

Payments to Inland Revenue
In Namibia, the Ministry of Finance, Inland Revenue State account, is being held by Bank of Namibia. This implies that at present the option of having Inland Revenue’s State Account with a commercial bank does not exist. Therefore the only option available to taxpayers for effecting payments above N$ 500,000 is to request an electronic funds transfer (EFT) via the Real Time Gross Settlement (RTGS) system in Namibia and the taxpayer’s local commercial bank to the State Account of Inland Revenue at the Bank of Namibia. Taxpayers that have electronic banking facilities cannot effect this payment themselves directly to Bank of Namibia. The process of payment to Inland Revenue is thus a prerequisite instruction from the taxpayer to a local commercial bank. The commercial bank then initiates the instruction and effect the transfer to the Bank of Namibia.

The department of Inland Revenue therefore advised that instructions for such electronic funds transfers via the RTGS system be made to local commercial banks well in advance.
“We strongly advise that the local bank where Namibian company accounts are held should be consulted should transfers to Inland Revenue in excess of N$ 500,000 be made to confirm the exact procedures and timing of EFT-transfers. Any misallocation or wrong recording of transactions by Inland Revenue will go along with a lot of administration and might require an entire audit process on its own,” the Ministry of Finance warned in a statement issued on Friday (28 May 2010).

Refunds by Inland Revenue
As is presently the case, Inland Revenue will not issue refund cheques in excess of N$ 500,000 from 10 June onwards. In the event of a tax refund exceeding N$ 500,000 the Ministry of Finance will effect an electronic transfer to the taxpayer’s bank account. The new arrangement will mean that refunds are processed much quicker as opposed to cheque refunds and funds are therefore released quicker than when cheques are issued.

Republikein, Market-Place, 1 June 2010