No new tax regime for informal sector: Schlettwein

WINDHOEK, 16 JUL – Minister of Finance, Calle Schlettwein said the ministry has not announced any new tax regime aimed at targeting the informal sector.
This follows media reports through information obtained from a widely circulated pamphlet of the ministry that it would be collecting taxes from businesses operating in the informal sector, such as hair salons, taxi or bus operators, hawkers, plumbers and kapana vendors.

Speaking at a media conference on the state of the economy and tax matters here Monday, Schlettwein said the ministry does not intend to introduce a new tax regime in the near future for administrative reasons.
“What is being assumed as a new tax targeting the informal sector is misunderstood generalisation of a well-intended information from our tax education pamphlets on taxation of business income,” said Schlettwein.

He explained that the current Income Tax Act subjects any person and company that earned income during every tax year to income tax, however the provision does not discriminate between formal and non-formal businesses and neither does it discriminate between Namibian or foreign-owned businesses.

He further emphasised that in respect to individual persons, the law sets a taxable income threshold at N$50 000 for those who ought to be registered and pay tax.

“On top of the threshold, the law further allows for various deductions against taxable income before tax obligation is calculated, which equally apply to formal and non-formal businesses,” said the minister.
Schlettwein said income is generated from various sources and their categorisation as formal or informal is not material for tax purposes, therefore the informal businesses mentioned in the ministry’s pamphlets are cited as a way of illustration.
He further noted that for instance, an administrative officer working for the government or private sector earning N$8 000 per month pays payroll tax as normal compared to a corner shop or a hairdresser earning on average N$60 000 per month but not paying tax.
He said tax policy is about equity and fairness and that the idea is rather to draw the public attention to the fact that any person or company generating revenue from any trade which is above the required threshold, is subject to income tax and should be registered and comply with tax laws.
“What the ministry intends to do is to seek for increased compliance and escalate enforcement of the provisions of the existing tax laws,” he said.
NAMPA