‘Slow VAT refunds kill business’

Jo-Maré Duddy - Nearly half of businesses surveyed by the Economic Policy Research Association (EPRA) said their claims for value-added tax (VAT) are “never” settled within two months of filing their returns.

In addition to the 49% of respondents above, another 23% said the ministry of finance “rarely” refunds VAT timeously.

Only 2% of respondents “usually” receive timeous VAT refunds.

Sixty percent of businesses which completed the EPRA survey in November said late VAT refunds put their operations under “extreme or some financial pressure”.

About half of respondents had to downsize since the beginning of 2020. However, 77% of them indicated that they were struggling even before the Covid-19 pandemic.

As part of his economic stimulus package to mitigate the impact of Covid-19 and the subsequent lockdown, finance minister Iipumbu Shiimi last April said government would “immediately” speed up the repayment of overdue and undisputed VAT refunds to boost the cashflow of businesses.

On 26 November, the minsitry issued a statement saying undisputed VAT refunds would be paid out within 90 days, from 1 February 2021.

Ninenty percent of respondents in the EPRA survey didn’t have good opinions of service delivery at the Receiver of Revenue, with 46% describing its administrative efficiency as “extremely bad”, while 44% said it was “bad”.

Meanwhile, three out of four respondents believed tax revenue is “mostly wasted” by government, while 22% maintained it is “somewhat wasted”.

‘RED TAPE’

The EPRA survey also looked at other issues hampering business in the country.

Nearly one in four respondents regarded the registration, taxation and regulatory requirements when doing business as “extremely onerous”, while 42% said it was “somewhat” burdensome.

More than 80% of respondents do business in a regulated environment. About 65% found their regulators “somewhat” or “extremely” incompetent.

Namibia’s cumbersome bureaucracy has earned the country the 104th spot out of 190 countries worldwide on the World Bank’s 2020 Doing Business Index. In sub-Saharan Africa, Namibia is ranked ninth.

‘INTERFERENCE’

Nearly 85% of respondents said government’s interference in the free market economy was too much, while 19.5% regarded it as “extremely high”, and 64.8% said it was “high”.

Also, almost 84% of respondents believed it is not an honest objective of government to create a conducive environment for private sector growth.

The majority of respondents – 48% - feel they have no influence over government policy.

More than two-thirds of respondents were convinced that it is risky to have a commercial relationship with government.

About 27% said a commercial relationship with government was such a high financial risk that it is almost impossible to do business with government, while another 38% maintained that there were “substantial” financial risks associated with a business relationship with government.

Local skills remain a hindrance to business growth, the survey shows.

Thirty percent of businesses said it was “extremely difficult to get the appropriate skills, while 56% reported it was “difficult”.

Forty percent of respondents regarded the standard of education in government schools as “extremely poor”, while 45% said it was “poor”.

The EPRA is a voluntary association established in 2017. Its main objective is to advocate for pragmatic, sustainable, pro-growth and investment-friendly economic policy.

It targeted 559 businesses in the survey and got a response rate of 40%. About 20% of respondents were SMEs, while some 30% generate an annual revenue of N$10 million or more.