Union wants Namdeb tax break

The mineworkers' union says a tax break will extend Namdeb's operations into the future.

03 September 2019 | Business

The Mineworkers Union of Namibia's southern branch wants the government to give Namdeb a tax break for five to seven years in an effort to save the mine from closure.

Diamond-mining companies are obligated to pay an effective 55% corporate profit tax in addition to a 10% export royalty on rough diamonds. Namdeb's exact tax payments remain confidential.

The government is heavily reliant on diamond mining. The Bank of Namibia's recent economic outlook forecast that diamond mining is expected to contribute nearly N$17.4 billion at current prices to Namibia's forecast gross domestic product (GDP) of about N$202.8 billion. Last year, the sector's contribution was about N$18.2 billion.

Shedding light on the proposed tax break, the MUN southern branch's deputy secretary Hashondali Kakuti said it would help ensure the sustainability of Namdeb's operations. The union believes that if a waiver is granted, it would free up necessary capital for Namdeb's accretion mining processes, which the union has said will ensure the continued existence of the mines as well as the creation of between 200 and 300 new jobs.

“Engagements have been held with the Oranjemund town council as well as the ministries of mines and finance. We would like a tax waiver for between five and seven years. We need cash which will be invested in accretion activities. In the absence of that, we will need cash from government,” Kakuti said.

According to him, provision was made in the mineral and diamond Acts for the temporary suspension of tax payments to the government.

The ministry of finance was reviewing Namdeb's financial statements dating back to 2011, Kakuti said.

“For the waiver to be approved it would need Cabinet approval and it is for that reason that we have also engaged the secretary-general of Swapo, Sophia Shaningwa.

“If this is approved it could lead to the creation of 200 to 300 jobs. We are also doing this for the sustainability of the mines. It is up to the government to decide if Namdeb has a life or not,” said Kakuti.

Namdeb spokesperson Shangelao Ndadi said it was constantly engaging its stakeholders about the future of the mine. According to her, Namdeb welcomed the move by the union.

“Namdeb has been rigorously engaging all its stakeholders regarding the future of its operations. While we are unable to comment on the specific, as it relates to the MUN's engagements with different ministries, we can confirm that we welcome any positive intervention that seeks to create a viable future for our operations and to safeguard continued employment,” Ndadi said.

Similar calls for a tax break were made in 2009 following the global economic crisis which saw Namdeb shed 600 jobs, and again in 2013.

The ministry of finance's spokesperson, Tonateni Shidhudhu, did not respond to an email requesting comment.


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