Mulunga, Hamutenya face lifestyle audits

20 July 2018 Author  
Two executives at State-owned enterprises are among the hundreds of people that have been targeted by the  Department of Inland Revenue as it intensifies its lifestyle audits in a bid to recover billions it says it is owed in unpaid tax, the Windhoek Observer understands.
Sources claimed this week that Namib Desert Diamonds (NAMDIA) Chief Executive Officer, Kennedy Hamutenya, and NAMCOR Managing Director, Immanuel Mulunga, are some of the high profile people who have been targeted by the lifestyle audits.
Hamutenya, however, told the Windhoek Observer that such speculation is wrong as his tax affairs are in order.
“There is nothing like that. For me that happened more than seven years ago, I settled my issues with the Ministry of Finance. No, it can’t be me,” Hamutenya said.
Mulunga, a well-known socialite, denied knowledge of his lifestyle being audited for tax purposes.
“I really don’t know whether they are doing a life style audit or not. No, I have not received a letter from the ministry. Maybe the letter is still on the way,” he said.
Finance Minister, Calle Schlettwein, confirmed this week that they have started tracking people they suspect are under valuing their tax obligation or whose lifestyle and properties do not correspond with the tax they declare with Inland Revenue.
Schlettwein told the Windhoek Observer that his ministry has already sent hundreds of letters under its lifestyle audits, asking individuals to account for their wealth and assets.
“We have sent many, hundreds (of letters),” Schlettwein said.
He explained that the letters oblige the recipients to disclose their income, which the finance ministry officials will investigate to verify if what is disclosed is correct.
The ministry will also look at bank statements and other income statements.
“After that, it’s either we are satisfied with the explanation in the disclosures or not,” the minister said.
He warned that those who have undervalued their income will face penalties and interest.
“In terms of consequences it depends on how much you have undervalued your income. There will be penalties and interests depending on how long you have undervalued your income. If it has accumulated this becomes very expensive.”
Schlettwein said the ministry will also look at assets that have been acquired like houses, cars and other expensive items.
“Those are the typical things we look at including bank statements, payments to third parties; if you have sold an expensive item recently we can use that. If you come forward on your own, it is always a better process. But if we catch you then sympathy for you is not at the same level than what you would have had if you had come forward on your own.”  
Inland Revenue Commissioner, Justus Mwafongwe told the Windhoek Observer in March last year that the lifestyle audits will target anyone whose lifestyle does not match their income irrespective of their status in society.
“It is important to make it categorically clear that we do not target specific individuals when conducting lifestyle audits or any other tax audit… we want to cover a wide scope to include any individual irrespective of his/her position in society.
“During the audit process we are able to probe as to how the individual is managing to maintain a high standard of living.
“Once we have determined the level of income that enables the individual to live a lavish life, the next step is to find out whether such individual is registered as a taxpayer and if so, we then compare if the level of income agrees with the income declared in the tax return and if not, an assessment is then raised to tax undeclared income.
“The burden of proof that income is not subject to tax is on the person to whom the audit is directed,” Mwafongwe said at the time.
Asked how they will hold to account individuals who are not able to explain their wealth, Mwafongwe said that if corruption is detected, the individuals concerned may be prosecuted or have their assets forfeited to the State.
 

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