The Department of Inland Revenue has expanded the scope of lifestyle audits called for by President Hage Geingob, to include private citizens, in a bid to root out corruption in the country and to ensure tax compliance.
Speaking in September 2016 on the Voice of America’s Straight Talk Africa programme, Geingob said all government officials will be subjected to audits to assess whether their salaries match their lifestyles
“We will have lifestyle audits. This is going to be done...If your salary is this, how do you live this kind of lifestyle?” Geingob said at the time.
The Windhoek Observer, however, understands that the scope of the lifestyle audits have now been expanded to include every tax payer in the country.
“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,” Inland Revenue Commissioner, Justus Mwafongwe told the Windhoek Observer.
He said a number of audits are currently underway for those who have failed their tax compliance analysis and that more cases are expected to be added to the list from time to time.
Lifestyle audits have already been carried out in Kenya to weed out corrupt officials.
Analysts say government’s financial woes have been exacerbated by public servants who continue to loot State coffers through dubious payments to ghost companies, over-invoicing, and other diversionary actions leading to a rise in the number of people earning modest salaries who live lavish lifestyles.
Mwafongwe said the lifestyle audits will also ensure that citizens pay the right amount of taxes.
Government is currently struggling to recover the N$4 billion that it claims is owed by businesses and individuals across Namibia with N$972 million having been collected so far since last year when Treasury introduced a tax incentive programme.
“Our objective is to ensure that people pay the right amount of tax in line with the income they earned and according to their ability to pay. For example, an assessed person may argue that he or she is unable to pay assessed taxes just because she does not have physical cash, but when you investigate deeper you may find that such person’s net worth puts him or her in a position where she has the ability to pay. It is just a matter of making his or her assets liquid.
“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.
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.
“For an individual who is registered, but did not file tax returns, such individual is told to file the returns, assessed and requested to pay. An individual who under-declares his or her income is reassessed and requested to pay. If an individual does not have the money to settle the tax account and can also not offer an acceptable payment plan, his or her assets can be sold in execution to recover tax debt.
“Where evidence of fraud and corruption is found, the necessary steps and procedures for prosecutions will be employed and the verdict will be determined by the court of law.”
The Public Service Commission (PSC) has also called for the introduction of lifestyle audits as one of the ways to detect graft among public officials.
PSC Chairperson, Markus Kampungu, told the Windhoek Observer that although Geingob initially called for a lifestyle audit on government officials, there is nothing wrong with Inland Revenue expanding the lifestyle audits to all individuals.
“Corruption is also happening at the low income level. You will be surprised that many government officials are the ones conniving with the non-government officials. So I believe this audit shouldn’t just be limited to public servants.
“The president said “government officials” but it is only fair for him to start with public servants, then the rest follows. We have always supported the president’s call, and still do as the PSC,” Kampungu said.