Tax man warns multi-national companies shifting profits illegally

Multinational corporations operating in Namibia have been put on notice as the Namibia Revenue Agency (NamRa) ramps up efforts to strengthen tax compliance, particularly in the area of transfer pricing.

Speaking at the official launch of the Tax Inspectors Without Borders (TIWB) Programme yesterday in Windhoek, NamRa Commissioner Sam Shivute sent a strong message to companies engaging in tax avoidance schemes, warning that Namibia is now better equipped to tackle such practices.

Transfer pricing is the practice where multinational corporations manipulate transactions between subsidiaries to shift profits to low-tax jurisdictions, and has long been a concern for developing nations, including Namibia, Shivute stated.

Shivute pointed out that transfer pricing is a global issue, which has historically deprived Namibia of much-needed revenue, particularly in resource-rich sectors like diamond mining.

“Already in the 1970s, reports documented how Namibia’s natural wealth was being exploited through transfer pricing. Instead of benefiting the Namibian people, profits were being funneled to tax havens,” Shivute stated.

Shivute highlighted Namibia’s historical struggles with transfer pricing, noting that as far back as the 1970s, reports documented revenue leakages in the country’s diamond sector.

Since the amendment of the Income Tax Act in 2005 to address transfer pricing, enforcement has been sluggish.

However, Shivute confirmed that Namibia is closing in on offenders, with three transfer pricing cases near completion, expected to recover millions in lost revenue.

“Just because companies have not been audited before does not mean they will not be audited now. Those who have been inflating expenses or declaring zero returns while shifting profits offshore have three months to amend their tax filings before we take action,” Shivute warned.

The TIWB Programme, launched in collaboration with the United Nations Development Programme (UNDP) and the Organisation for Economic Co-operation and Development (OECD), is set to enhance tax administration through expert-driven capacity building. This initiative embeds international tax professionals within NamRa to provide hands-on support in audits and compliance enforcement.

Speaking at the event, UNDP Resident Representative Alka Bhatia emphasised the programme’s transformative impact. “This initiative has already proven effective globally. According to the 2024 annual report, approximately US$ 2.3 billion (N$41.7 billion) was collected and deposited into state accounts of developing countries, with assessments totaling USD 6 billion (N$108.7 billion). If other African nations can benefit, Namibia must also take full advantage,” she said.