The transformation of tax

Johan Nel - With frequent change taking place around the globe, organisations and individuals need to remain versatile.

These changes include working methods, transacting, doing business and remaining compliant with relevant regulations.

As taxpayers (both juristic and natural), it is extremely important to gear ourselves for change within the landscape of taxation.

Global trends

With multiple social platforms available around the world, ‘social media’ has become a common household name. Therefore, the concept of “social Media tax” comes as no surprise.

With Uganda having introduced this type of tax in 2018, the tax is levied daily on the usage of mobile communication applications (over-the-top services).

There is an increased usage of data bundles by users in accessing the world wide web, collaboration platforms and social media sites.

With this in mind, the potential levying of an additional tax on ‘data bundles’ might be a consideration for governments in the near future. The rate and method of levying, controlling and monitoring thereof may have major implications for internet service providers and their users.

One of the major challenges globally, is that of climate change and biodiversity.

Many countries have implemented various initiatives in creating a better tomorrow. Some of these initiatives include that of tax incentives towards organisations that support eco-friendly behaviours or tax being levied on harmful products.

Major drive

A major drive has been placed on renewable energy in Africa.

South Africa previously introduced a tax provision for accelerated capital allowance deductions on renewable energy equipment/machinery. Through such incentives, organisations and individuals are encouraged to use environmentally friendly techniques in preserving the environment.

Thanks to technological advancements, cross border trading and communication has become convenient.

As a result thereof, initiatives have been implemented, such as the monitoring of Base Erosion and Profit Shifting (BEPS) by the OECD and introduction of DAC6 for European Union entities.

Due to increased international trade, these measures play a vital role in ensuring transparency and fairness in taxation. With cloud storage product offerings and improved data management systems, electronic filing is becoming the norm.

Similarly, multiple countries have implemented e-filing capabilities for their taxpayers in easily filing returns and assessing such returns in real-time. This has promoted compliance in terms of return filing, as well as, increased tax collection rates with information being processed faster.

Tax transformation in Namibia

From the above global trends, it is evident that Namibia has followed suit on some of these changes.

The previous introduction and expansion of environmental levies has proven the country’s drive in promoting an eco-friendly environment.

The implementation of the Integrated Tax Administration System has allowed taxpayers to embrace the e-filing capabilities of tax returns.

The phasing out of cheques, being replaced by electronic funds transfers (EFTs) and cash payments, has resulted in a more favourable tax collection rate and lastly, the possible implementation of proposed tax amendments in future for the curbing any ‘loopholes’ within the tax system.

As a developing country, Namibia has progressed well on the journey of transformation and technological change.

As corporate and individual citizens of the country, it is our duty to gear ourselves and adapt to these changes in preventing obsolescence. This is done through upskilling and equipping ourselves with the latest technological solutions and having an open-minded approach.

In an ever changing world, the principle and application of tax remains constant.

Johan Nel is a corporate tax partner at PwC Namibia. Contact him at [email protected]