Namibia has accumulated more than N$110 billion in revenue from the Southern African Customs Union (SACU) since 2017, under the revenue-sharing formula.
The revenue-sharing formula is significantly influenced by the value of imports and exports that the country has managed over a specific period.
Bank of Namibia Deputy Governor, Leonie Dunn, said this then requires that imports and exports are declared at correct values so that duties due can be collected accordingly.
She said without the accuracy of these declarations, fewer taxes risk being levied, and as a consequence, low proceeds from SACU will be received.
“A far-reaching consequence will be, less funds being available for the economic and social development of our beautiful Namibia. Tax revenue is dependent on accurate import and export declarations,” she said at the launch of the Trade Verification System on Wednesday.
She added that all funds in and out of Namibia should comply with exchange control rules to ensure sufficient foreign currency reserves are in place, and funds are not illicitly shifted out of the economy.
To bolster the efficiency and transparency of trade processes in the country, the Bank of Namibia and the Namibia Revenue Agency launched Namibia’s first Trade Verification System (TVS).
The system is launched under the theme, “Where innovation meets opportunity, and where businesses thrive in a connected world” and will ensure the trading of goods is verified.
Meanwhile, Namibia has been warned against an over-reliance on SACU) revenues, with the country set to rack in N$24.3 billion for FY 2023/24, a 71.6% increase from N$14.2 billion in FY 2022/23.
FirstRand Namibia Economist, Ruusa Nandago, said given the volatile nature of SACU revenues and the fact that they are often driven by external factors outside member countries’ control, an overreliance on this source of revenue can complicate fiscal management and undermine fiscal consolidation efforts.
“It is therefore important that the government continues to broaden the domestic tax base and diversify its source of revenue,” she said.
The Southern African Customs Union was established in 1910 between five member states: Botswana, Eswatini, Lesotho, Namibia and South Africa.
The Union allows for these five countries to share trade-related customs and excise revenue and for the free movement of goods and services within the Union.
All customs and excise duties are collected in a Common Revenue Pool and shared among the countries according to a revenue-sharing formula.
South Africa is the largest contributor to the pool, making up 97% of the total contribution, followed by Namibia at 1.4%, Botswana at 1.0%, Lesotho at 0.4% and Eswatini at 0.2%.
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