ITAS changes to VAT and import VAT accounts

The recent implementation of the Integrated Tax Administration System (ITAS) by Inland Revenue was accompanied by a string of changes and/or considerations that could affect taxpayers in relation to being compliant for value-added tax (VAT) and import VAT.

It is strongly recommended to register yourself as a taxpayer on the ITAS portal in order to ensure that all information currently on the system is accurate.

The most noteworthy change that will be taking effect is the altering of VAT and import VAT periods.

For VAT periods:

The VAT periods will be altered to be in line with the financial year-end (currently recorded on Inland Revenue’s system) of your entity.

This means that for certain taxpayers, a VAT return for one month will have to be submitted. This once-off one month VAT return is necessary to align the VAT periods of taxpayers with the financial year-end. After this submission, the taxpayer will need to familiarise themselves with the next VAT period and due date.

As an example:

1. February year-end: VAT category A (uneven months)

First ITAS VAT return will be for period 2019/06 (01/02/2019 – 28/02/2019) which will be due by 25/03/2019. This VAT return will be the last one submitted for the FY end 2019. Note that this will be a one-month VAT return submission to align yourself with your FY end.

February year-end: VAT category B (even months)

First ITAS VAT return will be for period 2019/06 (01/01/2019 – 28/02/2019) which will be due by 25/03/2019. This VAT return will be the last one submitted for the FY end 2019. Note that as the year-end and VAT category are both even, the tax period remains two months.

2. December year-end: VAT category A (uneven months)

First ITAS VAT return will be for period 2019/01 (01/02/2019 – 28/02/2019) which will be due by 25/03/2019. The one month submission will ensure that the taxpayer is aligned to the FY end 2019.

December year-end: VAT category B (even months)

First ITAS VAT return will be for period 2019/01 (01/01/2019 – 28/02/2019) which will be due by 25/03/2019.

3. June year-end: VAT category A (uneven months)

First ITAS VAT return will be for period 2019/04 (01/02/2019 – 28/02/2019) which will be due by 25/03/2019.

June year-end: VAT category B (even months)

First ITAS VAT return will be for period 2019/04 (01/01/2019 – 28/02/2019) which will be due by 25/03/2019.

Please note: If a taxpayer does not have an ITAS VAT period issued on the portal, it can be due to the fact that Inland Revenue does not have the taxpayers’ financial year-end recorded.

For import VAT periods:

The import VAT periods will not be aligned with a taxpayers’ financial year-end.

The first Import VAT period issued by ITAS will be for period 2020/01 – due 20/04/2019. However, to align yourself with these new periods, the import VAT for February will bear the reference 2019/12, due 20/03/2019.

Note: This information is subject to change as Inland Revenue is still in a testing phase of the project. All taxpayers are encouraged to educate themselves about these changes to avoid non-compliance.

ITAS VAT refund: audit procedures

Going forward, when a credit return is uploaded onto the portal, the system will automatically select/flag it for an audit. Once the selection has been made by the system, an allocation process takes place whereby a team leader takes charge of this audit.

Once done, the team leader will assign the audit to an auditor within his/her team, whose next step would be to contact the taxpayer in order to set up a specific time and date to initiate the audit process.

Once the audit has been completed the refund will be uploaded on the system for approval from the team leader, supervisor and subsequently the controller.

· Nelson Lucas is a tax partner at PwC Namibia. Tax Time is published in Market Watch bi-monthly on a Monday.