New Era pays millions in tax penalties

The New Era Publication Corporation (NEPC) has attributed its insolvency to the debts it owes to the receiver of revenue, printing cost and escalation of operational expenses.This was the explanation given by NEPC’s chief financial officer (CFO), Beatus Amadhila, when he responded to questions on the current financial predicament the entity finds itself in. “The cause of our insolvency is basically due to the debts we owe the receiver of revenue. Once that is cleared, the corporation shall be in a sound financial position,” Amadhila said. At the moment, the NEPC sits with accumulated losses of N$ 42.5 million and liabilities that exceed its assets by N$21.1 million. “While NEPC is not a commercial entity set up to solely target profit, our aim is to break even annually. [In] 2011, 2012 and 2013, NEPC made losses and in 2014 and 2015 NEPC recorded surpluses,” the CFO said.However, in 2016, NEPC made losses amounting to N$32.6million. Printing, penaltiesAmadhila attributed the losses to the escalation in operation expenses, printing cost totalling N$18.1 million, penalties expenses at NS14.7million - due to prior years’ non-submissions of returns to the receiver of revenue – and capital expenses of N$5 million. To restore NEPC’s ability to meet its immediate financial obligations, deal with the accumulated losses and to run it prudently and sustainably, Amadhila listed numerous interventions that they have since been deployed. Chiefly, they want to ensure that the parastatal is compliant with the receiver of revenue’s tax returns filing to avoid penalties.The company has also reduced its printing cost but without compromising on the print quality and print run.“Overall operational cost has been contained [and] revenue generation [has been prioritised] amid tough economic conditions,” he said.AG reportA report by Auditor General (AG), Junias Kandjeke tabled in the National Assembly on Tuesday posited that during the 2016/17 financial year, the company paid N$54.4 million in employees’ salaries, wages, bonuses and other benefits. The company, during the same period, generated N$12.5 million from newspaper sales and N$52.5 million through advertising.The corporation also received an adverse audit opinion for its failure to prove to the Office of the AG how it used N$33.5 million during the 2016/17 financial year.Kandjeke in the report said the ability of the corporation to continue as a going concern is dependent on a number of factors. “The most significant of these is that the directors continue to procure funding for the ongoing operations for the corporation and that the subordination agreement referred to in the notes of these annual financial statements will remain in force for as long it takes to restore the solvency of the corporation,” the AG said in the report. Kandjeke furthermore issued an adverse audit opinion to the NEPC for its inability to provide the auditors with financial statements that fairly represent the financial position of the entity. The AG premised his opinion on the unexplained adjustments amounting to N$13.9 million observed, among a host of other issues. These include bad debts amounting to N$10.2 million which were written off without approval and overstatement of penalties paid with N$4.3 million during the period under review. Further, interest paid was understated by N$1.5 million while a difference of N$915 062 was observed between the asset register and the general ledger. Purchases of property, plants and equipment were understated in the cash flow statement with unknown prior year errors amounting to N$121 244. ComplaintWhen asked about how they plan to turn around the entity’s financial fortunes and run it in a prudent manner, Amadhila said NEPC is now compliant in terms of receiver of revenue tax return filing to avoid penalties. NEPC has also made arrangements with the receiver of revenue to service the debts owed to them which attract high interests. “Operational cost containment (printing costs which were on the rise) have been reduced without compromising on the print quality and print run [and the] overall operational costs have been contained,” he said in a written response. In addition, the corporation has vowed to generate sufficient revenue generation amid the current tough economic conditions. NEPC is a 100% government-owned and owns local daily newspaper New Era and Kundana, a weekly national national newspaper published in Oshiwambo. - Nampa

New Era pays millions in tax penalties

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New Era pays millions in tax penalties

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