The High Court of Namibia rejected an interim relief request from a Chinese construction company for N$33 million in income tax.
According to a judgement delivered last week Friday in High Court by Judge Eileen Rakow, said the concept of ‘pay now, argue later’ should be applicable in this case.
“I find no reason to conclude that the ‘pay now argue later’ concept should not be applicable in this matter and thus find that the monies attached by the first respondent should remain with them for now as it is in the public interest,” said Rakow.
The money in question is the total and combined tax payable in respect of income tax that is owed to the Namibia Revenue Agency (NamRa) by the Zhong Mei Engineering Group.
The company which was recently awarded a significant road construction contract in the Erongo Region, has argued that the amount was transferred from its bank account to the Bank of Namibia.
The company claimed it was only informed in an audit exit meeting, which they claim they were not aware of, on 7 July 2023 that it owed that amount and it was due or payable before the same day in notices of assessments.
The construction company in its urgent application argued that it had a strong case for temporary relief.
“One of the reasons for this is that it is left to the Minister to declare any person “if he thinks necessary” as an agent of a taxpayer and it is left for him to decide whether or not to take the taxpayer’s total monies in the hands of the person appointed as an agent. There are absolutely no guidelines, limitations, restrictions or other relevant considerations he could make both in respect of the decision to declare a person as an agent and consideration of how much should be paid over. This is more of a subjective criterion and discretion,” read the judgement.
However, Namra argued that the Chinese company had self-assessed, filed no returns and informed the revenue agency that it had no taxable income.
“The applicants rely on the 7 July 2023 assessment as the original assessment date, such that it must be afforded a future date for the payment of the due tax is not correct. The applicant has misconstrued, in that it believes that payment of the tax is due and payable to the Fiscus on a future date after 7 July 2023. The date for payment is statutorily prescribed, for the applicant to be the last day of the seventh month after the end of the year of assessment,” the judgment reads.
According to the company’s affidavit, NamRa through its Intelligence Strategic Enforcement Unit unlawfully appointed Standard Bank Namibia as an agent to transfer the millions in a manner that kills and destroys the construction company’s business.
Managing Director, Jiang Yuan in the affidavit said that despite the company proposing to pay an amount of not more than N$2 million and make the arrangements to pay the rest whilst it submits its objection to the purported assessment, the amount was still deducted from its bank account between 10 and 12 July 2023.
“This came as a big surprise, given the fact that the applicant (the construction company) at the meeting on 7 July (which meeting was attended by the applicants’ representatives unprepared and without full knowledge of the nature of the meeting) requested that the first respondent (NamRa) first considers allowing the applicant to pay an amount of not more than N$ 2 million and make the arrangements to pay the rest whilst it submits its objection to the purported assessment. This request was rejected outright, but the first respondent’s employees undertook and promised to consider it internally and revert to the applicant with a response,” read the document.
The company further claims that NamRa was arbitrary, unfair, unreasonable and unlawful to consider the construction company’s inability to pay an amount of over N$33 million in one go due to its expenses.
“The applicant is in the construction industry. it was left with less than N$4 million plus interest in its bank account. the applicant recently lost a case in the Supreme Court in terms whereof it is required to pay an amount of about N$4 million. The applicant will have to make payment of that amount plus the cost in the next few days.
But then there would not be money. the applicant has a monthly expense of about N$28 million. The applicant’s inability to pay will not only cause the collapse of the applicant’s operations. It will drive the applicant in contractual breeches with several third parties,” it reads further.
Zhong Mei Engineering Group was a beneficiary of a contract to construct the second phase of the Windhoek-to-Hosea Kutako International Airport highway for N$1,2 billion in 2019.
In 2016, the Roads Authority awarded a N$755 million contract to Zhong Mei Engineering Group for the construction of the Swakopmund-Henties Bay-Uis road.
The matter has been postponed to 5 September 2023 for a case management conference hearing.