Staff Reporter
Zhong Mei Engineering Group has dragged Namra, Standard Bank, Bank of Namibia, and the finance minister to the High Court over N$33m garnished from its account as unpaid tax for 2013 and 2018.
The company says Namra instructed Standard Bank to deduct N$33, 031, 543.04 from its account on 12 July 2023 as unpaid tax.
According to Zhong Mei, Namra ordered the garnishing order while negotiations to pay off the debt were going on between the parties.
The company offered to pay N$2m once off and settle the rest in instalments.
Jiang Chong Yaun, who represented Zhong Mei, says Zhong Mei was left with N$4m in its bank account after the deduction.
He also says the company that recently lost a Supreme Court case must pay about N$4m, which it does not have.
According to Jiang, Zhong Mei’s monthly expenses are about N$28m, and they will not be able to pay for anything after the deductions ordered by Namra.
“The applicant’s inability to pay will not only cause the applicant’s business operations to collapse. It will actually drive the applicants into contractual breaches with several third parties,” Jiang says.
He argued that if the court does grant the interim relief sought, Zhong Mei will suffer irreparable harm.
Jiang says Zhong Mei has movable and immovable assets valued at N$160m.
Zhong Mei wants the court to rule that Namra’s comprehensive audits are unlawful and null because the finance minister or the commissioner did not issue them as required by section 64 of the NamRA Act.
The company argues that Namra’s purported assessments were done after an unlawful intrusion of its right to privacy and based on unlawfully obtained evidence.
Furthermore, Zhong Mei says Namra’s notice of assessment is unlawful because the tax collector and the commissioner misconstrued the key provisions of section 67(2) and further misconstrued other associated provisions, such as section 64 of the NamRA Act relevant to the process of collecting information and actual assessment and determination.
Zhong Mei argues that the actions of Namra and its officials are arbitrary, unfair, unreasonable and unlawful because, on 7 July 2023, the company requested them to pay N$2m and the rest by way of interest.
The company says Namra’s officials agreed to engage, but they proceeded to unlawfully appoint Standard Bank to transfer N$33m in a manner that kills and destroys its business.
Namra says Zhong Mei had filed zero return tax from 2013 until 2018, although the company was actively doing business.
Namra also says they informed Zhong Mei about the assessment and requested information on 23 June 2023.
According to Namra, Zhong Mei undertook to provide a list of the projects it was involved in to the compliance team.
Court records show that Zhong Mei was supposed to pay N$6, 356, 122.88 excluding interest and penalties, but rose to N$9, 989,599.36 for earning N$31, 217, 498 between October 2015 and September 2016.
For October 2017 to 30 September 2018, Zhong Mei earned N$52, 143, 190, and the payable tax was N$16, 685,820.80 excluding interest and penalties.
After including interest (N$15,017, 238 and penalties (N$13,951,999.48), the amount stood at N$45, 655, 059.
Namra says that based on the information and Zhong Mei’s financial statements, VAT returns, and zero income tax returns, there is no doubt that the company earned substantial income between 2013 and 2018.
“Yet, each year under consideration, notices were filed upon which the applicants returned zero income tax returns.
Needless to point out that what is absent from the applicant is a proper examination from the applicant itself as to how this all could have occurred, particularly given the contradictions between the applicant’s versions submitted during the period under consideration and the information contained amongst others in annual financial statements which have also been provided,” Namra says.
Mahnaem Haidula, who deposed the Namra affidavit, says a party in an application such as this must display good faith and be open with the court, particularly the one craving for the relief sought notice of motion in this application.
Haidula says Zhong Mei has not explained the omission and disregard to pay the tax, and the respective amounts assessed by NamRa were not paid.
“In my humble view, this should clearly go to the heart of the relief sought as they have the effect on the interim order sought by the applicant,” Haidula argues.
According to Haidula, Zhong Mei does not indicate whether the N$33m will be preserved in the case the court directs that Namra returns the money.
“Once those funds have been removed NamRa and the minister will have no recourse to those funds, which may later be non-existent. I am advised that in an application of this nature, an applicant must set out the full basis and grounds for the relief sought in its founding affidavit to enable respondents to meet the case before them,” Haidula says.
