By Shinovene Immanuel | 6 November 2020
A N$180 MILLION tender to build an internet-based tax administration system for the Ministry of Finance has divided opinions in the government.
There has been a push and pull in the past few months between the supplier and the government over this contract’s reliability and cost.
To some, those questioning the deal are “jealous”, because other companies were eyeing the tender.
Others liken the contract to “being in an abusive marriage with no ability to divorce”.
“It’s been a mess for the last six years,” says a person familiar with the finance ministry system. “Those who negotiated it are still around the table and defend everything around it,” the source says.
It all started in 2014 when the finance ministry awarded this contract to a joint venture between a company of businessman Vaino Nghipondoka, Profile Investments, and Beijing CSSCA Technologies, a company with direct ties to the Chinese government.
The tax platform contract was valued at N$180 million in 2014 to build a system and online platform for more than 767 500 taxpayers across the country.
But the new system largely failed to live up to expectations after concerns about technical capacity and friendliness.
“It’s the payment of taxes and how that IT contract is structured. Where have you heard that six years later, not a single IT technician in the ministry can even do a basic back-up,” a source familiar with this tender says.
“The supplier is trying to charge obscene monthly amounts for maintenance. They can collapse the system and we won’t be able to restore information,” the source says.
The Namibian understands he has been crucial in reducing the amounts asked by the private company.
The finance ministry vaguely announced the extension of deadlines for the submission of annual income tax returns to 31 March 2021.
This is the first time the taxman has extended the submission of returns in a long time.
Some point to this extension as a clear symptom of the failure to maintain the tax system.
The Namibian understands the finance ministry has been negotiating with the involved company on maintaining the tax system for the past three months.
Sources say Ngipondoka and his Chinese partners initially valued the maintenance deal at around N$1,7 million per month.
At some point, the private company allegedly walked away from the talks because the government was offering N$10 million for three years. The company allegedly refused that offer.
The parties then renegotiated and settled for around N$1 million a year for three years (36 months) for maintenance.
Ngipondoka’s company believes they are being lenient to the government by settling for N$1 million a month since the work is valued at around N$3 million a month.
They believe the N$1 million includes paying technical expats, who are allegedly in the country to keep the system running.
Nghipondoka yesterday said there was no bad blood between their joint venture and the finance ministry.
“There was no stand-off. It’s pure negotiations. Please talk to the ministry,” he said.
He said the structure of the agreement was standard IT practice.
“It works like this: Whoever implements the system should maintain the system because they have knowledge of the system,” he said.
Questions sent to Shiimi were not answered by yesterday.
News about the continuous challenges over the tax platform comes at a time when the government is promising to polish its tax collection efforts to fund its budget.
New Era reported last month that the Namibian Employers’ Federation (NEF) said the Integrated Tax Administration System (Itas) portal lacked guidelines for employers, making the system unfriendly to use.
The NEF said the deadline extension was necessary based on the needs of employers, as many had difficulty with the Itas portal.
NEF secretary general Daan Strauss says a recent federation survey indicated that 78% of respondents cited various challenges on the Itas portal.
In addition, the survey shows that 68% of employers were in favour of reverting to a manual process instead of electronic submissions.
The introduction of the digital tax platform has attracted mixed reaction in the country.
Red flags were raised as early as last year when some commentators said the platform was not user-friendly.
The Namibian reported that PwC tax partner Johan Nel raised questions over the system.
“It is a challenging process, but I eventually managed to register in my own capacity,” Nel then said.
He said taxpayers’ identification information on Inland Revenue’s former system should be the same as that which is used to register, or it would not work.
“This provides a challenge to taxpayers as they are not always aware of the information that is on Inland Revenue’s system, and now still needs Inland Revenue to correct it,” Nel said.
Beijing CSSCA Technologies, the company that built Namibia’s digital tax system, is a Chinese software company that has links to the Chinese government.
“We are proud of our heritage from the China National Software & Service Corporation, which was founded in 1980 as one of the biggest China state-owned software companies and has contributed tremendously to the development of the China ICT industry over the past 30 years,” the company says.
Beijing CSSCA Technologies appears to be a hot favourite in winning government digital jobs.
It says on its website it runs electronic document and report management systems for the Office of the President, the Office of the Prime Minister and other ministries.
The Namibian reported earlier this year that the same Chinese software development company developed and implemented integrated case-management systems at the legal advice and civil litigation directorates at the Office of the Attorney General.
The same company created an e-policing platform for the Namibian Police to improve crime prevention, detection and control.