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Applicable Taxes


Namibia has adopted IFRS, having previously substantially followed South African GAAP. Namibia currently has a source based system of taxation with the result that Namibian residents are, save for some exceptions and treaties, only taxed on their Namibian income while foreign residents are taxed only on the income generated within Namibia.

The tax guidelines set out below are in respect of the year of assessment commencing 1 March 2009, unless otherwise indicated.

 

  • Natural Persons
    Basis:
    Resident and non-resident individuals are taxable on all income received or accrued from a Namibian source or deemed source that is not of capital nature.

    Residence: The tax treatment of residents and non-residents is normally the same. Questions of residence generally are not relevant except when the non-resident is from a country that has concluded a tax treaty with Namibia.

    Filing Status (Tax on married couples): Namibia employs a self assessment tax regime where spouses are taxed separately on their income.

    Taxable income: Taxable income is an individual’s gross income, less exempt income and deductions.

    Tax Rates for Natural Persons
    N $ 0 - N$ 40 000.00             Not Taxable
    N$ 40 001.00 – N$ 80 000.00         N$ 0 + 27%
    N$ 80 001.00 – N$ 200 000.00       N$ 10 800.00 + 32%
    N$ 200 000.00 – N$ 750 000.00     N$ 49 200.00 + 34%
    Over N$ 750 000                           N$ 236 200.00 +37%

    Exemptions
    Several interest and dividend exemptions are applicable. Also exempted are dividends on special tax-free indefinite period shares in Namibian Building Societies (up to N$ 100 000.00), as well as certain interest earned from unit trusts.

    Deductions
    A deduction of up to N$ 40 000.00 per annum is granted for the aggregate contributions to pension, provident and retirement annuity funds and contributions towards tertiary education policies. No deduction is granted for personal medical expenses or medical aid contributions.

    Donations
    Donations to registered welfare organizations or approved educational institutions are deductible provided that:
    • an individual is not nominated as the beneficiary;
    • a certificate is obtained from the institution or organization;
    • compulsory school fees are not part of this deduction; and
    • the deduction does not create or increase an assessed loss.

    Administration and Compliance for natural persons:
    Tax Year: The tax year for individuals is 1 March to 28 February
    Filing and Payment: Salaried individuals must file their returns by the end of June. Tax on employment income is withheld by the employer under the pay-as-you-earn (PAYE) system and remitted on a monthly basis. Individuals who derive income from business or farming activities must register as provisional taxpayers. For non-farmers, 2 (two) provisional tax payments are due on 31st August and 28th of February. Farmers must make 1 (one) provisional tax payment on 28th of February. Final tax returns must be filed by the end of September.
    Penalties: Taxpayers who file their tax returns late or fail to file are subject to various penalties.

  • Farmers
    Farmers are taxed in the same manner as individuals or companies with the exception of certain provisions regarding capital expenditure. Certain capital expenditures may be deducted in full in the year in which the expenditure is incurred, limited to the farming taxable income for the year. This includes a deduction of capital expenditure relating to power supply from 1 March 2007 for individual taxpayers and 1 January 2007 for taxpayers other than individuals. Any excess farming capital expenditure can be carried forward to the next year of assessment.

  • Taxation of Trusts
    A trust is taxed as a person (see tax rate table for individuals). Income earned by a vesting trust and certain distributions made by a discretionary trust are taxed in the hands of the beneficiary.
  • Corporate Taxation
    Resident (incorporated in Namibia) and non-resident entities are subject to Namibian income tax only on taxable income arising in, or deemed to arise from, a source within Namibia.

    Taxable income is calculated as gross income, less exempt income and deductions. Gross income is the total amount in cash or otherwise, received or accrued during the tax year from a source within or deemed to be within Namibia, excluding receipts or accruals of a capital nature. Certain amounts are specifically included in gross income regardless of their source or capital nature.

    Annual audited financial statements are required for all corporations. These are the public and private limited company, external company (branch of a foreign company).

    Dividends received by residents are exempt from income tax, with the exception of certain Namibian building society dividends.

    Losses may be carried forward indefinitely for setoff against future taxable income, provided the entity does not cease to trade. Losses may not be carried back.

The normal corporation tax rate is 34% for tax years commencing on or after 1 January 2009. Mining companies excluding those mining diamonds and petroleum pay tax at a flat rate of 37.5%. This includes mining service companies. The effective tax rate for diamond mining and diamond mining service companies is 55%. The rate for petroleum mining companies is 35%. None mining income earned by mining companies is taxed at 34%. Recoupment of mining assets is taxed at the mining rate. The tax rate for registered manufacturers is 18% for a 10-year period. Recoupment of manufacturing assets is taxed at the manufacturing tax rate.

Incentives: A number of incentives are available, such as manufacturing and export incentives and Export Processing Zones. These incentives are generally designed to assist manufacturers and exporters, encourage employment, bolster Namibia’s foreign reserves and to promote Namibia as a trade centre for the region. Additionally, tax depreciation allowances are granted for the construction of buildings and the acquisition of capital equipment.


Withholding Tax:
Dividends:
Dividends paid to non-residents and certain foreign held residents are subject to NRST at 10%, unless the rate is reduced under an applicable tax treaty.
Interest: Both residents and non-residents are taxable on Namibian interest income (subject to certain exemptions and tax treaty relief). As from March 1st 2009, Namibian registered banks and Namibian registered unit trust management companies are required to withhold a final tax of 10% from interest accruing to an individual, trust, non- Namibian company and the estate of a deceased person. Namibian companies and entities that are normally exempt from tax (e.g. pension funds) are excluded from this requirement.
Royalties: Royalties paid to non-residents are subject to a withholding tax of 10.2% unless the rate is reduced under an applicable tax treaty.
Branch remittance tax: Profit distributions by local branches are not subject to NRST or other branch profit tax. However, NRST is payable when Namibian branch profits are distributed as dividends by the non-resident head office.


Other Taxes on corporations:
Capital duty:
No
Payroll tax: Tax on employment income must be withheld by the employer under the pay-as-you-earn (PAYE) system and remitted on a monthly basis to the Inland Revenue. The tax threshold is annual taxable income of N$ 40 000.00. PAYE is not required to be deducted from genuine allowances granted to employees to defray business expenditure.
Real Property Tax: No
Social Security: Both employers and employees are required to make social security contributions at a rate of 0.9% of the employee’s basic salary income up to a maximum of N$ 54 per month. Employers must make employees compensation contributions for employees whose pay is below a specified threshold.
Stamp Duty: Stamp duty is imposed on various instruments such as the transfer of shares, transfer deeds, rent and partnership agreements etc. Scheduled rates exist for these duties.


Administration and compliance for corporations:
Tax Year:
the tax year corresponds to a corporation’s financial year.
Consolidated returns: There is no system of group taxation in Namibia. Taxable entities are taxed separately.
Filing requirements: Provisional tax returns are due six moths after the beginning of a corporation’s financial year and at year end. Final tax returns, together with a computation of taxable income and the payment of any corporation tax, owed for the relevant tax year, are due within seven months after the taxpayer’s year end. Reasonable extensions may be granted to submit tax returns.
Penalties: Taxpayers who file late or fail to file are subject to various penalties.
Rulings: A ruling may be obtained from the tax authorities if required.

 

  • Donations Tax, Estate Duty, Capital Gains Tax
    There is currently no donations tax, estate duty or capital gains tax in Namibia. Certain capital gains are taxed as normal income.

  • There is no Surtax in Namibia
  • There is no Alternative minimum tax
  • Foreign Tax Credit: A foreign tax credit may be obtained only for tax paid to jurisdictions with which Namibia has concluded a tax treaty.
  • Tax Treaties: Namibia has concluded 11 tax treaties.
  • Tax Authorities: Inland Revenue or Receiver of Revenue.

Value Added Tax (VAT):
Taxable Transactions:
VAT is imposed on the supply and import of most goods and services.
Rates: The standard rate is 15%. Certain goods and services are zero-rated, such as direct exports of goods, international transport services, certain services rendered to non-resident persons and the sale of specified basic food items. 
Zero Rated Transactions: The supply by a registered person to another registered person of a taxable activity as a going concern may be zero-rated in terms of the VAT Act in the following circumstances:

  • the property/business is sold as a going concern,
  • the business will be an income earning activity on date of registration of transfer;
  • both parties, the transferee and the transferor is registered VAT vendors in terms of the VAT Act on date of the supply;
  • both parties should notify Inland Revenue of the sale within 21days after the time of the supply.

Registration for VAT: Enterprises with expected turnover of NAD 200 000.00 or more of taxable supplies in any 12-month period are required to register for VAT purposes.
Filing and Payment: VAT returns must be filed bimonthly.

  • Applicable Legislation relating to Tax matters in Namibia
    • Namibian Income Tax Act;
    • Namibian Value Added Tax Act;
    • Namibian Stamp Duty Act;
    • Namibian Petroleum Taxation Act;
    • Namibian Transfer Duty Act;
    • Namibian Social Security Act.

Acknowledgement to Deloitte & Touche Namibia:

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PO Box 47
Windhoek
Namibia

Tel: +264 61 285 5062
Fax: +264 61 285 5050
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