Namibian TAX GUIDE FOR INDIVIDUALS - EMPLOYEES - SELF EMPLOYED SMES
TAX GUIDE
FOR INDIVIDUALS
Table of Contents
Individual Tax Payers
Update 2022 First publication credit Deloite & Touch. While every care
has been taken in the compilation of the information contained herein, no
liability is accepted for the consequences of any inaccuracies contained in
this guide. Please contact First Business Multi Service Limited at +264 81 790
1079 / + 264 81 497 5840 or email: businessadvisorynamibia@gmail.com / hq.fbms@gmail.com
Individual Tax Payers
Tax Rates and Rebates
Individuals,
Estates & Trusts (Year ending 28 February 2022)
|
Taxable income |
Rate of tax |
|
N$0 – N$50 000 |
Not taxable |
|
N$50 001 – N$100
000 |
18% of taxable income |
|
N$100 001 – N$300
000 |
N$9 000 + 25% of taxable income above
N$100 000 |
|
N$300 001 – N$500
000 |
N$59 000 + 28% of taxable income above
N$300 000 |
|
N$500 001 – N$800
000 |
N$115 000+ 30% of taxable income above
N$500 000 |
|
N$800 001 – N$1
500 000 |
N$205 000 + 32% of taxable income above
N$800 000 |
|
N$1 500 001 and
above |
N$429 000 + 37% of taxable income above
N$1500 000 |
Exemptions
Interest (for
persons other than a company) received from:
Government stock or
securities, including Treasury Bills - Unlimited;
Post Office Savings
Bank - Unlimited; and
Foreign
institutions1 – Unlimited; and
Provided that acquisition is funded from
non-Namibian capital or investment, relates to a foreign business and the
interest is taxed in the foreign country.
Deductions
•
•
Donations
Donations
to registered welfare organisations or approved educational institutions are
deductible provided that:
• An
individual is not nominated as the beneficiary;
• A
certificate is obtained from the institution or organisation;
• Compulsory
school fees are not allowed as a deduction; and
•
Taxation of Married Persons
Husbands and wives
are taxed separately.
Employees’ Tax (PAYE)
PAYE must be
deducted at source on a monthly basis by the employer. The tax threshold is an
annual taxable income of N$ 50 000. PAYE is not required to be deducted from
genuine/ bona fide allowances granted to employees to defray business
expenditure. From 30 December 2015 payments to directors of private companies
and directors’ fees of public company directors are subject to PAYE.
Travel Allowance
Expenditure
incurred for business purposes may be deducted from the allowance. The capital
cost of the vehicle may be claimed over three years. Business expenditure is
calculated in the ratio of business kilometers over total kilometers. A
detailed logbook must be kept.
Social Security
Contributions
The employer and
employee must each make Social Security contributions at the rate of 0.9% of
the employee’s basic salary (maximum N$81 per month).
Valuation of Certain Other Fringe Benefits
Company Car Fringe Benefit
•
Taxable value of the fringe benefit is
1.5% per month of the cost price of the vehicle where the employer bears all
costs relating to the vehicle and 1.4% per month where the employee bears the
fuel costs.
•
Pool vehicles are taxed at N$100 per
month.
Free or Subsidised Services
The taxable value
of the fringe benefit is the cost to the employer of providing the service less
the consideration paid by the employee.
Housing and other Soft Loans
•
The taxable value is the difference
between the interest payable on the loan by the employee and 12% per annum.
•
Exempt loans:
Ø
Casual loans not exceeding N$3 000 in
aggregate;
Ø
Study loans granted to an employee for own
studies; and
Ø
Approved housing scheme loans or
subsidies: Generally, one third of the taxable benefit is exempt.
Meals
The taxable value
of meal coupons and free or subsidised meals, if used and received at the
residence, is N$ 100 per month for every family member of 6 years and
older. Meals provided at business
premises are exempt.
Residential Accommodation
An employee
provided with residential accommodation owned by his employer is taxed
according to the following table
|
|
Rooms / Monthly Taxable Benefit |
|
|
|
|
||||
|
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
8 + |
|
|
Location |
N$ |
N$ |
N$ |
N$ |
N$ |
N$ |
N$ |
N$ |
N$ |
|
WHK |
500 |
750 |
1000 |
1400 |
1800 |
2200 |
2800 |
3400 |
4000 |
|
WB SWK |
350 |
550 |
750 |
1000 |
1300 |
1700 |
2100 |
2550 |
3000 |
|
Other Municipal
Areas |
250 |
375 |
500 |
700 |
900 |
1100 |
1400 |
1700 |
2000 |
|
Other Towns |
125 |
175 |
250 |
350 |
450 |
550 |
700 |
850 |
1000 |
Generally, one
third of the taxable benefit is exempt if the employer has an approved housing
scheme.
Farmers
Farmers are taxed
in the same manner as individuals or companies with the exception of certain
provisions regarding capital expenditure.
Certain capital expenditure 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.
Any excess farming capital expenditure can be carried forward to the
next year of assessment. Farmers need to
ring-fence farming income in certain circumstances.
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. A proposed amendment will see trading trusts
be treated as a company for tax purposes.
In the main budget of 2022/2023 a delay in the proposal was announced.
Donations Tax, Estate Duty,
Capital Gains Tax
There is currently
no donations tax, estate duty or capital gains tax in Namibia. Certain capital
gains, including any change in ownership of mineral and petroleum licenses or
the right to mine minerals or petroleum in Namibia, are taxed as normal income.
Transfer Duty
Transfer duty is
levied on the value of any property acquired. The rates below are effective
from 1 June 2013:
Any property
acquired by natural persons including mineral rights (except the category
immediately below):
|
Value |
Rates of duty |
|
N$0 – N$600 000 |
0% |
|
N$600 001 - N$1
million |
N$ nil + 1% |
|
N$1 million - N$2
million |
N$4 000 + 5% |
|
Over N$2 million |
N$54 000 + 8% |
Agricultural land
acquired by natural persons and financed by Agricultural Bank of Namibia:
|
Value |
Rates of duty |
|
N$0 - N$1.5
million |
0% |
|
N$1.5 million -
N$2.5 million |
N$ nil + 1% |
|
Over N$2.5
million |
N$10 000 + 3% |
Any property,
including mineral rights, acquired by persons other than natural persons,
including trusts
• 12% of the value of
the property
In determining the
value for transfer duty purposes, VAT, where applicable, is excluded.
The sale of shares/
membership interest in property owning companies/ close corporations are
currently not subject to transfer duties.
Value-Added Tax (VAT)
VAT is imposed on
the supply and import of most goods and services at a rate of 15%. Qualifying
exports and certain other supplies may be zero-rated, including the following
foodstuffs:
• Mahango, mahango
meal and maize meal;
• Fresh and dried
beans (excl. canned or frozen beans);
• Sunflower cooking
oil;
• Animal fat used for
preparation of food;
• Bread flour, cake flour
and bread;
• Fresh milk;
• White and brown
sugar; and
• Sanitary pads (to
be added to the zero-rating list in 2022).
Stamp Duty
Stamp duty is
payable at 0.2% on the issue or transfer of shares. Shares listed on the Namibian Stock Exchange
are exempt from this duty.
Stamp Duty is also
imposed on the acquisition of immovable property and a range of other
instruments.
The rates on the
acquisition of immovable property from 1 June 2013 by an individual are:
|
Value |
Rates of duty |
|
0 – N$600 000 |
0% |
|
Over N$600 001 |
N$10 for every N$1 000 |
Stamp duty is
payable at N$12 for every N$1 000 or part therefore of the value of the
immovable property where purchased by a juristic person or a trust.
Withholding
Taxes
Non-residents
Certain payments to
non-residents are subject to withholding taxes as shown below:
Dividends2 10% /
20%
Royalties3
10%
Interest4
10%
Service
fees and foreign directors5 10%
Entertainment
fees6 25%
Certain dividends declared to foreign-held
Namibian holding companies are subject to non-resident shareholder’s tax at
10%.
Where the shareholding is less than 25%,
the withholding tax rate is 20%. These
rates may be reduced by a tax treaty.
The rate is applicable from 30 December
2015. This rate may be reduced by a tax treaty. Withholding tax on royalties
includes use of industrial, commercial or scientific equipment from 30 December
2015.
Namibian registered Banks and Unit Trust
Management Companies must withhold a final tax on interest of 10% as from 1
March 2009. From 30 December 2015 all
foreign interest is also subject to 10% withholding tax.
This withholding tax is applicable on
management fees, administration fees, technical fees and consulting fees.
Effective from 30 December 2011 at a rate of 25%. Rate changed to 10% on 30 December 2015.This
rate may be reduced by a tax treaty.
(1) Effective from 30
December 2011.
Corporate Taxes
Corporate income tax rates
• Basic Rate7 32%
• Diamond mining – effective rate8 55%
• Registered manufacturers9 18%
• Mining (other than diamond/petroleum)7 37.5%
• Petroleum mining 35%
• Branches of foreign companies
32%
• Retirement funds Exempt
(1) Rate is effective for years of assessment commencing on or after 1
January 2015. Previously the rate was 33%.
(2) Mining companies and manufacturing companies pay tax on
non-mining/ non-manufacturing income at 32%.
(3) In terms of the current wording in the Income Tax Act, the rate
was abolished. Changes may be made for
the rate to still apply until 2025.
Annual Duty on Share
Capital
Annual
duty N$6.50 per N$10 000
(Minimum N$80)
Levied on a
company’s issued share capital plus share premium and certain undistributed
reserves. In the case of an external
company, the duty is levied on the capital of the foreign parent company.
Vocational Education
and Training Levy
A monthly VET levy
of 1% of the employer’s monthly payroll is payable by employers with an annual
payroll of N$1 million or more. Certain
employers are exempt. The levy is payable to the Namibian Training Authority.
Employers may claim
a refund in relation to training costs incurred during the relevant year.
Capital Allowances for
Businesses
• Moveable assets
used for trade purposes 33⅓%
• Buildings used for
trade purposes (On cost of erection):
• in year brought
into use 20%
• subsequent 20 years
4%
• Certain farming
capital expenditure 100% (Limited to
farming taxable income)
• Intellectual
property Period of use
• Lease premiums Period of lease10
• Leasehold
improvements Period of lease
(4) Maximum 25 years
Incentives
Manufacturers
•
Registered manufacturers qualify for the
following incentives until 2025:
•
Buildings: The normal 4% annual allowance
is increased to 8% (applies for 10 years); and
•
An additional 25% deduction for:
§
certain export marketing expenses;
§
approved training costs;
§
remuneration of manufacturing employees;
and
§
Certain land-based transportation costs
(applies for 10 years from granting of manufacturing status).
Exporters of manufactured
goods
Reduction in
taxable income11 80%
(5)
From the export of goods manufactured in Namibia (excluding
fish/meat products). Applicable until
2025
Mining - Minerals and Petroleum
The sale, donation,
expropriation, cession, grant, transfer or other alienation of mineral or
petroleum licences or mineral or petroleum rights is subject to income tax. The
sale of shares, directly or indirectly, in a company that holds such licences
or rights is subject to income tax.12
(6)
Applicable for
minerals from 1 January 2012 and for Petroleum from 30 December 2015.
Export Processing Zones (EPZ)
EPZ status confers
total exemption from income tax, VAT, customs and excise duty, stamp and
transfer duty, but not PAYE and withholding taxes. Essential requirements
include conducting a manufacturing activity and exporting all goods outside the
Southern African Customs Union. All tax exemptions are repealed from 1 January
2025.
Transfer Pricing
Transfer pricing
legislation requires an arm’s length consideration to be charged for cross
border goods or services transactions between connected persons.
Thin Capitalisation
Thin
capitalisation requires foreign held Namibian companies to be adequately capitalised.
Interest charged on excessive debt is not tax deductible.
Land Tax
Land tax is payable
for every 12 month period ending 28 February at the following rates (applied to
the unimproved site value):
Namibian resident
owner 0.75%
Non-resident owner 1.75%
On each additional
farm the rate increases by 0.25%
Environmental Tax
Carbon taxes,
environmental levies on light bulbs, certain tyres and certain plastic products
are applicable on importation or manufacturing at specified rates per unit of
the affected items.
Export levies
Export levies13
apply on the export certain of minerals, gas and crude oil products,
certain fish products and certain forestry products for all exports made on or
after 1 June 2017.
Rates vary between 0% and 2%.
Exchange Controls
The
Namibian Dollar is linked to the South African Rand (N$1=ZAR1). Namibia is a member of the Common Monetary
Area (with South Africa, Lesotho and Eswatini).
The Common Monetary Area is currently subject to a system of exchange
controls, administered in Namibia by the Bank of Namibia
This
guide was initially published by Deloite and Touch and updated in August 2022
by First Business Multi Service Limited.
While every care has been
taken in the compilation of the information contained herein, no liability is
accepted for the consequences of any inaccuracies contained in this guide.
Please contact First Business Multi Service Limited at +264 81 790 1079 / + 264
81 497 5840 or email: businessadvisorynamibia@gmail.com / hq.fbms@gmail.com
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