In Namibia, employers have several tax obligations related to their employees' salaries and benefits.

Employee Tax (PAYE)

Any person paying an employee remuneration must register as an employer with the Namibian Revenue Authority (NamRA) within 14 days. Employers must withhold income tax at source (PAYE) from employee salaries according to the applicable tax rates. The deducted tax and a return detailing employee information, total remuneration paid, and tax deducted must be submitted to NamRA by the 20th day following the month the tax was withheld.

Social Security Contributions

Employers are required to contribute to the Maternity Leave, Sick Leave, and Death Benefit Fund. They contribute 0.9% of an employee's basic salary, subject to a minimum of NAD 2.70 and a maximum of NAD 81 per month.

Workmen's Compensation Fund

Employers also contribute to a fund that provides benefits for work-related injuries, disabilities, and death. Contribution rates vary by industry risk level, ranging from 1% to 8%.

Namibia uses a progressive income tax system where higher-earning individuals pay higher tax rates. The most current tax brackets and rates can be found on the website of Namibia Revenue Agency (NamRA). Employers in Namibia are responsible for withholding Pay-As-You-Earn (PAYE) from their employees' salaries based on official tax tables provided by NamRA.

Social Security Contributions

Employees in Namibia are required to contribute to the Social Security Commission (SSC) for social benefits coverage. The employee contribution rate is 0.9% of the employee's basic wage, with the same minimum and maximum limits as the employer contribution (NAD 2.70 to NAD 81 per month). The employer is responsible for withholding the employee's contribution and remitting it to the SSC.

Allowances and Deductions

Contributions to approved pension funds are tax-deductible up to a specific limit. Employees may have deductions for medical aid contributions up to certain thresholds.

Additional Notes

Non-resident employees working in Namibia are subject to a flat 20% withholding tax on their income, with limited deductions possible. Some employment benefits may be subject to taxation as part of an employee's taxable income.

VAT is a consumption-based tax applied to most goods and services supplied in Namibia, with the standard VAT rate being 15%. A wide range of services provided within Namibia are subject to VAT, including professional services, technical services, hospitality and tourism-related services, transportation services, rental and leasing services, telecommunication services, and entertainment services.

Services Subject to VAT

• Professional services (e.g., legal, accounting, consulting)
• Technical services (e.g., IT services, engineering, repairs)
• Hospitality and tourism-related services
• Transportation services
• Rental and leasing services
• Telecommunication services
• Entertainment services

Concept of Supply

VAT is triggered when a taxable supply of services is made in Namibia for consideration (payment).

Place of Supply for Services

The place where a service is considered to be supplied is crucial in determining VAT liability. The general rules are:

• Services related to immovable property: The place of supply is where the property is located.
• B2B (Business-to-Business) services: The place of supply is usually where the recipient/customer is established.
• B2C (Business-to-Consumer) services: The place of supply can depend on specific rules for different types of services (e.g., electronically supplied services).

VAT Liability and Registration

Businesses that supply taxable goods and services in Namibia with a turnover exceeding the VAT registration threshold (currently NAD 500,000 annually) must register for VAT. In some situations, the recipient of a service may be liable for VAT under the "reverse charge" mechanism (usually applies when foreign providers supply services to Namibian businesses).

VAT Invoicing

Taxable businesses must issue VAT invoices containing specific details:

• Supplier and customer information (names, VAT registration numbers)
• Date and invoice number
• Description of the service provided
• Taxable amount and VAT charged

VAT Calculation, Filing, and Payment

VAT is calculated by applying the 15% rate to the taxable value of the service. Businesses can generally claim input VAT (the VAT paid on business-related purchases) to offset against their output VAT liability. VAT returns generally need to be filed monthly or quarterly, and payments made by the deadlines.

VAT Exemptions

Certain types of services are exempt from VAT in Namibia. These may include:

• Financial services
• Medical and healthcare services
• Educational services

Additional Notes

Specific services, mainly exports, are subject to a 0% VAT rate. This allows businesses engaged in exports to reclaim VAT paid on their inputs. Certain types of services may have specific VAT rules or complexities. Namibia's VAT regulations are subject to change.

Namibia offers a variety of tax incentives to attract businesses and encourage investment. However, it's important to note that some of the previously available incentives have been revised or repealed. Here's a breakdown of the current landscape:

General Tax Deductions

Businesses can deduct a portion of the cost of capital expenditures (buildings, machinery) from their taxable income over a set period. This includes:

• An initial deduction of 20% for buildings in the year they are brought into use, followed by 4% deductions for the next 20 years.
• One-third deduction spread over three years for vehicles and machinery.

Expenditures for employee remuneration and training are generally tax-deductible.

Export Incentives

While the special tax rate for manufacturers was removed in 2020, there are still benefits for businesses involved in exporting:

• Regular companies can deduct export-related expenses from their taxable income.

Companies operating within a designated Export Processing Zone (EPZ) enjoy significant tax benefits, including:

• Exemption from corporate tax.
• No import or excise duties on goods brought into the zone.
• Negotiable tax packages.

It's important to consult with a Namibian tax professional to determine which incentives your business may qualify for and navigate the application process.