NamibiaTax Obligations Detailed

In Namibia, employers have various tax obligations, including PAYE, Social Security, and other compliance requirements. As of February 5, 2025, the following overview applies, keeping in mind that tax laws are subject to change.

Employer Taxes

• PAYE (Pay-As-You-Earn): This tax is deducted from employees' salaries based on progressive tax brackets. The tax-free threshold is NAD 100,000 per year. Employers must remit PAYE to NamRA by the 20th of the month following the deduction.
• Social Security: Employers contribute 0.9% of each employee's earnings up to a maximum of NAD 108,000 annually (NAD 81 monthly). Employees also contribute 0.9% with the same threshold and maximum contribution limit.
• Corporate Income Tax (CIT): The CIT rate is 31% for financial years commencing on or after January 1, 2024. This rate further reduces to 30% for financial years starting on or after January 1, 2025. Different rates apply to specific industries like mining and long-term insurance.

Employer Reporting and Compliance

• PAYE Reporting: Employers must submit monthly PAYE returns to NamRA within 20 days after the month-end. Annual returns, including employee details, total remuneration, and tax deducted, are due by February 28th of the following year.
• Tax Registration: Employers are responsible for registering new employees for income tax if they earn above NAD 40,000 annually or have other income exceeding NAD 5,000 monthly. They also register employees for PAYE with the Receiver of Revenue.
• Employer Registration: Upon becoming an employer, one must register with the Domestic Tax Department at NamRA within 14 days.

Penalties and Interest

Late payment of PAYE attracts penalties of 10% and interest of 20% per month, calculated on the outstanding tax amount. These penalties also apply to late submissions of the monthly PAYE returns.

Other Tax Considerations

• Withholding Tax: A 10% withholding tax applies to interest earned by residents from Namibian financial institutions, interest paid to non-residents, and in certain cases, dividends and royalties paid to non-residents.
• Individual Income Tax Returns: Employees must file annual income tax returns by June 30th.
• Provisional Tax: Businesses and self-employed individuals usually make provisional tax payments, with deadlines in August and June/September.

This information is for general guidance only and should not substitute professional tax advice. Consulting with a tax advisor is recommended for specific situations and up-to-date information.

In Namibia, employee tax deductions primarily involve Pay-As-You-Earn (PAYE) income tax and social security contributions.

Income Tax (PAYE)

As of March 1, 2024, the tax-free threshold is N$100,000 per year. This means no income tax is payable on the first N$100,000 earned. Income above this threshold is taxed at progressive rates. For the 2024/2025 tax year, PAYE was over-deducted for employees earning above N$50,000 annually due to mid-year tax amendments. Employers are obligated to reimburse the excess PAYE deducted between March 1, 2024 and August 31, 2024.

• Tax Rates (effective from March 1, 2024):

  • Up to N$100,000: 0%
  • N$100,001 - N$300,000: 18% of the amount exceeding N$100,000
  • N$300,001 - N$500,000: N$36,000 + 25% of the amount exceeding N$300,000
  • N$500,001 - N$800,000: N$86,000 + 28% of the amount exceeding N$500,000
  • N$800,001 - N$1,500,000: N$170,000 + 32% of the amount exceeding N$800,000
  • Over N$1,500,000: N$390,000 + 37% of the amount exceeding N$1,500,000

• Deductions: Certain deductions can reduce taxable income, up to a combined limit of N$150,000 per year. These include:

  • Contributions to approved pension or provident funds (mandatory for employment)
  • Contributions to retirement annuity funds
  • Premiums paid for a child's education policy

• Fringe Benefits: Several fringe benefits are considered taxable income, including:

  • Housing allowance (1/3 is exempt if the employer provides an approved housing scheme)
  • Company car usage (taxed at 1.5% of the car's value if the employer covers all costs, and 1.4% if the employee pays for fuel)

• Deadlines: Annual income tax returns are due by June 30th each year. Monthly PAYE returns are due within 20 days after the month-end.

Social Security Contributions

Both employers and employees contribute to the Social Security Fund. Specific contribution rates and thresholds apply, although the sources provided don't specify these exact values. Employers are responsible for deducting employee contributions from salaries and remitting them to the Social Security Commission along with their own contributions.

Other Deductions

Beyond statutory deductions, other deductions may apply based on individual circumstances or employment agreements, such as loan repayments, union dues, or medical aid contributions (although employer contributions to medical aid are not taxable for the employee).

National Minimum Wage

As of January 2025, a national minimum wage of N$18 per hour is in effect, potentially influencing tax calculations for lower-income earners.

It is important to note that tax laws and regulations are subject to change. This information is based on the available sources as of February 5, 2025, and might not reflect the most recent updates. Consulting official government resources or a tax advisor is recommended for the latest information and personalized advice.

Value Added Tax (VAT) in Namibia is a consumption tax levied on most goods and services, as well as imported goods.

VAT Rates

• Standard Rate: 15% (This applies to most goods and services.)
• Zero Rate: 0% (Applies to specific goods and services like basic foodstuffs and exports.)
• Exempt: Certain supplies are exempt, primarily financial, medical, and educational services.

VAT Registration

• Mandatory Registration Threshold: N$1,000,000 (as of the 2024/2025 fiscal year). Businesses with taxable supplies exceeding this amount annually are required to register.
• Voluntary Registration Threshold: N$200,000. Businesses can voluntarily register if their annual taxable supplies exceed this lower threshold. If choosing voluntary registration, the business must remain registered for two years.
• Businesses involved in import/export activities may need to register regardless of turnover.

Filing and Payment

• VAT Returns: Filed monthly, due by the 25th of the month following the tax period.
• Import VAT: Payable by the 20th of the month following the import.
• Farming Businesses: Can choose bi-monthly, quarterly, semi-annual, or annual tax periods.

Exempt Supplies

These are not subject to VAT and do not qualify for input tax deductions. Examples include:

• Financial services
• Public passenger transport
• Educational services
• Medical services
• Rental of residential accommodation

Zero-Rated Supplies

These are taxable at 0%. Examples include:

• Basic foodstuffs
• Exports of goods and services

Input Tax

Registered businesses can claim input tax credits on VAT paid on goods and services used for taxable purposes. However, some restrictions exist for things such as passenger vehicles, entertainment expenses, and club memberships.

Electronic Invoicing

Namibia is currently reviewing the possible implementation of a mandatory electronic invoicing system for VAT. This system could help to improve tax administration and reduce compliance burden for businesses.

Other Considerations

• Penalties and interest may apply for late filing or non-compliance.
• Maintaining accurate records in English is essential for all registered businesses.
• Tax invoices must include specific information such as VAT registration numbers and amounts exclusive and inclusive of VAT.

As of today, 05 February 2025, this information is believed to be accurate. However, tax regulations are subject to change.

Namibia offers several tax incentives aimed at stimulating economic growth and attracting investment, particularly in manufacturing and export-oriented sectors. As of February 5, 2025, these incentives are undergoing changes with the introduction of Special Economic Zones (SEZs) and adjustments to existing programs.

Incentives for Manufacturers and Exporters

• Registered Manufacturers: A reduced corporate tax rate of 18% is available for the first 10 years of operation, reverting to the standard rate thereafter. Additional benefits may include special building allowances, accelerated depreciation on factory buildings (20% in the first year and the remaining balance at 8% over the next ten years), and allowances for transport costs.

• Exporters of Manufactured Goods: An 80% allowance on taxable income derived from exporting manufactured goods is available, along with additional deductions for export promotion expenses. Exporters may also be eligible for transport and training allowances.

• Export Processing Zones (EPZs): While transitioning to the SEZ model, existing EPZ enterprises enjoy a grandfathering period until December 31, 2025, maintaining benefits like 0% corporate tax for the first 10 years and VAT zero-rating on goods and services used within the EPZ. Exemptions from stamp and transfer duties also apply.

Special Economic Zones (SEZs)

The SEZ regime offers a reduced corporate income tax rate of 20% and VAT zero-rating, along with non-fiscal incentives like a One-Stop Shop for administrative processes and facilitated visa processing for foreign investors. Existing EPZ enterprises can apply to transition into the SEZ framework.

General Tax Updates & Incentives

• Corporate Tax Reduction: The non-mining corporate tax rate has been reduced to 31% as of January 1, 2024, with further reductions to 30% in 2025 and a planned reduction to 28% in 2026/2027.

• Individual Income Tax Relief: The income tax threshold has been increased to N$100,000, effectively exempting income up to this amount from taxation.

• VAT Threshold Increase: The mandatory VAT registration threshold has been raised to N$1 million.

• Building Improvement Deductions: A 10% annual capital depreciation allowance is available for eligible trade buildings.

• Internship Tax Incentive Program: A new program has been introduced, though details are not yet fully available.

Application Procedures

Application procedures vary depending on the specific incentive. Generally, applications must be submitted to the relevant ministry, such as the Ministry of Industrialisation, Trade and SME Development, or the Ministry of Finance. For SEZs, applications are routed through the SEZ Authority. Detailed information and specific requirements can be obtained from these authorities.

Further Information

It is advisable to consult official government resources and tax professionals for the most current and comprehensive information. Tax laws and regulations are subject to change, and the details provided here are based on available information as of February 5, 2025.