EY | Assurance | Tax | Transactions | Advisory
@EY_Africa
© 2016 EYGM Limited.
All Rights Reserved
Creative Services ref. 160224. Artwork by Gumede.
ey.com/za
Basis of taxation
Manufacturing Companies
Withholding tax on royalties (WHTR)
The liability of a taxpayer is based on the source of the income and not on the residence
of the taxpayer. Non-residents are therefore taxed on their income generated from a
source within Namibia unless resident in a country with which Namibia has concluded a
double taxation agreement (DTA) and qualifying for relief in terms of that DTA.
The basic rate of tax payable by manufacturing companies remains unchanged at 18%
for the first 10 years of assessment as a registered manufacturer. The normal tax rate
of 32% will apply after the 10 year period ends.
Namibia has entered into DTAs with South Africa, India, the United Kingdom, Botswana,
France, Germany, Malaysia, Mauritius, Romania, Russian Federation and Sweden.
Withholding tax on services (WHTS)
WHTR is imposed at a rate of 10%, on payments for the use or right of use of any patent,
design, trademark, copyright, model, pattern, plan, formula or process or any other
property of a similar nature with effect from 30 December 2015 (previously 9.6%). It
also includes payments made for the imparting of any scientific, technical, industrial or
commercial knowledge or information for use in Namibia or the undertaking to render
any assistance or service in connection with the application of or utilisation of the
knowledge or information.
Non-manufacturing companies
WHTS is imposed on service payments for managerial, technical and consultative
services at a rate of 10% with effect from 30 December 2015 (previously 25%). It is
also imposed on directors’ fees and entertainment fees. The tax rate may be reduced in
terms of a DTA.
The basic rate of tax payable by companies effective for years of assessment
commencing on or after 1 January 2015 is 32%.
Mining, Mining Services Companies and Oil and Gas
extraction companies
The basic rate of tax payable by hard rock mining companies and companies rendering
services in connection with mining on behalf of a person licensed to conduct hard rock
mining operations remains unchanged at 37,5%.
The basic rate of tax payable by diamond mining companies and companies rendering
services in connection with mining on behalf of a person licensed to conduct diamond
mining operations remains unchanged at 55%.
The basic rate of tax payable by oil and gas extraction companies remains unchanged
at 35%. These companies are also subject to additional profits tax that is calculated in
terms of a complex formula contained in the Petroleum Taxation Act.
Disclaimer
This tax facts card is based on the budget proposals tabled in Parliament by the Minister of Finance on
25 February 2016 which are subject to approval by Parliament.
The tax facts card is for general guidance only. Specific tax advice must be obtained when considering
the tax effects of particular transactions. No liability is accepted for the consequence of any inaccuracies
contained in this tax facts card.
Withholding tax on interest – Namibian banks and
unit trusts (WHTI)
WHTI is imposed on interest paid by a Namibian bank or unit trust to any person other
than a Namibian company or unit trust. The tax is withheld by the payer at the rate
of 10%. The withholding tax on interest is generally a final tax and the interest is not
subject to normal income tax in the hands of the recipient.
WHTI is also imposed on any amount of interest that is not distributed by a Namibian
unit trust at the end of its financial year.
With effect from 30 December 2015 WHTR is also imposed on payments to nonresidents for the use of industrial, commercial or scientific equipment. Rentals of
movable goods likewise attract WHTR from this date. The tax rate may be reduced in
terms of a DTA.
Non-resident shareholder’s tax (NRST)
Capital allowances are inter alia available on plant and machinery, vehicles and other
movable assets, deductible over 3 year tax years in equal instalments. Building
allowances can be claimed in respect of the cost to erect a building - 20% of the cost of
erection is deductible in the year the building is brought into use and 4% in each of the
ensuing 20 years.
Mining companies are allowed deductions in respect of exploration expenditure and
development expenditure. Exploration expenditure is deductible in full in the year
production commences, while development expenditure is deductible over 3 tax years in
equal instalments from the year production commences.
Exempt income
Capital gains tax
Namibia has transfer pricing legislation that applies to cross-border transactions between
connected persons and requires these transactions to take place at arm’s length.
Namibia also has thin capitalisation legislation which provides that if a non-resident party
grants financial assistance to a resident party or other person in whom the non-resident
has a 25% or more shareholding, and the amount of the loan is disproportionate relative
to the fixed capital of the resident company, the interest on that part of the loan which is
considered to be excessive will not be allowed as a deduction for purposes of determining
the taxable income of a Namibian resident. Currently a debt: equity ratio not exceeding
3:1 is required by Exchange Control and this ratio is also applied by Inland Revenue.
WHTFI is payable at a rate of 10% on interest payments by a Namibian resident to a nonresident with effect from 30 December 2015.
Any interest paid to a non-resident after 29 December 2015 is subject to the WHTFI at
10%.
Recoupments
Interest paid by Namibian banks to foreign banks as well as interest paid by the Namibian
government is exempt from WHTFI. The tax rate may be reduced in terms of a DTA.
Taxable income is gross income less allowable deductions and allowances. Deductions
allowed are expenses incurred in the production of income and not of a capital nature.
NRST is imposed on dividends declared to non-residents and to Namibian companies
where more than 50% of the shares are owned by non-residents. The rate is 10% where
more than 25% of the shares are held by a non-resident company and 20% in all other
cases. No NRST is imposed on the remittance of branch profits. Dividends declared by
the foreign head office attract NRST to the extent that these dividends include Namibian
sourced profits. The tax rate may be reduced in terms of a DTA.
There is no capital gains tax applicable in Namibia. Income from the sale of mineral
licence and petroleum licences (including exploration licences) as well as income from
the sale of shares in a company that owns such licences (directly or indirectly) is however
subject to tax in terms of specific inclusions in gross income.
Withholding tax on foreign interest (WHTFI)
Calculation of tax payable
Recoupments arise where an asset on which an allowance was claimed is sold, removed
from Namibia or withdrawn from trade. The recoupment is limited to the expenditure
claimed as capital allowances. Mining companies are also liable to recoup capital
allowances claimed. The proceeds are not limited to the cost of the asset and as such
any capital gain made on the disposal of mining assets will be subject to tax.
Local and foreign dividends received by or accrued to any company is exempt from tax.
Transfer pricing and thin capitalisation
Value-added tax (VAT)
VAT is chargeable on the taxable supply of goods by every registered person in terms
of the Value-added Tax Act 10 of 2000. A person is obliged to register for VAT if the
value of supplies made during a twelve month period exceeds N$500 000. The standard
rate of VAT is 15%. VAT is however levied at 0% on specified transactions such as the
export of goods and services, provided certain requirements are met. Certain specified
transactions are exempt from VAT. These include financial services as defined, medical
and hospital services and educational services.
Customs duties
Customs duty is payable at prescribed rates in terms of the Customs and Excise Act.
The schedules to the Customs Duty Act sets out the various tariff headings and rates of
customs duties payable on goods imported. No customs duties are payable on imports
from countries in the Southern African Customs Union, i.e. South Africa, Botswana,
Lesotho and Swaziland.
Export levy
In terms of the proposed Export Levy Act a levy ranging from 0% to 2% of the value of
the goods will be imposed on the export of raw minerals, unprocessed fish, game, crude
oil and gas depending on the nature of the raw materials and the value addition to the
materials which are exported. The effective date of the introduction of the export levy
has not been announced.
Mineral royalties
Estate duty
Mineral royalties are imposed at varying rates in terms of section 114 of the Minerals
(Prospecting and Mining) Act 33 of 1992.
There is no estate duty applicable in Namibia.
Donations tax
The following rates apply:
Precious stones – fixed rate of 10%
Dimension stone
– fixed rate of 5%
Precious metals
- 3%
Base and rare metals - 3%
Semi-precious stones - 2%
Nuclear fuel minerals
- 3%
Industrial minerals
-2%
Non-nuclear fuel minerals
-2%
Oil & Gas royalties are imposed in terms of the Petroleum (Exploration and Production)
Act. The royalty is 5% (12.5% if exploration licence was issued prior to 1 April 1999).
Transfer duty
Non-natural persons are liable for transfer duty of 12%. To date the proposed
amendments to the Transfer Duty Act to impose transfer duty on the transfer of shares
in companies and close corporations that own immovable property or mineral or
petroleum licences have not been gazetted.
There is no donations tax applicable in Namibia.
Vocational training and education levy
Namibian employers with annual payrolls of N$1 000 000 or more are liable for the
payment of a vocational education and training levy. The levy is imposed at a rate of 1%
of the annual payroll costs of employers that are liable for the levy. The levy is payable to
the National Training Authority monthly by the 20th of the month.
Social security
Every working Namibian citizen or individual who is in possession of a permanent resident
permit who is under the age of 65 is obliged to make a contribution to the Social Security
Commission. Employers are required to contribute an amount equivalent to that of the
employee.
The contribution is 0,9% of the employee’s basic salary, subject to a minimum of N$2,70
and a maximum of N$81,00 monthly contribution.
Workmen’s compensation
Stamp duties
Stamp duties are payable at varying rates on instruments executed in Namibia as
provided for in Schedule 1 of the Stamp Duties Act. Instruments subject to stamp duties
inter alia includes leases, marketable securities, bills of exchange and promissory notes,
bonds, life insurance policies and transfer deeds relating to immovable property.
Employers are required to make a workmen’s compensation contribution for all
employees who earn less than N$81 300 per year.
Individuals
The maximum marginal rate for the year of assessment ending 28 February 2017
remains 37% for taxable amounts exceeding N$1 500 000.
The minimum tax threshold remains at N$50 000. The cumulative tax exempt amount
applicable to retirement and retrenchment payments is N$300 000. With effect from 30
December 2015 directors’ fees and member salaries of a member in close corporations
are subject to PAYE.
Tax Rates for Individuals and Trusts for the year of assessment ending 28 February
2017:
From N$
To N$
Amount N$
Marginal %
50 000
0
0
50 001
100 000
0
18
100 001
300 000
9 000
25
300 001
500 000
59 000
28
500 001
800 000
115 000
30
800 001
1 500 000
205 000
32
And over
429 000
37
1 500 001
The total annual contribution to an approved pension fund, provident fund and
retirement annuity fund as well as a tertiary study policy for dependent children may not
exceed N$40 000.
No medical expenses or contributions to a medical aid fund can be claimed for tax
purposes. Other than the deductions set out above an individual may only claim
deductions against employment income or allowances in limited specified situations, e.g.
premiums on certain income protection policies and tax depreciation on equipment.
Taxable amount
0
Deductions
Transfer duty
Transfer duty is payable on the acquisition of immovable property in Namibia by natural
persons.
Transfer duty rates - Value of land – N$
From N$
0
Exempt income
Local and foreign dividends received by or accrued to any person as well as interest
earned from Government stock or securities are exempt from tax. Interest earned from
investments at the Post Office Savings Bank, Namibian banks and unit trusts are exempt
in the hands of individuals.
To N$
Amount N$
Marginal %
600 000
0
0
600 001
1 000 000
0
1
1000 001
2 000 000
4 000
5
2 000 001
and over
54 000
8
Reduced rates apply to commercial agricultural land acquired under Affirmative Action Loan Scheme.
Key Tax Contacts
Retirement
Lump sum payments from pension funds are exempt from tax if paid due to death,
superannuation or ill-health or other infirmity.
Windhoek office
+264 61 289 1100
Cameron Kotzé
[email protected]
Lump sum payment from retirement annuity funds are exempt from tax provided
withdrawn after the age of 55. One third of any amount received from a provident fund
on retirement is exempt from tax.
Friedel Janse van Rensburg
[email protected]
Yolande Böttger
[email protected]
Clarissa //Garoës
[email protected]
Walvis Bay office
+ 264 64 205847
Julia Engels
[email protected]
Lump sum payments from pension and provident funds transferred to other Namibian
retirement funds are exempt from tax.
Namibian Tax Facts
February 2016/2017