Thinking Beyond Borders
All information contained in this document is summarized by KPMG Advisory Services (Namibia) (Pty) Ltd, a Namibian private company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity, based on an interpretation of current Namibian income tax laws, as contained in the Income Tax Act No. 24 of 1981 and the VAT Act No. 10 of 2000 and the website of the Namibian Social Security Commission as well as the website of the Namibian Ministry of Home Affairs.
The Namibian tax system is source based. In terms of the source basis of taxation, any amount of cash or otherwise which is received by or which accrues to any person from a source within or deemed to be within Namibia is subject to tax in Namibia, unless the receipt is of a capital nature.
A sliding scale is used to determine the tax rates applicable to individuals. For all years of assessment effective 1 March 2013, the minimum rate is nil percent and the maximum rate applied is 37 percent. Any change in the tax rates is announced in the annual budget speech once the draft bill is promulgated for comments and approved by Parliament.
The Namibian tax year commences on 1 March to the last day of February that subsequent year.The Namibian tax authority is known as the Namibian Inland Revenue Authority (NIRA).
As mentioned above, Namibia has a source basis of tax. Where a person provides services (including employment services) within Namibia, the income will be regarded as being from a Namibian source if the service is rendered in Namibia and will be subject to tax in Namibia. Where the person is a non-resident, the person may receive relief from being taxed in Namibia under a Double Taxation Agreement (DTA) provided that the conditions of the said DTA are met.
Where a person earns income from a Namibian or deemed Namibian source and that income exceeds 50,000 Namibian dollars (NAD) per year, that person would need to register for tax in Namibia.
Most types of remuneration and benefits received by any person from a Namibian or deemed Namibian source for services rendered constitute taxable income regardless of whether the person making the payment is a resident of Namibia or not, except for a few exceptions. Typical taxable items are:
Tax rates effective from 1 March 2013:
|Taxable income||Base rate||Percentage|
|0 - 50 000||N$0||0%|
|50 001 - 100 000||N$0||18 % of the amount exceeding N$50 000|
|100 001 - 300 000||N$9 000||+ 25% of the amount exceeding N$100 000|
|300 001 - 500 000||N$59 000||+ 28% of the amount exceeding N$300 000|
|500 001 - 800 000
||N$115 000||+ 30% of the amount exceeding N$500 000|
|800 000 - 1 500 000||N$205 000||+ 32% of the amount exceeding N$800 000|
|Exceeds N$1 500 000||N$429 000||+ 37% of the amount exceeding N$1 500 000|
There are social security taxes that are paid over to the Commissioner of Social Security. Contribution by the employer is 0.9 percent and the contribution by the employee is 0.9 percent, up to a maximum remuneration of NAD108,000 per annum, amounting to NAD81 per month for an employee.
The deadline for individual returns of income is 30 June every year. The submission date for provisional taxpayers is 30 September every year. Late provisional tax payments attract penalties of 10 percent per month and interest charges of 20 percent per annum.
An employer must withhold tax on salaries and wages, and pay this over to Inland Revenue on or before the 20th of the subsequent month following the month during which the amounts were withheld. Late payment of this tax will attract penalties of 10 percent per month and interest charges of 20 percent per annum.
There are certain exemptions available from paying tax which includes salaries and emoluments payable to a person who holds an office in Namibia as an official of a government other than the government of Namibia; or any specialized agency of the United Nations, provided certain requirements are met.
Further exemptions include:
The taxable value of housing benefits granted, in terms of housing schemes approved by Inland Revenue, is reduced by one-third thereof.
Lump sum payments from loss or variation of office
Where a lump sum payment is received as a result of the relinquishment, termination, loss, repudiation, cancellation or variation of any office or employment as a result of an employee attaining the age of 55; due to ill health, superannuation or other infirmity; or because the person was considered redundant, an exemption of up to NAD300,000 is available on the lump sum received. The NAD300,000 is available over the lifetime of the individual.
Lump sum payments from a pension, provident or preservation fund
Lump-sum benefits received from pension funds, provident funds or preservation funds transferred for the benefit of the taxpayer to another pension fund, provident fund, retirement annuity fund or preservation fund within three months after the end of such year of assessment is exempt from tax. This is so if the taxpayer did not claim a deduction in respect of one of the following:
New Work Permit Application: Documentation
(Please note all documentation must be in English and certified)
Application for temporary work or study permit (for applicant only)
|Marriage certificate||Only if spouse is going to accompany you to Namibia/Divorce certificate
|2 Passport Photos||For each member of the family if accompanying applicant|
|Visa Application Form||For each member of the family who have own passports|
|Copies of Passport||Date of Issue, Date of Expiry and Passport Number for each member – must be certified.|
|Police Clearance||For any person over the age of 18 years accompanying the applicant. Must be from country/territory of Origin and last country/territory of residence.|
|Tax certificate||Certificate of good standing|
|Medical Report||Applicant and each member of the family|
|Radiological Report||Applicant and each member over the age of 12 years old|
|Qualifications||Of applicant only. Must be certified and in English|
|Curriculum Vitae||Applicant only|
|Copies of work references||Applicant only – must be certified and in English|
|Registration certificate||With the relevant professional board and/or association.|
To be completed by the Company
Subject to certain conditions, generally relief from Namibian tax will apply where the expatriate is a resident of a country/territory that has a DTA with Namibia and is working in Namibia, where:
Namibia has DTAs with the following countries/territories:
Namibia does not have the concept of a “permanent establishment” specifically defined in its domestic law. Reliance is placed on the Organisation for Economic Co-operation and Development (OECD) definition of the term “permanent establishment” (PE) in Article 5, which defines a PE as “a fixed place of business, through which the business of an enterprise is wholly or partly carried on”. Where a DTA applies however, there is a risk that individuals working in Namibia on behalf of their foreign employer may create a permanent establishment for the foreign employer in Namibia.
Indirect taxes that could be encountered are:
According to transfer pricing provisions, to determine the taxable income of an acquirer or supplier in an international transaction, who are connected persons, the Minister of Finance may adjust the consideration to reflect an arm's length price where the goods or services are supplied or acquired at a price less or more than the arm's length price.
The following general guidelines apply in relation to transfer pricing documentation:
The Minister of Finance has the power to adjust the liability of a taxpayer where he they considers that a transaction, scheme or operation has been entered into which has the effect of avoiding or postponing liability for the payment of any tax imposed by the Income Tax Act, if it was entered into in an abnormal manner or has created rights not normally created in arm's length transactions.
In addition, Namibia has thin capitalisation rules in terms of which the deduction of interest may be disallowed if it is the Minister’s opinion that the value of the financial assistance granted to a Namibian company by a non-resident connected person or a non-resident which holds more than 25 percent of the shares in the Namibian entity is excessive in relation to the Namibian company’s fixed capital. The Minister has not prescribed a safe-harbor ratio in this regard.
There are no local data privacy requirements for individuals as Namibia does not have any specific data privacy laws.
Non-residents can open a non-resident’s account with a Namibian bank in order for them to receive their salary, wages and any other benefits relating to their employment here in Namibia.
Generally, expenses not incurred for business purposes are not deductible for assignees. Expenses incurred for personal consumption are not deductible.
To the extent that a non-resident individual renders services outside of Namibia, the remuneration attributable to the time worked outside Namibia would not be taxable in Namibia, as it would not be sourced in Namibia. This apportionment will usually be done on the basis of days spent working inside and outside Namibia. It is however our recommendation that the requirement for the individual to render services outside Namibia be detailed in a contract of employment (such as a split contract arrangement which could be entered into).
© 2020 KPMG Advisory Services (Namibia) (Pty) Ltd, a Namibian private company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.