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Namibia - Indirect Tax Guide

Namibia - Indirect Tax Guide

Explore the requirements and rules that apply to indirect taxes in Namibia.

Explore the requirements and rules that apply to indirect taxes in Namibia.

Aerial view of namib dessert

General

Types of indirect taxes (VAT/GST)

VAT.

What is standard VAT/GST rate?

15 percent.

Are there any reduced rates, zero rates or exemptions?

Zero-rated supplies include:

  • export of goods
  • international transport
  • certain food items
  • maize meal and mahango
  • flour and bread
  • sunflower cooking oil
  • beans
  • milk and sugar
  • erection and extension of buildings and sale of land for residential purposes
  • funeral undertaking services
  • goods or services supplied to an export processing zone enterprise of a person or an export processing zone management company in an export processing zone
  • supply of parts or services, or both, rendered in pursuance of any guarantee given in respect of new goods
  • petrol (leaded and unleaded).

Exempt supplies include:

  • financial services
  • education services
  • public transport services 
  • fringe benefits
  • supplies to heads of foreign states
  • medical and paramedical services
  • rooms or services by a registered hospital, clinic, maternity home, convalescent home, nursing home or hospice.

What are the general and specific place of supply rules, if applicable?

Namibia does not have specific place of supply rules, however, the consumption-based rules are applied in Namibia (i.e. if the goods and services are consumed in Namibia the general principle is that the supply took place in Namibia).

VAT/GST registration

Who is required to register for VAT/GST?

A business making taxable supplies that meets the threshold of 500,000 Namibian Dollars (NAD), or is expected to meet the threshold in a 12 month period is obliged to register for VAT.

Is voluntary VAT/GST registration possible for an overseas company?

Yes, if turnover is in excess of NAD200,000. Generally, an entity would need an income tax registration and be registered with the Ministry of Trade as a subsidiary or external company.

‘Special’ VAT registrations are allowed where an entity does not have an income tax filing obligation but is required to register for VAT.

Does an overseas company need to appoint a fiscal representative?

Yes.

Is VAT/GST grouping* possible?

No.

VAT/GST compliance

How frequently are VAT/GST and other indirect tax returns submitted?

Bi-monthly, 25 days after the end of the tax period. Farmers may elect a tax period of 2, 4, 6 or 12 months.

Import VAT returns are due 20 days after the end of the month of import for goods and 30 days for imported services.

Special provisions are available for taxpayers who wish to have returns submitted on a monthly basis. This happens in instances where a taxpayer has massive refunds which, if delayed, may impact their cash flow.

Can returns be filed and payments be made electronically?

VAT returns cannot be filed electronically but payments can be made electronically. A proposal for e-filling was made, however, the effective date has not been communicated yet.

What are the exchange rate rules?

All amounts have to be expressed in Namibian currency which is the Namibian Dollar (N$). However, where foreign currency is used, the appropriate exchange rates should be used at the time such amount is required to be taken into account under the VAT Act which is generally the date of invoice.

VAT/GST recovery

Can an overseas company recover VAT/GST and other indirect taxes if not registered for VAT/GST locally?

No.

Is it a prerequisite that output tax be charged before input tax can be claimed?

No.

Are there any exemptions with the right to recover or deduct input VAT?

Input VAT cannot be deducted on:

  • entertainment
  • passenger vehicles
  • club subscriptions of a sport, social or recreational nature
  • petroleum products (unless it is wholly for use in business).

For what period of time may input tax not previously claimed be claimed (i.e. prescription)?

For 3 years from the date of entitlement.

Where a VAT return reflects a refund due to the taxpayer, is the refund paid to the taxpayer or is the taxpayer required to utilize the refund as a credit against future payments?

The refund will be paid to the taxpayer once it has been confirmed by Inland Revenue, following an audit.

Inland Revenue may also set off any credit owing to a taxpayer against the balance owing on another account provided that this is requested in writing and confirmed by Inland Revenue.

Invoices

Is a business required to issue tax invoices?

Yes.

Is it possible/mandatory to issue invoices electronically?

Possible, not mandatory.

Is it possible to issue recipient-created tax invoices?

Yes, with prior approval from the Commissioner of Inland Revenue.

Audits

Do tax audits take place on a regular basis?

Yes. There is no limit for the number of VAT audits that can be conducted as there are no prescription periods.

Are audits done electronically in your country/territory (e-audit)? If so, what system is in use?

No.

What penalties can arise from non-compliance?

A penalty of NAD100 per day will be levied for any outstanding VAT returns in addition to a 10 percent penalty of the outstanding VAT per month or part of a month.

Interest is levied at the rate of 20 percent per annum on any unpaid VAT calculated from the first day after the date from which payment was due, until the date payment of the unpaid tax was made.

Special indirect tax rules

Are there unique country/territory-specific indirect tax rules that differ from 'standard' indirect tax rules in other jurisdictions?

No.

Does a reverse charge mechanism apply?

Yes. VAT is levied on imported services to the extent that such services are used for purposes other than making taxable supplies.

Can VAT on reverse charges be claimed as input tax, to the extent that the expense on which the reverse charge VAT is accounted for, is used for taxable purposes?

The Namibian recipient is only liable to reverse charge VAT on imported services to the extent that the imported services are acquired for non-taxable purposes. Thus, no input VAT credit may be claimed.

Can non-residents appoint local agents in order to avoid reverse charge VAT by virtue of charging standard rate VAT and accounting for such VAT through the agent?

No.

Are there indirect tax incentives available (e.g. reduced tax, tax holidays)?

Supplies made to an entity in an export processing zone is zero-rated.

Rulings

Is it possible to apply for formal or informal advance rulings from the tax authority?

A formal ruling can be requested from the Commissioner of Inland Revenue. The ruling will only apply to the person to whom it is granted and is not available to the general public.

Are rulings and decisions issued by the tax authorities publically available?

No.

Other indirect taxes

Are there other indirect taxes not commented on above?

Yes, customs and excise duties.

For further information please contact

Robert Grant
Senior Partner
KPMG in Namibia
T: +26461387502
E: robertgrant@kpmg.com

Footnote

*By ‘grouping’ we mean: either a consolidation mechanism between taxpayers belonging to the same group (payment and refund are compensated but taxpayers remain distinct) or a fiscal unity for VAT/GST purposes (several taxpayers are regarded as a single taxpayer).

Disclaimer

All information contained in this document is summarized by KPMG in Nambia, a member firm affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

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