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Namibia: Budget 2019-2020, highlights of tax proposals

Namibia: Budget 2019-2020, highlights of tax proposals

The Minister of Finance on 27 March 2019 delivered the budget for 2019-2020 that includes revenue raising measures as well as tax policy and administration reforms.

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Among the tax measures in the budget 2019-2020 are proposals to:

  • Introduce a 10% tax on dividends paid to residents
  • Disallow deductions for the amount of fees and interest paid to non-residents not subject to withholding tax
  • Require Namibian residents to declare income earned from foreign sources in their annual income tax returns
  • Disallow the deductibility of royalties for non-diamond entities
  • Repeal the “conduit” (flow-through) principles with respect to the taxation of trusts
  • Repeal or phase out certain tax incentives including the preferential tax treatment granted to manufacturers and exporters of manufactured goods and the “export processing zone” (EPZ) but allowing a “sunset clause” for current operators with EPZ status
  • Introduce a “special economic zones” system
  • Impose tax on income from certain commercial activities of charitable, educational, and other similar institutions
  • Introduce value added tax (VAT) on income of listed asset managers, and proceeds from sale of shares or membership in company owning commercial immovable property
  • Remove the VAT “zero-rating” with respect to sugar
  • Increase the fuel excise tax, expand the excise tax to apply to agricultural, forestry, game products, and other mining products, increase the excise tax on “dimension stones” and introduce a 15% excise tax on exported timber
  • Introduce “environmental levy” on imported lubricant oil, on primary cells and batteries, and on plastic carrier bags


Read an April 2019 report [PDF 615 KB] prepared by the KPMG member firm in Namibia

Tax proposals

Area

Namibian government has proposed to:

Dividends tax

Introduce 10% dividends tax on dividends paid to residents

Income tax

Require all Namibian residents to declare foreign source income in their annual returns and tax all such income (i.e., introduce a residence basis of taxation)

Repeal conduit (i.e., flow-though) principle in the taxation of trusts

Increase tax deduction for retirement fund contributions to 27.5% of income subject to N$150,000 cap

Disallow tax deductions for fees/ interest paid to non-residents until payment of withholding tax is proven

Subject income derived from commercial activities of charitable, religious, educational and other types of institutions under section 16 of the Income Tax Act to normal corporate tax requirements

Tax incentives

Phase out incentive for manufacturers and exporters of manufactured goods

Replace export processing zones (EPZ) with special economic zones subject to a sunset clause for current EPZ operators

Value added tax (VAT)

Introduce VAT on income of listed assets managers

Introduce VAT on proceeds from sale of shares/ membership in companies owning commercial immovable property

Remove VAT zero-rating on sugar

Excise duties

Increase fuel levy by 25c/ litre

Expand export levy to include other agricultural, forestry, game and other mining products

Increase export levy for dimension stones from 2% to 15%

Introduce 15% export levy on timber

Environmental levy

Introduce import levy on lubricant oil of N$1.8/litre

Introduce levy on 5% of cost on primary cells and batteries

Introduce levy on plastic carrier bags

Other

Disallow deductions for royalties for non-diamond mining entities

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