Value-added tax (VAT)
VAT is a transaction tax, and the implications will vary for different transactions. Some transactions are taxed at a rate of 15% or 0% while other transactions are exempt from VAT. Input tax deductions may be claimed, subject to certain provisions.
VAT is levied on every taxable supply by a registered person. A taxable supply means any supply of goods or services in the course or furtherance of a taxable activity. A taxable activity means any activity that is carried on continuously or regularly in Namibia that involves the supply of goods or services for consideration.
VAT is payable on all imports for home consumption in Namibia, subject to certain exemptions (e.g. in terms of a technical assistance agreement, donations to the state, goods of which the local supply is zero-rated).
Import VAT is payable on the greater of the free on board (FOB) value plus 10% or the market value. The payment may be deferred in terms of an import VAT account registered with the Directorate of Inland Revenue to the 20th day of the month following the month of importation. Penalties of 10% per month or part of a month and 20% interest on outstanding import VAT, according to the Customs Asycuda reports on import VAT account numbers, are levied by the Directorate of Inland Revenue.
A company/branch is required to register for VAT if it supplies goods or services on a regular basis for consideration and if its taxable supplies (standard rated and zero-rated supplies) exceed 500,000 Namibian dollars (NAD) in any 12-month period.
The Value-added Tax Act, 2000 (as amended) also makes provision for voluntary VAT registration, provided that taxable supplies exceeded or will exceed NAD 200,000 in any 12-month period and the applicant is in good tax standing, has a fixed place of business, and will keep acceptable accounting records.
A registered VAT vendor is entitled to deduct input tax credits paid in the course of taxable supplies made to such person, provided that a tax invoice is available to support the input tax deduction. It is also important to take note of deemed input tax deductions and prohibited input deductions. Import VAT paid may be deducted only as input tax if the import was in furtherance of a taxable activity and the required documentation (e.g. stamped customs entries) is held by the importer.
VAT returns are due within 25 days following the month to which the VAT relates.
The Inland Revenue system automatically selects VAT periods for audits. An audit will focus on deposits made into bank statements and whether VAT was charged as required. It will also focus on whether tax invoices meet the criteria as set out in the VAT Act.
Shareholders of companies and members of close corporations may be held liable jointly or severally for VAT debts of the company or close corporation.
Customs and excise duties
Namibia is a member of the Southern African Customs Union (SACU), and customs duties are not levied on intra-SACU trade (i.e. between Botswana, Lesotho, Namibia, South Africa, and Swaziland).
Customs duties are payable according to the Common Customs Tariff of SACU on imports from outside SACU. Preferential duty rates apply on imports from Southern African Development Community (SADC) countries, while goods may be imported free of customs duties from Zimbabwe in terms of the Namibia-Zimbabwe Free Trade Agreement.
Excise duties are levied on local production of excisable products (e.g. cigarettes, liquor, fuel) and are included on most excisable products imported from another SACU country in terms of the duty at source procedures. Identical excise duty rates are applied throughout the SACU. Importation of excisable products from outside the SACU is subject to customs duties and specific customs duties.
Current specific excise/customs duty rates for the above-mentioned products are as follows:
- Cigarettes: NAD 8.33/10 cigarettes.
- Beer: NAD 102.07/litre absolute alcohol (AA).
- Spirits (whisky, rum, brandy, gin, vodka, etc.): NAD 204.15/litre AA.
- Petrol: 3.909 cents/litre.
- Diesel and biodiesel: 3.817 cents/litre.
- Illuminating kerosene (paraffin): 3.817 cents/litre.
Namibia intends to introduce additional duties on certain excisable products at a rate of 5%. Enabling legislation has not been drafted yet.
Ad valorem excise/customs duties are levied on certain products (e.g. motor vehicles, perfumes) in addition to the normal customs duties.
Ad valorem excise/customs duty rates are as follows for the above-mentioned goods:
- Motor vehicles: ([0.00003 x A] - 0.75)%, with a maximum of 25%, where 'A' is the recommended retail price, exclusive of VAT.
- Perfumes: 7%.
Customs fuel levies are payable on petrol, diesel, and illuminating kerosene. The current customs fuel levies are as follows:
- Petrol: NAD 0.90/litre.
- Diesel: NAD 0.90/litre.
- Illuminating kerosene (paraffin): NAD 0.90 /litre.
Road user charges (RUCs) payable to the Namibian Road Fund Administration (RFA) may be claimed back for certain non-road operations (e.g. mining, farming, construction) under certain conditions (e.g. NAD 0.9 of the current RFA RUCs of NAD 1.36 used in mining operations may be claimed back from the RFA).
Surety in the form of a provisional payment, bank, or insurance guarantee is required by Customs on most temporary imports to cover import VAT and customs duties (if applicable).
It is possible to import goods that are subject to customs duties into registered Customs' bonded warehouses, where goods are kept for later use. In this case, the payment of duties may be deferred until the goods are taken out of the bonded warehouse for home consumption or acquitted if the goods are subsequently exported.
Namibia has introduced the AsycudaWorld customs clearing system, which is a web-based, Java-enabled system utilised at points of entry. All land border posts, airports, and harbours are linked to the AsycudaWorld system.
Property taxes are levied by municipalities based on municipal valuations of properties.
Transfer duty is payable at 12% of the acquisition value where property is acquired by non-natural persons (a sliding scale applies to property purchases by natural persons). While it is normally payable by the buyer, the agreement for the sale of the property may determine the person liable to pay these costs.
Amendments to the Transfer Duty Act were proposed to include transfer duty on the sales of shares/members interest in property/mining right-owning entities. These amendments have not been enacted or promulgated per the Government Gazette.
Certain transactions may attract stamp duty. The amount of stamp duty payable differs and is based on the nature of every individual transaction.
The basic transactions can be summarised as follows:
|Agreements or contracts (other than those where duty is specifically provided for in the Act)
|Lease agreement or lease
||The stamp duty will be based on lease payments, together with additional considerations specified in the lease agreement
|Transfer or issue of marketable securities and other share transactions
||NAD 2 for every NAD 1,000 or part thereof of the value/consideration, depending on the specific transaction
|Transfer deed relating to immovable property purchased
||NAD 12 for every NAD 1,000 or part thereof of the value/consideration, depending on the specific transaction
Additional stamp duty of NAD 5 for every NAD 1,000 of debt secured is payable on the registration of a bond over immovable property.
Annual duty is levied in terms of the Companies Act at an amount of NAD 4 for every NAD 10,000 (or part thereof) of the issued share capital of a company, with a minimum duty of NAD 80 per annum. Issued share capital includes ordinary shares, share premium, and preference shares.
Since a branch does not issue share capital, the issued share capital of the head office will be used to calculate the annual duty payable in Namibia.
Any remuneration paid by an employer to an employee will place an obligation on the employer to withhold employee taxes. The employee taxes are due on the 20th day of the month following the month during which the payment was made. The tax tables applicable to individuals are provided in the Taxes on personal income section of Namibia’s Individual tax summary.
Late payment of employee taxes will result in penalties of 10% per month and interest of 20% per annum. Both penalties and interest are limited to the amount of tax outstanding.
Social security contributions
Social security contributions are payable by the employer for employees working in Namibia. Social security is based on a principle of 50/50 contributions from employers and employees. It is calculated at 0.9% of earnings, with a minimum monthly contribution of NAD 2.70 and a maximum monthly contribution of NAD 81 each (i.e. the total maximum monthly contribution of both the employer and the employee will amount to NAD 162).
Under the Employees Compensation Act, employers are required to contribute to a fund that provides cash benefits for industrial injury, disability, and death. Contribution rates vary according to inherent occupational risk, from less than 1% in most low-risk commercial/administrative occupations to 8% for high-risk sectors (drilling, tunnelling, and rock-blasting). Employees whose annual remuneration exceeds NAD 81,300 are normally excluded from coverage.