Namibia has a source-based taxation system in terms of which both residents and non-residents are subject to tax on income earned from a source in Namibia.
The Namibian Income Tax Act does not use the term “residence” with reference to companies, but rather the term “domestic company”, which is defined as referring to:
- a Namibian incorporated or established association, corporation, company or body; or
- a company managed and controlled in Namibia.
corporate tax rate
Resident companies and permanent establishments of foreign companies are subject to corporate tax at the rate of 32%.
Petroleum entities are taxed at 35%, mining companies (other than diamond mining) at 37.5% and diamond mines at an effective rate of 55%.
Registered manufacturers may qualify for a reduced rate of 18% for the first 10 years of operation.
|capital gains tax (“CGT”)|
Namibia does not impose tax on capital gains.
withholding tax (“WHT”) rates
WHT rate (%)
|branch profits||N/A ||dividends declared by foreign head office subject to non-resident shareholder’s tax of 10%|
| dividends||N/A||10% (if at least 25% shareholding) 20%|
| interest||N/A || 10%|
| royalties||N/A|| 10%|
| management, consulting and technical services fees||N/A || 10%|
| || |
double tax agreements (“DTAs”)
DTAs are in place with France, Germany, India, Malaysia, Mauritius, Romania, Russia, South Africa, Sweden and the United Kingdom.
Ordinary losses may be carried forward indefinitely, provided the company continues to carry on trading in Namibia.
In terms of Namibia’s transfer pricing rules, transactions between connected persons must be entered into at an arm’s length price.
In terms of Namibia’s thin capitalisation rules, deductions by a resident company of any interest, finance charge or other consideration will be disallowed (and treated as a dividend) to the extent to which it relates to financial assistance granted by a connected non-resident person or a non-resident person with substantial (ie, at least 25%) shareholding or control in the resident company, where the Minister of Finance considers such assistance to be excessive in relation to the fixed capital of the resident company.
Although the Income Tax Act does not specify the maximum accepted debt : equity ratio, a ratio of 3:1 is applied in practice.
The income tax rates applicable to resident individuals from 1 March 2013 are:
|annual chareable income of residents (NAD)||tax rate |
|up to 50 000|| 0%|
|50 001-100 000|| 17%|
|100 001-300 000|| 25%|
| 300 001-500 000|| 28%|
| 500 001-800 000|| 30%|
| 800 001-1 500 000|| 32%|
| 1 500 001-2 500 000|| 39%|
| over 2 500 000|| 40%|
Both employers and employees must make monthly social security contributions to the SCC.
Both the employer and employee contribution rates is 0.9%% of the employee’s basic salary (based on a minimum salary of NAD300 per month and a maximum salary of NAD9 000 per month).
|payroll taxes||A vocational education and training levy is payable by employers having an annual payroll of at least NAD1-million at the rate of 1% of the payroll.|
|stamp duty |
Stamp duty is levied under the Stamp Duties Act on the issue of a number of instruments at rates varying from 0.2% to 1.2% depending on the nature of the instrument.
Stamp duty at the rate of 0.2% is payable on the issue and transfer of marketable securities (excluding listed securities).
Stamp duty on the transfer of immovable property is levied at the rate of 1.2%. Transfer duty is also levied under the Transfer Duty Act on the value of any land and buildings or mining rights acquired by a company.
|taxable supplies ||VAT is levied on the supply of goods and services in Namibia and on the importation of goods and services into Namibia.|
Effective 16.5% on imported goods
A person who has reasonable grounds for believing that the total value of taxable supplies during any 12-month period will exceed NAD500 000, must register for VAT purposes.
|reverse VAT on imported services|
To the extent that imported services will be utilised or consumed in Namibia other than for making taxable supplies, the recipient of such services is required to declare and pay output VAT on the services in terms of a reverse-charge mechanism.