TAXATION OF BUSINESS INCOME
For tax purposes, all income earned from any business activities carried out in Namibia is taxable. This income is regarded as ordinary income for tax purposes. "If you are conducting any business in Namibia, being in a formal or informal set up, know that the income you receive is subject to tax."
TAXATION ON FARMING ACTIVITIES
Income received from selling farm animals and game, leasing land for grazing and agricultural products is taxable. A farmer will also be taxed on the livestock or produce that has been donated or consumed. "Each farmer is required to indicate the number of farm animals at the beginning (01 March) and at the end of the year (28 Feb) in the income tax return"
An employer is required to deduct tax from the salary of an employee in accordance with the tax rates and pay over such an amount to Inland Revenue Department.
An employer should issue an employee with a tax certificate (PAYE 5 certificate) indicating the total remuneration and the amount of employees’ tax deducted. The certificate should be delivered:
1). Within 30 days after end of February, if the employer has not ceased to be an employer to such an employee;
2). Within 14 days if the employer has ceased to be an employer in relation to such an employee; and
3). Within 7 days if the employer has ceased to be an employer.
VAT is levied at the standard rate of 15% on the supply of most goods and services and on the importation of goods.
It is mandatory for a person who carries on a business with an annual taxable turnover above N$500,000 to apply for VAT registration.
A person may choose to register for VAT if the annual taxable turnover does not exceed N$500,000 but exceeds N$200,000 but will not be registered if the Commissioner is satisfied that such a person:
1). Has no fixed residence or place of business;
2). Does not keep proper accounting records;
3). Has previously been registered but failed to comply with the Act; and
4). Has failed to comply with the Income Tax Act.
"Every registered person who is liable for the payment of value added tax is required to maintain accounting records in the English language at the place of business in Namibia"
Administrative Requirements for VAT registration
An application for VAT registration should be accompanied by:
1). Proof of Banking Details
2). Fitness Certificate
3). Founding Statement
4). Indication of expected turn over for 12 months.
"A registered person must submit a VAT return on or before 25th day of the month following the end of the period"
As per Value Added Tax amendment Act 12 of 2015, Section 1 states:
(a) by the substitution for subsection (1) of the following subsection: “(1) Where tax is payable on an import of goods – (a) in the case of goods required to be entered for home consumption in terms of the Customs and Excise Act, the importer shall, upon such entry, furnish the Commissioner with an import declaration and pay the tax due in respect of that import in accordance with subsection (5) or any arrangements on terms as prescribed by the Commissioner by notice made there under; or
(b) in the case of goods imported from Botswana, Lesotho, South Africa or Swaziland, the importer shall, upon such import, furnish the Commissioner with an import declaration and pay the tax due in respect of that import in accordance with [that] subsection (5) or [the said] arrangements made under that subsection; or
(c) in the case where goods, in circumstance contemplated in paragraph (a) or (b) are imported on a VAT import account arranged on condition that security may be requested before the importation of goods on such account and on such additional conditions as may be prescribed by the Commissioner by notice for the granting or refusal of such account as contemplated in subsection (5)(a)(ii)(aa) or (bb), the importer shall, not later than the twentieth day of the month following the month of import, pay the tax due in respect of the import of those goods: Provided that where during any particular month no goods were imported on a VAT import account, the importer shall, not later than the twentieth day of the month following that month, furnish the Commissioner with an import declaration reflecting that no goods were imported during that month; or
(d) in any other case, the importer shall, at the time of the import, furnish the Commissioner with an import declaration and pay the tax due in respect of that import in accordance with subsection (5)(a)(i).”;
VAT is payable on any imported service by the person importing the service into Namibia after 27 November 2000.
An imported service is a supply of a service by a non-resident person to a non-registered Namibian resident, or one who makes exempt supplies. If a registered person imports a service to make taxable supplies, this is regarded as an exempt import.
A person who pays interest to a non-resident is required to withhold tax at a rate of 10% and pay it over to Inland Revenue Department.
The Interest to non-residents is deemed to be paid on the earlier of the actual payment or the date the interest becomes payable.
"Due Date for payment of Withholding tax on interest and submission of tax return is within 20 days after the end of the month during which the amount was withheld"
Penalties and Interest A penalty of 10% and interest of 20% of the amount of withholding tax will be levied on the late payment of tax for each month or part of the month. The penalty and interest are limited to the amount of unpaid tax.
A resident person liable for the payment of management fee, consultancy fee, entertainment fee etc. to a non-resident is required to withhold tax at a rate of 10%.
A person who pays an amount for the use of any patent, trade mark, and motion picture film including the right to use industrial, commercial or scientific equipment to a person not being ordinarily resident in Namibia is required to withhold tax on royalties at a rate of 10%.
NRST is paid on dividends declared by a company to a shareholder who is not a Namibian resident. The tax is payable by the company declaring the dividend or the agent in Namibia who is receiving the dividend on behalf of a non-resident.
NRST rate is 10% if the beneficial shareholding company holds at least 25% of the capital and 20% of the amount in all other cases.
Due Date for payment of all these taxes and submission of tax return is within 20 days after the end of the month during which the amount was withheld.