Niël Terblanché
Many low-income earning Namibians are preparing to benefit from tax refunds following a recent announcement by Iipumbu Shiimi, the minister of finance and public enterprises.
Over the weekend, Shiimi declared that employers across the country must adjust Pay-As-You-Earn (PAYE) deductions to ensure that employees who were over-taxed are reimbursed.
On Monday, the Ministry of Finance confirmed the new measures through the publication of the revised tax schedule in the Government Gazette, detailing the updated tax thresholds and rates.
The new schedule exempts individuals earning below N$100 000 annually from PAYE, a move aimed at easing the financial burden on low-income workers.
For people earning above this threshold, the new tax rates progressively increase, with the highest rate set at 37% for individuals earning over N$1 550 000 annually.
According to the finance minister, this adjustment is part of the government’s broader effort to reform the tax system and create a more equitable structure, particularly benefiting employees in lower-income brackets.
Shiimi stressed in his earlier statement that employers must take responsibility for refunding any over-deductions resulting from the implementation of the adjusted rates.
“The reimbursement would be deducted from the employee’s monthly tax contribution payable to the Namibia Revenue Agency (NamRA),” Shiimi explained.
He indicated that the directive is aimed at ensuring that the total PAYE deductions for the 2024/25 tax year fully comply with the new regulations set out in the Income Tax Act of 1981.
The finance minister also addressed scenarios in which employers may not have sufficient tax payable to refund employees who fall within the new tax-exempt threshold.
“In such cases, employees will need to claim their refunds when submitting their tax returns for the 2025 fiscal year,” he said.
Shiimi stated that the deadline for filing these returns is 30 June 2025. He added that employees who have changed jobs during the tax year would also need to submit claims for any over-deductions when filing their returns.
“These reforms are part of a larger initiative by the Namibian government to modernize the tax system, promote fairness, and improve compliance,” he said.
Shiimi said the government is committed to ensuring that the tax system reflects current economic realities while reducing the administrative burden on both employees and employers.
“The changes also align with the government’s objective to streamline tax collection processes and ensure efficiency in revenue collection,” he said.
He added that while these reforms are designed to benefit employees, the administrative complexities for employers are not insignificant.
The minister directed that employers must adjust tax deductions retroactively, process refunds, and ensure that all employees receive the correct reimbursements.
Shiimi also urged employees and employers alike to familiarize themselves with the new regulations and prepare for the changes.
He stressed the importance of accurately reflecting any over-deductions in tax filings to avoid complications during the forthcoming tax year.
According to Shiimi, these adjustments are expected to provide much-needed relief to lower-income earners while promoting greater compliance within the country’s tax framework.
