Ester Mbathera and Erasmus Shalihaxwe
PriceWaterhouseCoopers (PwC), a provider of business advisory services, will host a series where experts will discuss the tax amendment update in greater detail.
The recent tax amendments, gazetted on 16 September, aim to provide tax relief to individuals and businesses while broadening the tax base, signalling a shift in the country’s fiscal policies.
The amendment follows extensive consultations with stakeholders and is part of the government’s ongoing efforts to stimulate economic growth and enhance revenue collection.
According to PwC, the increase in individual tax thresholds, along with the reduction in corporate income tax rates, is a step closer to alleviating financial pressures on both individuals and businesses while ensuring a more sustainable revenue base for the country.
The key highlights of the amendments include an increase in the tax threshold for individual taxpayers from N$50,000 to N$100,000, effective from March 2024, and a phased reduction in the corporate income tax (CIT) rate from 31% in 2024 to 30% in 2025.
PwC predicts that these measures will increase Namibians’ disposable income and increase the country’s appeal to businesses.
The Ministry of Finance and Public Enterprises provided guidance to employers regarding the adjustment of Pay-As-You-Earn (PAYE) and the reimbursement of over-deductions from 1 March 2024 to August 2024.
Employers should correct any excessive PAYE deductions during this period to guarantee employee reimbursement by the September 2024 payroll and deduct the over-deductions from the employee’s monthly tax amount.
In cases where employers lack the necessary funds to refund employees, especially those who fall within the revised tax-exempt threshold of N$100 000 annual remuneration, under the revised tax threshold may claim refunds directly from the Namibia Revenue Agency (NamRA).
In addition to these changes, employers can now claim an internship allowance under new rules known as the Youth Internship Allowance.
PwC, however, pointed out that some clarifications are needed, particularly regarding the formula used to calculate the internship allowance, which she noted could result in unintended significant allowances being claimed.
The amendments also introduce limitations on the carry-forward of assessed losses and changes to insurance companies’ tax treatment.
These are expected to have far-reaching effects on various sectors, particularly mining, petroleum, and green hydrogen, where entities are now facing different rules on loss carry-forwards and debt-to-equity ratios.
Despite the overall positive reception, the PwC stressed the need for continued dialogue between the government and businesses to iron out uncertainties, such as the interpretation of assessed losses and the application of thin capitalisation rules.
Registration for the discussions can be done on the PwC website.
The minister of finance and public enterprises, Iipumbu Shiimi, acknowledged the urgent need to provide relief to taxpayers and boost domestic demand and said the ministry has taken the initiative to institute operational arrangements that will facilitate taxpayers receiving their refunds.
He added that in this regard, alongside the gazetting of the Amendment Act, the ministry has issued a general notice early this month, granting authority and directing employers to reimburse the PAYE over deducted from employees between 01 March 2024 to 30 September 2024.
Between 1 October 2024 to 28 February 2025 the employers will pay the employees PAYE from the employee’s tax amount to NamRA .
‘’With such adjustment, employers will ensure that the total amount of employee’s tax deducted for the 2024/25 year of assessment will be equal to the amount of employees’ tax due as per the new statutory tax rates. This action is legally provided for in paragraph 12A of Schedule 2 to the Income Tax Act, 1981 (Act No. 24 of 1981),’’ explained Shiimi.
