Martin Endjala
Various labour unions have criticised the lack of consultation on the tax reimbursement of Pay-As-You-Earn (PAYE) to be paid by employers to employees between 1 March and 30 September.
They said that a lack of prior consultation raises questions about transparency and the potential implications of the new taxation regulations for businesses and employees.
In a joint statement released last week, we responded to the announcement made earlier this month by the finance minister, Iipumbu Shiimi, regarding tax refunds.
The gazetting of the Namibian Income Tax Amendment Act (Act 4 2024) was met with trepidation by employer representatives, including the Namibia Employers’ Federation (NEF) and the Namibian Local Businesses Association (NALOBA).
The National Union of Namibian Workers (NUNW) and the Trade Union Congress of Namibia (TUCNA) are also part of the labour unions that questioned the motive.
Elias Shikongo, president of the NEF, believes that this amendment will not only provide immediate relief to our citizens but also pave the way for a more prosperous and vibrant economy.
He said NEF regrettably was very much concerned about the directive given to employers without having consulted them about the implications of the process.
“We believe that it is crucial for the government to engage in meaningful consultations with employers and labour union representatives before implementing significant policy changes that affect the business environment,” stated Shikongo.
On 17 September, Shiimi said the General Notice is granting authority and directing employers to reimburse the PAYE over-deducted from employees between 1 March and 30 September.
The Namibia Revenue Agency (NamRA) will receive the reimbursed PAYE deduction from the monthly employee’s tax amount between 1 October and 28 February 2025.
According to Erastus Shapumba, president of NALOBA, raising the income tax threshold will generally benefit households by stimulating the economy.
“We cannot expect that employers take on the work that NamRA should do. We have not been consulted by our government. This has administrative implications for all businesses; especially smaller businesses will really struggle with the additional administration, as well as financially, as the higher threshold will mean that many employees are no longer required to pay income tax,” he cited.
He questioned how they would pay tax consultants to support them with the required implementation.
The secretary general of the NUNW, Job Munario said they encourage open communication and collaboration between employers, employees, and government agencies to address any concerns with regard to the reimbursement process and ensure a smooth transition to the new taxation regulations.
“By working together, we can uphold the integrity of the tax system and promote a fair and equitable environment for all stakeholders,” he encouraged.
Kavihuha Mahongora, TUCNA’s secretary general stated that in principle they are happy about the potential positive impact on the lives of the Namibian people, particularly the poorest members of society.
He believes that by allowing individuals to keep more of their hard-earned income, the amendment will put more money in the pockets of those who need it most.
“This is likely to improve the standard of living for many Namibians. It is important, however, that both employers and employees are adequately supported to facilitate the refunding of the overpayment of income tax,” he said.
Moving forward, employers and labour union representatives said they are committed to engaging constructively with the government to address their concerns and work towards solutions that benefit both businesses and employees.
They emphasised the need for open communication, collaboration, and consultation to find practical solutions to resolve matters with regard to the reimbursement of over-deductions.
Some quotas provide support for the increase in income tax thresholds, despite their initial opposition.
The method for securing employee reimbursement is considered to be of great concern, and it could have been avoided if stakeholders had been consulted.
An employer’s concerns stem from the fact that there will often be financial implications.
Where the immediate impact of reimbursing employees for over-taxation and managing deductions from future income tax may pose challenges for businesses, particularly in terms of cash flow management and budgeting.
In addition, implementing the reimbursement process and accurately calculating and deducting the reimbursement amounts from future income tax payments will require additional administrative work.
This may lead to increased workload and complexity in payroll processing for employers.
It will be particularly daunting for employers without specialized expertise in tax matters, who will have to ensure compliance with the new regulations and navigate the complexities of tax calculations.
