Niël Terblanché
Namibia’s minister of finance and public enterprises, Ipumbu Shiimi, has announced that employers are required to adjust the Pay-As-You-Earn (PAYE) tax deductions from employees to ensure the reimbursement of any over-deducted amounts.
In a statement issued over the weekend, Shiimi stressed that any over-deduction of PAYE resulting from the implementation of the adjusted statutory tax rates must be refunded by employers shortly after the gazettement of the new rates.
The minister, however, did not indicate exactly when the new rates will be gazetted.
“The reimbursement would be deducted from the employee’s monthly tax contribution payable to the Namibia Revenue Agency (NamRA). Employers will be responsible for the adjustment of PAYE deductions because NamRA will not be reimbursing taxpayers,” he explained.
This adjustment comes as part of the government’s statutory tax reforms, which aim to align deductions with the newly prescribed tax rates set out in the Income Tax Act of 1981.
Shiimi’s directive also addresses the handling of exceptional cases where employers do not have sufficient tax payable to refund employees who now fall within the revised tax-exempt threshold.
“The new threshold sets an annual tax-free income of N$100 000. In such cases, employees will be required to claim refunds when submitting their 2025 tax returns,” he said.
Shiimi added that the deadline for this submission is 30 June.
“Employees who have changed jobs during the tax year and are no longer employed by their previous employer will similarly need to claim a refund when submitting their 2025 returns,” he said.
Shiimi added that the new measures aim to ensure that the total PAYE deductions for the 2024/25 tax year are in full compliance with the revised tax regulations.
The directive is part of Namibia’s broader tax reform initiative aimed at creating a fairer tax system while easing the financial burden on individuals within the lower income bracket.
“The changes also align with the government’s commitment to improving tax compliance and efficiency in revenue collection,” he said.
Shiimi said that the statutory tax changes are designed to benefit employees, particularly those who fall below the new tax-free threshold.
“The implementation places a burden on employers, who must navigate the administrative complexities of adjusting tax deductions retroactively and coordinating refunds for eligible employees,” he said.
He added that employees, who qualify for the refund but have changed employment during the tax year, will have to ensure that their tax filings accurately reflect the over-deductions, enabling them to claim their refund within the stipulated time frame.
Shiimi said that the adjustments are essential for ensuring that Namibia’s tax system remains equitable and transparent, further promoting compliance among taxpayers and reducing administrative bottlenecks.
“The adjustments are intended to reflect the government’s recognition of the need for modernising the tax system while addressing challenges faced by employees and employers alike,” he said.
He urged employees and employers to familiarize themselves with the revised regulations and prepare accordingly to avoid any complications during the forthcoming tax year.
