Namibia Personal Income Tax

Individuals are taxed on employment and self-employment income at progressive marginal rates. Income tax is assessed only on income from sources within or deemed to be within Namibia and is generally not affected by the residence of the taxpayer.

Income subject to tax

Employment income. Employment income is taxable in Namibia if it arises from a source within, or deemed to be within, Namibia. The place where the services are rendered generally determines the source of remuneration. Namibia extends to the territorial shelf and includes the exclusive economic zone for income tax purposes. However, income from services related to employment or a profession in Namibia is deemed to be from a Namibian source, regardless of where services are performed or payment is made. For example, income for services rendered during a temporary absence from Namibia by a person ordinar­ily resident in Namibia is subject to tax if the services are ren­dered for or on behalf of a Namibian employer.

Taxable employment income consists of salaries and bonuses, in cash or in kind, and fringe benefits, including the use of company vehicles, free housing and interest-free or low-interest loans.

Self-employment income. Capital and exempt receipts and allow­able deductions are subtracted from gross income to arrive at taxable self-employment income, which is taxed with other income at the rates described in Rates.

Nonresident individuals who charge service fees (as defined) to Namibian residents are subject to a withholding tax on services at a rate of 10% of the gross amount paid to the nonresidents. The withholding tax rate may be reduced based on an applicable double tax treaty. Services that are subject to the withholding tax include consulting fees, management fees, administration fees, technical fees and fees charged by entertainers, including artistes and sportspersons and other persons receiving payment with respect to such types of activities.

Investment income. Interest and dividends from building societ­ies received by a Namibian resident from anywhere in the world are deemed to be from Namibian sources and are taxable with other income at the rates set forth in Rates. An exception is made if the investment originates outside Namibia or is made for a business carried on outside Namibia and if the interest is taxed outside Namibia.

Interest earned by individuals from local commercial banks is subject to a 10% withholding tax. Interest income that is subject to this withholding tax is exempt from normal income tax.

The following types of income, among others, are exempt from tax:

  • Interest from stock or securities issued by the government of Namibia or any local authority
  • Interest from deposits in the Namibia Post Office Savings Bank
  • Worldwide dividends accrued on ordinary and preference shares

The interest portion of distributions received from non-Namibian unit trusts is specifically excluded from the definition of “divi­dend.” As a result, such portion is taxable in the hands of unit holders. Individuals are subject to tax on such portion at the marginal tax rate.

Namibian unit trusts must withhold tax on the interest portion of distributions to all investors other than Namibian companies at a rate of 10% on the interest portion of distributions to individuals and non-Namibian companies.

Rental income is aggregated with other income and taxed at the rates set forth in Rates.

In the absence of an applicable double tax treaty, nonresidents are subject to the following final withholding taxes:

  • 20% nonresident shareholder’s tax on dividends declared
  • 10% tax on royalties paid to nonresidents

Effective from 30 December 2015, withholding tax is imposed on interest paid to nonresidents at a rate of 10%. The withholding tax rate may be reduced based on an applicable double tax treaty.

Directors’fees. Namibian-source directors’ fees are subject to tax with other income at the rates set forth in Rates. The source of the directors’ fees is the location of the head office of the com­pany of which the taxpayer is a director. This rule does not apply to remuneration for special services, which may be sourced where the services are rendered.

Directors’ fees paid by a Namibian company to a nonresident are subject to a withholding tax of 10%. The withholding tax is a final tax, and the directors’ fee income is not part of the recipi­ent’s Namibian taxable income.

Restraint-of-trade payments. Effective from 30 December 2015, restraint-of-trade payments are specifically included in gross income. Whether these payments may be of a capital nature is no longer relevant because these payments are now specifically included in gross income.

Other income. Partnerships are not treated as separate taxable enti­ties. Partners are taxed on their share of net partnership income.

Taxation of employer-provided stock options. Namibian tax legis­lation does not specifically address the tax treatment of employer-provided stock options. In general, options are taxed at the time of vesting on the difference between the exercise price and the fair market value of the stock at the time of exercise.

Capital gains. Capital gains are generally exempt from tax in Namibia. A gain on the sale of shares in a company that holds a mineral mining or exploration license or shares in a company that holds a petroleum mining or exploration license is subject to tax at the marginal rate of tax that applies to the taxpayer. Similarly, a gain made on the sale of a mineral mining or exploration license or a petroleum mining or exploration license is also sub­ject to tax at the marginal rate of tax that applies to the taxpayer.

Deductions

Deductible expenses. Non-capital expenses incurred in the produc­tion of income are deductible. An annual deduction of NAD40,000 per person is allowed for total contributions made to approved retirement annuity funds, pension funds and provident funds (essentially Namibian registered funds) and premiums with respect to study insurance policies for children or stepchildren. Dona tions to registered welfare organizations and approved edu­cational institutions are deductible if the recipient issues to the donor a certificate recording certain specified information.

Business deductions. Non-capital expenses incurred in producing taxable income are deductible.

Rates. The same progressive tax rates apply to all individuals. Income tax is levied at the following rates.

Taxable income Tax rate Tax due Cumulative tax due
NAD % NAD NAD
First 50,000 0 0 0
Next 50,000 18 9,000 9,000
Next 200,000 25 50,000 59,000
Next 200,000 28 56,000 115,000
Next 300,000 30 90,000 205,000
Next 700,000 32 224,000 429,000
Above 1,500,000 24

Relief for losses. A loss may be carried forward to the next year to be offset against income in that year. If a taxpayer carries a loss forward from the previous year and has no trading activities dur­ing a year of assessment, the loss is terminated and may not be carried forward into the following year; otherwise, the loss may be carried forward indefinitely. Losses may not be carried back.

Losses from certain trades are ring fenced from income of indi­viduals for years of assessment beginning on or after 1 March 2012 in any of the following circumstances:

  • The taxable income of the individual for the year of assessment before taking the loss into account is at least NAD200,000.
  • Losses have been incurred by the taxpayer from a trade in at least three of the most recent five years of assessment, including the current year (losses prior to the 2012 year of assessment are ignored).
  • The taxpayer carried on a suspect trade listed in the Income Tax Act. Suspect trades include part-time farming, animal showing, rental income from letting property to relatives, sport activities practiced by the taxpayer, dealing in collectibles and betting.

Other taxes

Wealth tax or net worth tax. Namibia does not currently impose wealth tax or net worth tax. The Ministry of Finance proposed a solidarity tax in the budget speech. No further details are avail­able.

Property tax. The local authorities impose property taxes.

Inheritance (or estate) and gift taxes. Namibia does not impose estate tax or duties or donations tax.

Transfer duties. Transfer duties are payable by the transferee on the transfer of fixed property (land). The applicable rates depend on the identity of the transferee and the value of the property transferred. The following table sets out the rates payable by individuals with respect to agricultural land acquired with the assistance of the Agricultural Bank of Namibia under Sections 5(a) or (c) of the Agricultural Bank Act, Act No. 5 of 2003.

Value of land

Exceeding      Not exceeding

NAD                     NAD                                Rate

0                         1,500,000                      No duty payable

.

1,500,000     2,500,000                      1% of the amount in

.                                                                excess of NAD1,500,000

.

2,500,000                —                          NAD10,000 + 3% of the

.                                                               amount exceeding NAD2,500,000

The following table sets out the rates payable by individuals with respect to other land.

Value of land

Exceeding      Not exceeding

NAD                     NAD                                Rate

0                       600,000                         No duty payable

.

600,000        1,000,000                      1% of the amount in

.                                                              excess of NAD600,000

1,000,000     2,000,000                    NAD4,000 + 5% of the

.                                                              amount exceeding NAD1,000,000

.

2,000,000                —                       NAD54,000 + 8% of the

.                                                             amount exceeding NAD2,000,000

.

The transfer duty payable by any person other than a natural person when acquiring land is 12% of the value of the property acquired.

Social security

Employees under 65 years of age and all employers are subject to social security contributions. Employees must contribute 0.9% of monthly compensation, subject to a minimum of NAD2.70 and a maximum of NAD81 per month. Employers must contribute an amount equal to the employee’s contribution. Self-employed individuals must con tribute 1.8% of monthly compensation, lim­ited to NAD162 per month.

In addition, a contribution to the Workers’ Compensation Fund must be made for each employee earning less than NAD81,300 a year.

Namibia is not a party to any totalization agreement.

Tax filing and payment procedures

The tax year in Namibia runs from 1 March to the end of the fol­lowing February. In general, individuals must file annual tax returns by 30 June, unless an extension is granted. Husbands and wives are taxed separately in Namibia.

The Pay-As-You-Earn (PAYE) wage withholding tax system oper­ates in Namibia. Individ uals who earn only remuneration subject to PAYE and who are employed by the same employer throughout the tax year are not required to file tax returns unless requested to do so by the Ministry of Finance. Individuals who earn remunera­tion that is not subject to PAYE (for example, travel allowances) must calculate their taxable income and tax payable, and must pay the tax owed by 30 June each year.

Individuals deriving annual income of NAD5,000 or more that is not subject to PAYE are considered provisional taxpayers and are required to make two provisional payments each year, one on the last weekday in August and one on the last weekday in February. Half of the year’s estimated tax is due with the first provisional return, and the balance is due with the second return. A penalty is imposed for underpayment of the first provisional tax payment if the payment is less than 40% of the finally determined tax payable for the year of assessment and is limited to the amount underpaid. A penalty is also imposed for the underpayment of the second provisional tax payment if the total provisional tax paid for the year is less than 80% of the finally determined tax payable for the year of assessment and is limited to the tax payable. The penalty for late submission of the first or second provisional tax payment is NAD100 per day for each day the form is submitted late. Any tax balance due is payable by 30 June each year if the taxpayer’s income is received from employment only, for example, director’s fees. If the taxpayer receives income from conduct ing a business, for example, as a sole trader, the balance of tax due is pay able by 30 September each year. Interest is payable at an annual rate of 20% per year if the final tax payments and the provisional pay­ments are paid after the due dates.

Effective from 30 December 2015, all directors’ fees, including fees payable to non-executive directors, are subject to PAYE. Such amounts now constitute remuneration and are subject to PAYE under Paragraph 2 of Schedule 2 of the Income Tax Act. Directors of companies that earn no income other than directors’ fees should be deregistered for provisional tax after the second provisional tax payment for 2016 is made.

Double tax relief and tax treaties

A tax credit is available for direct tax and withholding taxes paid to foreign jurisdictions. The credit may not exceed the Namibian tax applicable to the underlying income.

Namibia has entered into double tax treaties with the following jurisdictions.

Botswana                   Malaysia                          South Africa

France                        Mauritius                         Sweden

Germany                    Romania                          United Kingdom

India                           Russian Federation

The treaties follow the model treaties of the Organisation for Economic Co-operation and Devel op ment (OECD).

Namibia is negotiating double tax treaties with Canada, Liberia, Seychelles, Singapore, Spain, Tunisia, Zambia and Zimbabwe.

Temporary visas

All foreign nationals (bona fide tourists or business travelers) must obtain valid entry visas to enter Namibia, with the exception of nationals from the following jurisdictions.

Angola                       Ireland                             Portugal

Australia                     Italy                                 Russian

Austria                       Japan                               Federation*

Belgium                      Kenya                              Singapore

Botswana                   Lesotho                           South Africa

Brazil                          Liechtenstein                   Spain

Canada                       Luxembourg                    Swaziland

Cuba                           Macau SAR                    Sweden

Denmark                    Malawi                            Switzerland

Finland                       Malaysia                          Tanzania

France                        Mozambique                   United Kingdom

Germany                    Netherlands                     United States

Hong Kong SAR       New Zealand                   Zambia

Iceland                        Norway                           Zimbabwe

* Including the Commonwealth of Independent States.

Persons from the United Nations and the World Service Authority do not require valid entry visas to enter Namibia.

The government of Namibia issues visitors’ visas, business visas, work permits and temporary or permanent residence permits.

Visitors’ visas. Visitors’ visas are issued to foreign nationals who intend to visit Namibia for recreational purposes only and are issued to visitors on arrival in Namibia. These visas are valid for up to 90 days and can be extended at a cost of NAD470 if the extension application is submitted within 14 days (weekends or holidays excluded) of the expiration date.

Business visas. Business visas are required for individuals who enter Namibia for business purposes. The business visa in Namibia is required for persons performing the following activities in Namibia:

  • Looking for prospects to set up formal businesses in Namibia
  • Exploring business opportunities
  • Business persons attending meetings at subsidiaries of their parent companies
  • Official government visits
  • Attending conferences
  • Attending corporate events (non-work) and meetings for which no remuneration is received
  • Attending short training courses (not more than 90 days per year)
  • Participating in sports events, expositions and trade fairs

All of the persons performing the activities listed above must apply for a business visa unless they are from countries that have entered into a visa abolition agreement with Namibia.

Traders and street vendors, voluntary workers, and persons hired and remunerated in their countries but performing work in Namibia must obtain work visas.

On application, business visas may be granted for multiple re­entry. However, they must be obtained for each entry into the country for business purposes if a multiple re-entry visa was not originally granted.

The documentation required for a business visa consists of a copy of the passport (showing date of issuance, date of expiration and passport number), a completed visa form and a motivation letter (references from the employer) on a company’s letterhead.

The cost of a business visa is NAD390 plus a handling charge of NAD80.

Work visas and permits. Work visas and permits are discussed in Section G.

Work visas (and/or permits) and self-employment

Work visas are issued to persons who intend to work for up to six months in Namibia. Work visas can be issued for a three-month period and can be renewed for an additional three months.

The cost of a work visa is NAD390 plus a handling charge of NAD80.

The documentation required for a work visa is the same as the documentation required for a business visa (see Business visas), except for the additional requirement of a police clearance cer­tificate for a work visa.

Foreign nationals may accept employment in Namibia only if they enter the country with work permits and with temporary or per­manent residence permits (see Section F).

Work permits are issued to foreign nationals who intend to under take employment in Namibia and are valid for a period approved by the Ministry of Home Affairs. The cost for a 12-month work permit is NAD1,395. In addition, a handling fee of NAD80 is charged on all applications. The multiple-entry visa allows an individual to enter and leave Namibia as he or she desires. Appli­cants may not begin work until they are in possession of valid work permits.

Work permits must be renewed three months before their expira­tion dates. They are valid only for the employment detailed in the application and are not transferable if the holder changes employ­ment. A Change of Conditions permit must be obtained in these circumstances.

The following items, certain of which are standard forms ob tainable from the Ministry of Home Affairs, must be submitted to acquire a temporary work permit:

  • An application for a temporary work permit completed by the applicant
  • Application for visa (for purpose of multiple re-entry)
  • Motivation letter on the company’s letterhead that indicates why the applicant’s skills are required
  • Work references from previous employers
  • A copy of a marriage or divorce certificate, if applicable
  • A copy of the applicant’s passport (showing date of issue, date of expiration and passport number) and two photographs
  • Copies of a diploma indicative of higher education or special training
  • Completed standard medical certificate and radiological report forms obtained from the Ministry of Home Affairs
  • Police clearance certificates from the country of origin and most recent countries where the applicant was previously employed
  • A deed of surety completed by the employer promising to reim­burse the government of Namibia for all expenses and costs in curred for the repatriation or deportation of the applicant
  • Proof of advertisement of the position in two local newspapers for two weeks
  • Trade union letter (if applicable)
  • A minimum of three CVs from applicants for the position

A foreign national may establish a business in Namibia, but must possess a work permit or permanent residence permit before entering the country and beginning a business. To speed up the approval process, applications can be submitted through the Investment Centre if the investment will create employment (minimum five persons) that is sustainable. Houses are not con­sidered an investment.

Residence visas and/or permits

Temporary residence permits are issued together with work per­mits and are renewable on the same basis as work permits.

Subject to government approval, permanent residence permits are issued to foreign nationals after they have held a work permit or temporary residence permit for 10 years. The cost of the per­manent residence permit is NAD12,130. In addition, a handling fee of NAD80 is charged for all applications.

An applicant for a permanent residence permit must complete a standard permanent residence application, which must be accom­panied by the following items:

  • A photograph of the applicant
  • Police clearances from Namibia, the country of origin and all foreign countries where the applicant previously worked
  • A certified copy of the applicant’s original birth certificate
  • Standard medical and radiological reports from all previous countries of residence for longer than 12 months
  • Marriage certificate or a final divorce certificate if applicable
  • A death certificate of a late spouse if applicable
  • A standard questionnaire form obtainable from the Ministry of Home Affairs detailing the training and experience of the applicant
  • Copies of the highest educational, trade or professional certifi­cates obtained
  • The employment offer from the employer
  • Proof of financial resources if applicants are self-employed or entering into business partnerships

Family and personal considerations

Family members. The spouse of a work permit holder must file an independent application for a work permit if he or she will be employed in Namibia or for a temporary resident permit, which does not allow a person to work, if he or she does not intend to work in Namibia.

Marital property regime. Namibia has abolished the marital power provisions and, as a result, each spouse now has equal marital powers. The regime elected by the spouses at the time of mar­riage governs their conjugal relationship.

Interest income accruing to a jointly held bank account is deemed to belong one-half to each spouse.

Forced heirship. Namibia does not have a system of forced heir­ship.

Driver’s permits. International driving permits are issued by the Automobile Association of Namibia in accordance with the terms of the International Convention relative to Motor Traffic of 1949 and to holders of valid driver’s licenses issued in Namibia.