Namibia: Business Environment

Company Tax

32%

Tax Rate For Foreign Companies

Namibia has a source-based tax system, hence income earned by foreign companies from a source within or deemed to be within Namibia will be subject to tax in Namibia.
Foreign companies are subject to the same tax rates as local companies. However, they have to decide whether they want to register as a local company (subsidiary) or an external company (branch) if they have a place of business within the country. Permanent establishments are only taxed on their Namibia-source income.

Capital Gains Taxation

There is no capital gains tax in Namibia; however, income from certain capital transactions is subject to income tax, regardless of its capital nature. These transactions include:

• income received or accrued from any transaction regarding a license or a right to mine minerals in Namibia, regardless of where the transaction is concluded, the place where payment for the transaction is made or the place where the funds from which payment is made are held
• the direct or indirect sale of shares in a company that holds a license or has a right to mine minerals in Namibia
• the sale or other disposal of petroleum rights/licenses or the direct or indirect sale of shares in a company that holds such rights/licenses.

Main Allowable Deductions and Tax Credits

A tax deduction is available for the cost of all tangible and intangible assets used by the taxpayer to generate income. No apportionment is allowed where an asset is held for less than 12 months. A construction allowance of 20% is available for buildings used to generate income in the year they are first brought into use, with an annual allowance of 4% deductible for the twenty following years. Eligible manufacturers can claim 20% of construction costs of the building in the year it is first brought into use and 8% for the ten following years.
Mine operators can claim a tax deduction for all exploration and development expenditure incurred prior to commencement of mining production.
The amortisation of goodwill is not deductible for tax purposes. Interest expenses incurred in the production of income are deductible. Bad debts are only deductible if they are not recoverable under any contract of insurance, guarantee, security, or indemnity. Charitable donations to registered welfare organisation or an approved educational institution are tax-deductible, whereas fines, penalties and tax on income are not deductible.
Tax losses can be carried forward indefinitely. Losses cannot be transferred to other members of a group. The carryback of losses is not permitted.

Other Corporate Taxes

Transfer duty is payable at 12% on the value of any property acquired in Namibia by a non-natural person (the rate decreases gradually for natural persons). It is generally payable by the buyer; however, the agreement for the sale of the property may determine the seller as the liable person.
Certain legal transactions are subject to stamp duty at varying rates: NAD 5 for agreements or contracts, 0.2% on the issue or transfer of marketable securities, 1.2% on the transfer of deed relating to immovable property. Additional stamp duty of NAD 5 for every NAD 1,000 of debt secured is payable on the registration of a bond over immovable property.
An annual duty is levied on the issued share capital of a company at an amount of NAD 6.5 per every NAD 10,000 (with a minimum duty of NAD 120 per year).
Social security contributions are split equally between the employers and employees. The share of employers amounts to 0.9% of earnings (minimum monthly contribution of NAD 2.70, maximum monthly contribution of NAD 81 each). Under the Employees Compensation Act, employers are also required to contribute to the Employees' Contribution Fund, which provides cash benefits for industrial injury, disability, and death. Rates vary from 1% to 8% according to the occupational risk (does not apply to employees who make more than NAD 81,300 per annum).

Other Domestic Resources

Namibia Revenue Agency

Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.

Tax Rate

Allowable Deductions and Tax Credits

There are no standard allowances for business expenses. Individuals have to prove their expenses (travel, entertainment, and motor vehicle expenses) were incurred to generate taxable income. Personal and mortgage expenses are not deductible. An employee may deduct contributions of up to NAD 40,000 per year to an approved pension, retirement annuity, provident, and educational policy fund registered in Namibia.

Special Expatriate Tax Regime

Namibia has a source-based tax system. Income derived or deemed to have derived from Namibian sources is subject to tax. Foreigners with income deriving from Namibian sources will therefore be subject to income tax, regardless of their residency. There is no general unilateral provision for relief from double taxation (except for royalties).
A withholding tax of 10% on services applies to any Namibian resident paying a management, consultancy, or entertainment fee to a non-resident.
Dividends declared by a Namibian company to a non-resident person will be subject to non-resident shareholders tax. The standard rate is 10% where a company holds more than 25% shares in the Namibian company. In all other cases, the tax is payable at 20%.