from | to | Tax rate

NAD 0 | NAD 50,000 | 0%

NAD 50.001 | NAD 100,000 | 18%

NAD 100.001 | NAD 300,000 | 25%

NAD 300.001 | NAD 500,000 | 28%

NAD 500.001 | NAD 800,000 | 30%

NAD 800.001 | NAD 1.500.000 | 32 %

over NAD 1,500.001 | 37%

Namibia is one of the youngest states in Africa. Therefore, Namibia had sufficient opportunity to orient itself on other models in the development of its tax law. The result is an innovative, but above all competitive tax law that provides many incentives for domestic and foreign investors as well as takes into account their own national needs. It is particularly interesting that in Namibia taxes are levied according to the territoriality principle. No wonder then that the EU has in the past put Namibia on its blacklist of tax havens. In the meantime, however, this classification has been revised.

1st Taxation in Namibia – Introduction

If you look at the EU blacklist of 2017, you will find the African country Namibia. At that time, the state in the southern hemisphere was regarded as a tax haven and this list was intended to encourage tax cooperation.

Several years have passed since then, in which Namibia managed to escape the unfavorable EU list. It looks like Namibia can stay away permanently. Therefore, this is a good reason for us to find out how to pay taxes in Namibia today.

2nd General about Namibia

2.1 Geographical location of Namibia

The Republic of Namibia is located in the southwest of Africa. It borders Angola to the north, Botswana to the east and South Africa to the south. The Atlantic Ocean surrounds the 1,500 km long coastline in the west. It seems surreal how there the ocean burns on an extensive sandy beach, which widens inland as a desert, partly with high dunes, seemingly endlessly. However, the coast is even more surreal when, thanks to the evaporation of the sea water, it is often in thick fog in the morning – a strong contrast to the desert.

This coastal fog has been a constant risk for sea travel since the time of the first sea voyage in this region. No wonder, then, that a coastal strip is notorious as a skeleton coast due to the many shipwrecks.

The name has been given to the state from its large parts of the country-covering desert Namib. It is the oldest geological desert in the world. But also most other parts of the country are characterized by arid climate with extensive steppes and savannahs, of which the Etosha pan in the national park of the same name and the Kalahari are probably the most famous regions. Rain is very rare here nationwide.

2.2 Economic factors in Namibia

Only in the north and northeast of the country is it enough for some agriculture, which is dominated mainly by animal breeding. Of economic importance is also fishing off the coast, which is rich in fish due to the cold Benguela current. Tourism is also an increasingly important economic factor in Namibia, which thus also brings in taxes. However, Namibia derives the greatest economic value from its rich mineral resources, especially diamonds and uranium. Diamond production alone contributes to a third of Namibia’s export revenue.

2.3. History of Namibia

The history of Namibia is characterised by many changes. Even in pre-colonial times, regional migrations led to numerous conflicts. After use of the coast by the Portuguese at the end of 15. For a long time, the area was largely spared European influences. But at the latest with the colonization of South Africa by the British, the settlement by Europeans in Namibia began. Although they remained a minority for a long time, their position of power quickly consolidated and so did their takeover of land.

This led to the end of the 19th century. In the 19th century, the German Empire as a protective power took control of the protected area known at the time as German Southwest Africa. In the then general racial infatuation, a balancing, consensual settlement with the resident polyethnic population was neglected, so that in 1904 there was first a revolt of the Herero, which was bloodily suppressed, and then the survivors of the desert were left. Even the Nama, who initially also fought the Herero, was not lucky in their pursuit of freedom.

But the German dominance was already nearing its end at that time. Because with the First World War, the British occupied the country, which was no longer a German colony. Instead, after the war, the League of Nations provided South Africa with a mandate to administer the country.

After World War II, South Africa sought to integrate South West Africa into its territory. However, since it was still a mandate area, the UN had to agree to the request. But it did not. This did not in any way prevent South Africa from taking further steps to promote integration, so that South Africa lost its mandate and then its seat at the United Nations.

With Soviet and Cuban support, an underground war developed in the following period to liberate South Africa. This, together with the beginning of the end of the apartheid regime in South Africa in 1990 ultimately led to the independence of Namibia.

3rd Tax in Namibia

3.1. Basics under which Namibia levies taxes

Already at this point we are surprised by an unknown premise, according to which Namibia, unlike many other countries in the world, levies taxes. Namibia has introduced taxation by source instead of a tax liability based on the residence of a potential taxpayer. While we in Germany tax the world income, the tax law in Namibia is based on the territoriality principle. However, there are also some exceptions. In any case, this is a tempting approach to saving taxes at international level.

But also remarkable is the fiscal year after which Namibia levies taxes. This is how it always begins with the 1. March of a year, thus deviates from the calendar year, which is decisive in Germany and most other countries.

3.2. Types of income in Namibia

In Namibia you pay taxes on income from self-employment, rental income, income from agriculture and forestry as well as from business. However, special rules apply to (commercial) commercial and agricultural and forestry income, which may subject them to corporate tax.

In Namibia, on the other hand, there are no taxes on capital gains. This also includes fees for licensing and other rights of use in intangibles (with the exceptions that are similar to those for the sale of companies). Dividends and interest also remain tax-free in Germany. With few exceptions, in Namibia you can also earn profits from the sale of company shares without taxes. These exceptions concern holdings in oil and mining companies, which are therefore taxable.

3.3.Taxes in Namibia: Income Tax

3.3.1. General rules on income tax in Namibia

In the taxation of income in Namibia, there is a similar scheme as in Germany. This assumes a total income, deducts any tax-exempt income from it and thus comes to income. From this one can deduct further expenses, such as advertising costs as well as depreciation and certain losses. Of course, these expenses must be linked to the intended revenue. In addition, this applies only to taxable income. Those who are tax-exempt therefore remain out of the question. For example, if you sell shares in a company and pay brokerage commissions, you cannot deduct this as advertising costs. Furthermore, contribution payments for health insurance by employers remain tax-free. With this you have calculated the taxable income, to which you then apply the respective tax rate.

3.3.2.Wage Tax and Social Security Duties in Namibia

By the way: if you receive wage or salary, this is, as in Germany, pay tax. In addition, employers and employees each bear half of the social security contributions. They are 0.9% of the wage or salary, but at least NAD 2.70 and a maximum of NAD 81 per month per page (i.e. a maximum of NAD 162). One Namibian dollar (NAD) corresponds to about EUR 0.05. Or vice versa: One euro is about NAD 20.

Employers are obliged to pay the correspondingly withheld income tax of their employees to the tax office within a period of 20 days after the end of the month of disbursement.

If you pay a part of the income into a pension insurance for retirement provision, you can set this up to an amount of 40,000 NAD per year tax deduction in the income calculation.

3.3.3. Tax progression in Namibia

Tax rates in Namibia are staggered in seven stages:

3.4.Taxes in Namibia: withholding taxes

Due to the territoriality principle when collecting taxes in Namibia, there are various withholding taxes that have to be paid in Namibia if the source of income is located in Namibia. Additional taxation (CFC rules) is unknown in Namibia.

3.4.1. withholding tax on dividends in Namibia

If shareholders receive distributions from a Namibian company abroad, the latter is obliged to withhold a withholding tax of 20%. However, if a foreign corporation holds more than 25% of such a company in Namibia, the tax rate is reduced to 10%.

By the way, the withholding tax is due 20 days after the decision to pay the dividend.

3.4.2. withholding tax on transfer of interest abroad

If a person resident in Namibia makes interest payments abroad, he is obliged to withhold 10% as withholding tax and transfer it to the local tax administration. A period of 20 days applies after the end of the month in which the interest payment was made.

3.4.3. withholding tax on license payments and comparable fees

License fees and other payments for granting rights or transferring funds to recipients outside Namibia are subject to a 10% withholding tax. The provision of funds also covers the rental of equipment, including machinery and equipment (for example, for research or mineral extraction).

3.4.4. Withholding tax on foreign services

Also with 10% you have to withhold withholding taxes in Namibia if you accept services from a foreign provider. However, this involves in particular consulting services consisting of management, management or technical support.

3.5.Taxes in Namibia: Corporate Tax

3.5.1. Corporate tax liability in Namibia

Corporations and other corporations in Namibia are subject to corporate tax. As already mentioned above, certain agricultural and forestry enterprises and commercial enterprises also tax their income in accordance with Namibian corporate tax law.

Companies from abroad that generate income in Namibia must also pay taxes there. It may be necessary to register yourself or at least one branch in Namibia. If there is a double taxation agreement with the country in which the foreign company is based, a taxation of the local income in Namibia is only possible if it has a permanent establishment in Namibia. Otherwise, withholding taxation may apply (see above).

3.5.2. General rules on corporate tax in Namibia

Here, too, there is a scheme according to which the taxable income is determined. First, you add all the income to a total income. As a rule, capital income is excluded. From this you deduct permitted tax-free amounts and receive the income. Now, again, cuts are made if they are allowed by the tax law in Namibia. This includes, for example, losses or expenses that served to generate the income. However, if such expenses were tax-free themselves, the deduction option is also eliminated. This is how taxable income is calculated.

3.5.3. The corporate tax rate in Namibia

When it comes to corporate tax, Namibia also follows the trend of following a flat-rate taxation instead of a progressive tax rate system. Most companies in Namibia pay taxes of 32%. This also applies to foreign branches in Namibia. At 55%, diamond miners and companies that serve as suppliers to these companies pay a significantly higher tax rate. Other mine operators and their suppliers pay 37.5% in taxes on their income in Namibia.

3.5.4. Economic Development Programmes in Namibia

On the other hand, as a registered manufacturer of goods, you can pay a tax rate of 18%, but only in the first ten years after the company was founded. In addition, there are also other incentives to promote manufacturers in the production of goods in Namibia.

On the other hand, exporters of industrial goods benefit from another promotion. It does not matter whether the goods they export were produced in Namibia or abroad. What is interesting to them is that they are entitled to an 80% allowance on income from the export of these goods.

And when companies process or refine goods for export outside the SADC (Southern African Development Community), their income is even completely exempt from corporate tax. However, such a company must register and establish itself in a so-called EPZ (Export Processing Zone). This is comparable to a free zone or free port.

Particularly noteworthy are the very generous depreciation rates for entrepreneurs in Namibia. For example, when a factory or warehouse building is built, you can write off 20% of the acquisition or production costs in the first year after completion and then proceed with a rate of 4% annually. In the case of companies receiving special assistance, this rate may even double to 8%. Furthermore, mining companies are allowed to depreciate their entire exploration costs in the first year of operation. Your development costs are also to be written off linearly within three years after commissioning of a mine.

Taxes in Namibia: Annual levies on share capital

In addition to corporate tax, a special feature must be mentioned. Thus, an annual levy is incurred on the share capital of companies. It is 10,000 NAD 6.5 per initial amount of NAD. The minimum amount for this levy is NAD 120 per year.

3.7. VAT in Namibia

The taxation of turnover in Namibia, as in Germany, is geared towards deliveries and services. It is also a multi-phase tax. The general rate is 15 % and the reduced rate is 0 %. In addition, there are sales that are tax-free.

Since there are only two VAT rates, if there is no VAT exemption, it is easiest to list the sales that are taxed at 0%. Because all others are then automatically charged with 15% sales tax. For example, supplies and services subject to a sales tax of 0% include fuels, certain basic foodstuffs (for example unprocessed fresh or dried beans, sunflower oil, bread, flour, sugar, fresh milk), sales or construction services to residential real estate, international transport, funerals and sanitary towels. Excluded from VAT are rentals of residential properties, certain services in the health sector, including those in licensed clinics and hospitals, financial services, education and public transport within their own borders, to name but a few.

3.8.Taxes on property in Namibia

Unlike in many parts of the world and also unlike in Germany, the tax law in Namibia does not provide for taxation of assets. There is neither a property tax nor an inheritance or gift tax and certainly no general property tax.

3.9.Taxes in Namibia: Stamp duty

Nevertheless, levies may arise in relation to certain assets. This applies to the transfer of assets, in particular real estate. This is because a stamp duty has to be paid. For example, a stamp duty of NAD 12 is payable for each started NAD 1,000 of the value of a property when it is sold. But there is also a stamp duty on the transfer of shares and other rights.

Taxes in Namibia – Conclusion

Despite the taxation according to the territoriality principle, you can see many overlaps with German tax law in the way you pay taxes in Namibia. Other aspects, however, are very specific. For example, when compiling goods subject to the reduced VAT rate, the general average income of the local population has probably also been taken into account. This has also been an obvious concern in the area of income taxes. Thus, the particularly profitable industries, i.e. especially the mine operators, contribute a large part to the state budget of Namibia.

Nevertheless, Namibia is also interesting for foreign investors. In particular, the tax and extra-tax incentives offered to producers. Combining these peculiarities with taxation on the basis of the territoriality principle gives rise to a wide range of possibilities. It is therefore good that Namibia has already concluded a double taxation agreement with a number of countries, including Germany.