Effective dates of 2015 tax amendments

January 15, 2016, 9:37am


EY

The Value-Added Tax Amendment Act 12 of 2015 and the Income Tax Amendment Act 13 of 2015 were promulgated in the Government Gazette on 29 December 2015 and 30 December 2015 respectively.

Value-Added Tax (“VAT”)

The amendments to the VAT Act take effect on 1 January 2016.

VAT Registrations and cancellation of registrations

- The compulsory VAT registration threshold is increased from N$ 200 000 to N$ 500 000;
- A voluntary VAT registration will in future only be considered where:
- there is a reasonable expectation that taxable supplies will be made for consideration after a period of time; and
- a reasonable expectation exists that future taxable supplies will exceed N$ 200 000 in a 12 month period;
- The Commissioner of Inland Revenue may cancel a voluntary VAT registration in certain circumstances;
- A voluntary VAT registration will be allocated a six month VAT period unless, upon written application, the Commissioner of Inland Revenue has allowed a different VAT period.

Import VAT accounts

- Provision has been made that the Commissioner of Inland Revenue may require security or impose additional conditions before allowing the import of goods on an import VAT account;
- The Commissioner of Inland Revenue may cancel the registration of an import VAT account in certain circumstances.

Liability of shareholders for tax debt

- The term “tax debts” is defined to include the VAT liability, penalties imposed and interest charged for late payment of VAT;
- Shareholders of companies and members of close corporations will be liable to pay unpaid tax to the extent that the tax debt arose during the time the person was a shareholder or a member. Shareholders and or members will be held liable jointly or severally for a tax debt.

Financial services

- Financial services rendered to a non-resident who is outside Namibia at the time the services are supplied will be an exempt supply in future. The impact of this proposed amendment on the apportionment ratios of banks should be carefully considered.

Income Tax

Reduction of the corporate tax rate (non-mining) 

- The reduced corporate tax rate of 32 % is effective for years of assessment commencing on or after 1 January 2015 and apply to companies and close corporations.

All the amendments detailed below became effective on 30 December 2015.

Definitions

- Definitions are now provided for:
- Namibia;
- Mineral license;
- Petroleum license;
- Right.
- The definition of remuneration has been amended so that remuneration paid to directors is subject to employees’ tax.

Gross income

- Gross income includes the following items which were previously treated as capital of nature:
- Restraint of trade payments;
- The alienation or transfer of any share or interest (directly or indirectly) in a company which holds a mineral license, mineral right, petroleum license or petroleum right.

Deductions

- An allowance is provided for expenditure incurred in respect of restraint of trade payments.

Withholding tax on royalties

- The withholding tax rate in respect of royalties is a fixed rate of 10%;
- A wider application of royalty is applicable which includes the right to use industrial, commercial or scientific equipment. Non-resident owners of such equipment earning rental income from a Namibian resident are affected by this amendment as well as Namibian residents paying the rental to a non-resident person.

Withholding tax on services

- A new definition for resident person has been included and branches of external companies are specifically defined as residents for withholding tax on services purposes;
- The withholding tax rate is reduced from 25% to 10%.

Withholding tax on interest

- Interest paid to a non-resident is subject to a withholding tax of 10% with effect from 30 December 2015. The withholding tax must be paid by the 20th day of the month following the month in which the interest is paid. The payment must be accompanied by a return.

Non-resident shareholders’ tax

- The due date for payment of non-resident shareholders’ tax has been changed to 20 days following the month the tax has been withheld;
- Specific penalties and interest provisions in respect of the late payment of non-resident shareholders’ tax has been introduced.

Collection of tax balances

- Provisions have been introduced in terms of which payments are first allocated to tax, then to penalties and then only to interest;
- Provisions have been introduced for the collection of taxes where there are grounds to believe that a person will leave Namibia.

Recovery of tax debts from third parties

- The term “tax debts” is defined to include the income tax liability, penalties imposed and interest on the late payment of income tax;
- Shareholders of companies and members of close corporations are liable to pay unpaid tax to the extent that the tax debt arose during the time the person was a shareholder or a member. Shareholders and or members are held liable jointly or severally for tax debts;
- Provisions have been introduced to assign liability for tax debts to financial managers in certain circumstances;
- Provisions have been introduced to grant the Minister powers to recover tax debts from third parties.