The Treasury is targeting 5,100 graduates to benefit per year under the Internship Tax Incentive Programme.
Under the funding scheme, each intern will be entitled to an N$50,000 stipend per annum, which will be a yearly amount, with the possibility of being increased after a review, depending on the level of participation from the private sector.
In the midterm budget review, Finance Minister Iipumbu Shiimi allocated an initial N$126 million to incentivize employers to provide internship opportunities in their organizations in exchange for reduced corporate tax.
“So that’s the incentive that we have come up with, which we are saying there will be an additional deduction for tax purposes as an employer when you take on an intern. Simply put, it is a cost-sharing mechanism with an employer to reduce the cost of employing the youth. This is also open to the private sector,” Ministry of Finance and Public Enterprises’ Economic Policy Deputy Executive Director Oscar Capelao told The Brief.
“We are really proud of this tax reform the government has taken, among many others. In Africa, we have been speaking of the youth dividend, but that’s only provided if the youth become productive as soon as possible after qualifying or finishing school and graduating. The amount will be revisited afterwards because the target was that we would share the cost 50/50 between the employer and the State, and the Income Tax Act will have to be amended.â€
Capelao said phase one, being implemented, will cater to the private sector, while phase two will target incentivizing State-Owned Enterprises (SOEs) and will be initiated sometime in 2024 after consultations.
“So obviously, the private sector, we believe the incentive would allow them to take on more interns. But in the public sector, it’s also needed because you need to manage your pipeline. As those employees are retiring, the apprentices will learn long enough and be able to maintain whatever needs to be maintained. In addition, we will be looking at the NTA levy, where we can also involve nonprofit organizations. With regards to NTA, we shall consult the Ministry of Higher Education, Technology, and Innovation as the line ministry,” he said.
Considering that SOEs fall under the Finance Ministry, Capelao said, the Ministry will be engaging with them on how this program can be rolled out.
“It is very important to lay a foundation because it will serve as a pipeline to manage their workforce. There are people who will retire in two or three years, hence, it is important to have a succession plan. That way, you are building that pipeline, naturally,” he said.
Capelao said the government department will engage with the private sector regarding the incentive program.
“We have engagements coming up next week where we are meeting the private sector, as we seek to finalize the rules of agreement. We have seen this work in other territories and have crafted sunset clauses, but we haven’t. So, we will amend the Income Tax Act that says you as an employer will have this deduction reduced. This is one of those things that, if the economy is pumping and creating jobs by itself, then you could always withdraw it. But we are now at that phase where we are saying the economy needs help, hence we have introduced the Youth Employment Incentive,” he said.
The government currently spends close to N$200 million per annum to fund internship training in the public service through the National Internship Programme Policy, an initiative which aims at reducing the number of unemployed graduates in the country.
