The Treasury has introduced a bill to amend the Income Tax Act of 1981 aimed at capping interest deductions and limiting tax loss carryforwards to close corporate loopholes.
Minister of Finance and Public Enterprises Iipumbu Shiimi said the government is closing loopholes previously exploited by multinationals, such as excessive interest deductions and indefinite tax loss carryforwards.
He said this is in line with the country’s objective to protect and broaden the tax base.
“The bill introduces a limit of 30% on interest deductions, excluding SMEs to support their growth. It also limits the carry forward of tax losses to five years for non-mining companies and ten years for mining companies,” he said.
To help small and medium enterprises raise capital offshore, the bill proposes an exception for interest expenses below N$3 million, targeting smaller enterprises.
“This aligns with our regional and international commitments, including the SADC protocol and global anti-avoidance standards. We believe that these amendments will contribute to increased revenue mobilisation, sustainable growth, and a fair and equitable tax system,” he said.
Shiimi noted that the policy aims to balance the interests of all stakeholders, reduce compliance costs, and pave the way for future tax rate reductions.
“These amendments are designed to provide domestic relief to households, enhance incomes, and create a favourable environment for businesses. Our goal is to stimulate investment and address incidental needs,” he added.
The Minister noted that the government has also considered ways to enhance the competitiveness of the tax system to attract more investments and support economic growth.
Namibia is a signatory to the SADC Protocol on Finance and Investment, which mandates cooperation and coordination of tax regimes among member states.
Additionally, Namibia is part of the Inclusive Framework, a body of over 145 countries working to combat base erosion and profit shifting.
“These actions align with Namibia’s long-term goals to address these issues. Base erosion involves corporate tax planning, where multinational companies shift profits from high-tax jurisdictions to lower-tax ones, often moving income from developing to developed countries,” Shiimi said.
Furthermore, Namibia is working to improve its tax administration to build trust, increase voluntary compliance, and boost revenue collections.
