The Ministry of Information and Communication Technology (MICT) confirmed that it is in talks with the Ministry of Finance on the possible taxation of digital services such as Netflix, Yango, inDrive, Spotify, Google and Starlink, which do not have a local presence in Namibia.
MICT minister Emma Theofelus said discussions with the finance ministry are advanced.
“Tax on digital products is definitely in the works. The Finance Minister and I are at advanced talks,” Theofelus said.
According to government insiders, the proposal under consideration would see a 15% Value Added Tax (VAT) applied to payments made by Namibians for digital services supplied by non-resident providers. VAT is a domestic consumption tax and would apply to transactions that would ordinarily attract VAT if supplied locally.
The proposed approach is expected to involve local banks to ensure compliance at the point where payments for digital services are processed.
The issue of taxing foreign digital and over-the-top (OTT) service providers has become increasingly prominent across Africa, amid concerns such companies generate substantial revenue in local markets without paying taxes due to the absence of a physical presence. Traditional international tax rules generally require a company to have a permanent establishment before it can be subjected to corporate income tax.
Digital business models, however, allow companies to operate across borders without local offices or infrastructure, creating what governments view as an uneven playing field with domestic firms.
In response, several African countries have introduced new tax measures, including digital services taxes and VAT on digital services supplied by non-residents. Countries such as Kenya, Nigeria, Tunisia, Zimbabwe and Sierra Leone have implemented digital services taxes, while others, including Kenya and Mauritius, have extended VAT to cover digital services provided by foreign companies.
African governments are also participating in international efforts, including initiatives under the Organisation for Economic Co-operation and Development’s Base Erosion and Profit Shifting framework, to address taxation challenges arising from the digital economy.
