The Ministry of Finance has announced plans to modernise Namibia’s Value-Added Tax (VAT) framework and introduce mandatory e-invoicing as part of a broader package of tax reforms aimed at improving compliance, reducing fraud and strengthening revenue collection.
Finance Minister Ericah Shafudah outlined the proposed reforms during the 2026/27 budget presentation, saying the amendments are intended to improve legislative clarity while aligning the tax system with evolving economic realities.
“Modernise the VAT Act and implement e-invoicing to improve legislative clarity, enhance compliance and reduce fraud,” Shafudah said.
The proposed updates to the VAT Act are also expected to provide targeted support to priority sectors, including agricultural input imports and the creative industry, although further details on specific amendments are yet to be released.
The introduction of e-invoicing is designed to improve efficiency in tax administration by enabling real-time or near real-time verification of transactions. Authorities say this will help curb invoice manipulation, reduce tax leakage and improve audit capabilities.
In addition to VAT reform, the Ministry plans to adjust personal income tax brackets over the next two financial years to reduce fiscal drag and improve fairness in the tax system.
“Adjust the income tax brackets to reduce fiscal drag and improve fairness. Update personal income tax rates and thresholds to ensure continued progressivity and adequacy of revenue over two financial years,” Shafudah said.
Fiscal drag occurs when taxpayers are pushed into higher tax brackets due to inflationary income increases, even though their real purchasing power has not improved.
To support investment and economic growth, government also intends to review and update depreciation rules. The proposed changes will allow for accelerated capital allowances, enabling businesses to deduct the cost of qualifying capital assets more quickly than under standard depreciation schedules.
The reform package further includes measures aimed at strengthening tax transparency and curbing avoidance. Government plans to introduce mandatory disclosure requirements for aggressive tax planning arrangements, aligned with the OECD/G20 Base Erosion and Profit Shifting (BEPS) Action 12 framework.
Special Economic Zones (SEZs) will also be reviewed to ensure tax incentives deliver tangible investment and job creation outcomes, while remaining consistent with Namibia’s international obligations.
The Petroleum Income Tax Act is set to be amended to address recent developments in the sector, as exploration and production activity expands.
Additional proposals include reviewing the introduction of a corporate social responsibility tax deduction or incentive, streamlining the taxation of revenues from international sporting events, and clarifying the tax treatment of property within corporate group structures.
The latter reform is expected to introduce a form of “group relief”, allowing for tax-neutral mergers, acquisitions and restructurings under specified conditions.
The measures form part of a wider effort to modernise Namibia’s tax framework, broaden the revenue base and strengthen fiscal sustainability amid ongoing consolidation efforts.
