The government’s revised tax reforms will put N$646 million back in the pockets of taxpayers by exempting all individual taxpayers from paying tax on the first N$100,000 of their income, starting 1 March 2024, an official has said.
The government made amendments to increase the threshold for Income Tax on Individuals from the current N$50,000 to N$100,000.
“In this respect, the revised tax tables will be published accordingly. Furthermore, we have made provisions in the two outer years of the Medium Term Expenditure Framework (MTEF) to adjust all tax brackets for inflation creep. In this regard, a total of N$712.9 million per annum in direct relief to taxpayers has been provided for; as previously communicated,” Minister of Finance and Public Enterprises Iipumbu Shiimi, said while tabling the 2024/25 budget and MTEF which runs until the 2026/27 fiscal year.
Other reforms Shiimi announced include the non-mining company tax rate which will be reduced by two percentage points during the MTEF.
The tax rate will then be reduced to 31% effective on 1 January 2024, with a further reduction to 30% taking effect on 1 January 2025.
“Furthermore, to improve competitiveness against regional peers and in keeping with global developments in corporate income taxes, the non-mining company tax rate will be reduced further to 28 percent during FY2026/2,” he said.
These decisions, the Minister said, were taken during the preceding MTEF, where the government maintained a policy stance to not consider new tax policy proposals, specifically those with the potential to stifle economic recovery and compromise the emerging growth prospects.
“Broadly, we still maintain the same view, and as such this budget continues specific tax policy proposals aimed at providing some relief to taxpayers to boost domestic demand and broaden the tax base to improve revenue mobilisation.
“These proposed reforms on corporate income tax are expected to ensure revenue enhancement through improving corporate tax compliance and easing the administrative and audit burden on Namibia Revenue Agency. Overall, the changes are estimated to yield additional taxes of more than N$600 million per annum,” said Shiimi.
In addition, Shiimi said fiscal authorities have considered specific proposals to enhance the competitiveness of Namibia’s tax system to attract investments and foster private sector development.
To maintain tax neutrality, he said the reduction will be undertaken alongside broadening the corporate income tax base by replacing the 3:1 thin capitalisation ratio with a 30% limit on interest deductions; capping assessed losses carried forward at 5 years for normal companies and 10 years for companies operating in the natural resources sectors.
To maintain tax neutrality, introducing a 10% dividend tax, effective on 1 January 2026 to address the existing disparity in the investment arena where dividends paid to non-resident shareholders are subject to tax.
Further forming part of the reforms is the introduction of the Internship Tax Incentive Programme, aimed at incentivising employers to enrol more interns by providing an additional corporate tax deduction. The total financial implication for the Government is estimated at N$126 million.
