Namibia

Rates and scope

The standard VAT rate is 15% and applies to all supplies of goods and services not qualifying for the zero rate or an exemption. The effective VAT rate for the importation of items subject to 15% VAT will be 16.5%, due to a 10% upliftment factor.

The following transactions are generally subject to VAT:

• the taxable supply of goods and services for consideration in Namibia or partly in Namibia by a registered person on a continuous or regular basis

• the importation of goods by any person.

The following supplies are considered outside the scope of VAT:

• employment services

• provision of goods on consignment

• recreational pursuit or hobbies

• exempt supplies

• branch activities outside Namibia

• registration and issuing of a licence by a registering authority

• levying of tax or levies by the state or local/ regional authorities under any Act of Parliament

• payment of a subsidy, grant or bursary by any person

• goods entered in a licensed customs and excise warehouse

• any activity conducted by the state.

VAT registration

Compulsory registration

Any person making taxable supplies of NAD500,000 or more in a 12-month period is obliged to register for VAT.

Voluntary registration

A person may register voluntarily for VAT when they make or will be making taxable supplies of NAD200,000 or more in a 12-month period.

A person having or intending to have a taxable activity and is likely to make taxable supplies after a certain period may also elect to register for VAT.

Group registration

No group registration is allowed. Each entity within the group should consider its liability to register for VAT.

Non-residents

A non-resident person must register for VAT if they are performing taxable activities in Namibia or partly in Namibia and the turnover exceeds or is likely to exceed N$500,000 in a 12-month period.

In order to register for VAT purposes, such a person should have a Namibian bank account and a place of business in Namibia. A VAT registration of a non-resident business does not necessarily create a permanent establishment for direct tax purposes.

Application procedures

A VAT registration form should be completed and can be obtained from Inland Revenue. With the introduction of the new integrated tax administration system (ITAS), a taxpayer identification number (TIN) became effective.

All previous taxpayer reference numbers (7 digits) on the old system were migrated to ITAS, where an additional digit, ’0’, was added in front of the existing 7 digits, in order to make up the 8-digit TIN required for ITAS. The ITAS platform allows for online application of VAT registration, which is done by uploading the required documents under your TIN account.

Deregistration

Output tax

Calculation of output tax

VAT is levied on the consideration charged for goods and/or services. VAT is therefore calculated at either 15% or 0%, on the consideration/price charged by a registered person.

Where the consideration/price charged by a registered person is silent on VAT, the price is deemed inclusive of VAT.

Prices advertised or quoted by any registered person in respect of a taxable supply must include VAT and the registered person must state in the advertisement or quotation that the price includes VAT. If a person wishes to advertise or quote a price exclusive of VAT, he may nevertheless do so, provided that the VAT amount is also indicated.

Exempt supplies

Exempt supplies include (but are not limited to):

• financial services

• educational services

• renting of residential accommodation

• supplies by a body corporate

• services by trade unions for the benefit of members

• medical services and rooms by registered hospitals and clinics

• public transport of persons

• certain medical and paramedical services

• fringe benefits

• supplies to foreign heads of state, vice presidents and prime ministers.

Zero-rated supplies

Zero-rated supplies include (but are not limited to):

• exportation of goods

• fuel

• maize meal, mahango and mahango meal

• fresh and dried beans (excluding canned or frozen), sunflower cooking oil, fried out or processed animal fat used for the preparation of food, bread and cake flour (sifted and unsifted), and bread. However, these are excluded when cooked, served as a meal, or as prepared food

• dry white, or wet or dry brown granular sugar (in March 2019 proposed to be removed from zero-rating, however not enacted yet)

• fresh milk

• funeral undertaking services

• international transport

• erection, extension and sale of land and buildings for residential purposes

• the supply of sanitary pads.

Input tax

Input tax allowed

VAT incurred on the supply of goods and services to a registered person and on the importation of goods by a registered person may be claimed as input tax by such person, when used or consumed in the course or furtherance of a taxable activity carried on by such person.

VAT incurred may not be claimed where the goods and/or services are used or consumed in making exempt supplies. Input tax claims may be made within a period limited to three years after the end of the tax period during which a registered person became entitled to it for the first time.

For VAT registration made by persons having and intending to have a taxable activity, input taxes may be claimed once registered; on the condition that the input tax claimed is directly related to the current or intended future taxable activity.

Input tax expressly denied

VAT incurred relating to the following goods and services is specifically denied as an input tax claim:

• entertainment

• acquisition or renting of passenger vehicles

• subscriptions of a sports, social or recreational nature.

A tour operator, a person providing entertainment or a person providing taxable transportation services may, however, deduct input tax on taxable supplies made to them or on imports by such person, provided such taxable supplies or imports relate to the provision of entertainment or if the entertainment is provided to passengers as part of transportation services. ‘Entertainment’ is defined as the provision of food, beverages, tobacco, accommodation, amusement, recreation or hospitality of any kind, whether directly or indirectly.

Certain types of persons may deduct the input tax on passenger vehicles, namely:

• persons dealing in motor vehicles or car rental

• tour operators

• short-term insurers if the vehicle was acquired to indemnify a client under a short-term insurance contract

• charitable organisations (however the subsequent sale of the vehicle will be subject to VAT).

Partial exemption

Adjustments

Preregistration and post-deregistration of VAT

VAT incurred on trading stock (excluding capital goods) and/or consumables on hand at the date of registration is claimable, if bought within four months of the date of registration.

Upon deregistration, a taxable supply is deemed to have been made on any assets on hand at the date of deregistration on which input tax was claimed.

Output tax should be declared and paid on the open market value of the assets.

International trade

Imports

Goods

VAT is payable on the importation of goods at the greater of the free-on-board (FOB) value plus the upliftment factor of 10% (i.e. effectively 16.5% of FOB value), or the open-market value of the imported goods. Import VAT paid may be claimed back should the person be registered for VAT and render taxable supplies.

Where an importer has a registered import VAT account, the payment of import VAT on goods imported is deferred to the 20th of the next month, following the month of import.

Where an importer does not have a registered import VAT account, payment of import VAT can be made in cash or by electronic payment (prepayment) supported by a customs receipt.

Certain imports are exempt, but it is advisable to ascertain the customs procedures applied to obtain the exemption. For example, the exemption for import of household furniture by a person changing residence to Namibia must be applied for in advance at NamRa and supported by a work permit issued by the Ministry of Home Affairs.

All imports cleared under a valid import VAT account are recorded electronically on the Customs ASYCUDA system. Inland Revenue has been linked to the Customs ASYCUDA system, making it possible to determine import VAT liability based on the reports of monthly imports produced by the ASYCUDA system.

Security in the form of provisional payment, guarantee or ATA Carnet is required for the temporary importation of goods, such as construction equipment and machinery, including private vehicles by a person taking up residence in Namibia. Temporary imports are valid for six (6) months, but this can be extended on application to the Customs and Excise Commissioner.

Services

VAT on imported services (the so-called reverse charge) is only levied to the extent that such imported services are utilised or consumed other than to make taxable supplies. VAT on imported services is levied at 15% of the value of the supply.

Essentially, only exempt or partially exempt registered persons (for example banks and life insurers), are thus impacted by the reverse charge. Non-registered persons who import services theoretically also have to declare and pay VAT on these imported services, where non-registered persons are not making taxable supplies.

Exports

Goods

Exports consigned and delivered outside Namibia are zero-rated, provided they are supported by documentary proof acceptable to Inland Revenue. Non-residents qualify for a refund of VAT paid on purchases of goods in Namibia and exported by them, supported by sufficient proof of export.

Services

Services generally supplied to non-residents who are outside Namibia at the time the services are rendered are zero-rated, provided that they do not relate to movable goods which are not subsequently exported from Namibia or immovable property situated in the country.

A supply of services physically rendered outside Namibia is zero-rated.

Refunds to foreigners

VAT refunds to tourists and non-residents are processed by a private VAT refund administrator (VRA) appointed by NamRa. A specified commission is withheld by the VRA for services rendered on behalf of Inland Revenue.

Non-residents and tourists qualify for refunds of VAT upon presentation of proof of export (customs-stamped export bill of entry) and an original customs-stamped tax invoice, and such other documents as may be required by the VRA from time to time. However, such refunds do not apply to goods and services consumed in Namibia.

Place, time and value of supplies

Place of supply

Time of supply

Value of supply

VAT compliance

Integrated Tax Administration System

The Integrated Tax Administration System (ITAS) became operational in January 2019. The overall objective of ITAS is to improve the service delivery to taxpayers, with an envisaged shift from manual interaction between Inland Revenue department and taxpayers, to a continuous online platform.

Returns and payment of VAT and import VAT

A VAT return must be completed once every two months and must be filed within 25 days after the end of the tax period. A tax period is a period of two calendar months, except for farmers who may elect a tax period of two, four, six or 12 months.

A penalty of NAD100 per day will be levied for any outstanding VAT returns in addition to 10% of the outstanding VAT per month, or part of a month limited to 100% of the outstanding VAT.

The integrated tax administration system (ITAS) allows for the online filing (e-filing) of VAT returns. Note this is an optional method of filing the return. VAT must be paid when the VAT return has to be filed or by the due date.

Effective September 2020, an interface between the ASYCUDAWorld platform and ITAS was introduced. What this means is that the import transaction recorded on ASYCUDA auto -populates on the ITAS return and an assessment is thus raised with the liability recorded based on the transactions that were captured on the ASYCUDA

A separate import VAT return is no longer required to be filed every month within 20 days after the last day of the relevant month as a result of the interface, but VAT on imports must be paid monthly by the 20th. The import VAT liability is automatically transferred from the Customs ASYCUDA system to ITAS with the onus on the taxpayer to correct import entries prior to the due date of payment should the importer not agree with the liability as reflected on the ASYCUDA system.

The preferred method of payment is by EFT. Payment, however, can also be made in cash before 00:00 (12:00am).

Interest

Interest is levied at the rate of 20% per annum on any unpaid VAT, calculated from the first day after the date on which payment was due until the date on which payment of the unpaid tax was made.

Unlike penalties, interest may not be waived (as per the terms of the VAT Act).

Refunds

A refund can be claimed on the VAT return, or (in case of overpayment of VAT) per written application to the Commissioner for Inland Revenue. Refunds may be subject to a desk or field audit by Inland Revenue, following a decision by an internal VAT department committee. This may delay refunds on filed VAT returns significantly. A registered person may not deduct a refund from the next period’s payment.

Objections and appeals

The VAT Act makes provision for an objection and an appeal process. However, the Act specifically defines appealable decisions, thus rendering certain decisions by the Commissioner of Inland Revenue not subject to appeal. An example is the decision to deregister a person who, according to the Commissioner, is not carrying on any taxable activity for VAT purposes.

Time limits

VAT records

Tax invoices

An invoice for VAT purposes must contain the following information:

• the words ‘tax invoice’ must be shown in a prominent place

• the name, address and VAT identification number of the supplier

• the name and address of the recipient (purchaser)

• the serial number of the invoice

• the date of issue

• a description of the goods or services supplied

• the quantity or volume of the goods or services supplied

• the total amount of VAT charged, the purchase price excluding VAT, and the purchase price including VAT.

All tax invoices must reflect Namibian currency and be issued in English. The foreign currency equivalent may be reflected on the same invoice. The VAT registration number of the customer needs to be stated on the tax invoice. Electronic invoices are not accepted.

Credit notes and debit notes

A tax credit note or a tax debit note must contain the following particulars:

• The words ‘tax credit note’ or ‘tax debit note’ in a prominent place

• The name, address and VAT registration number of the registered person making the supply

• The name and address of the recipient of the supply

• The date on which the tax credit note or tax debit note was issued

• The value of the supply shown on the tax invoice, the correct amount of the value of the supply, the difference between those two amounts, and the tax that relates to that difference

• A brief explanation of the circumstances giving rise to the issuing of the tax credit note or tax debit note

• Sufficient information to identify the taxable supply to which the tax credit note or tax debit note relates.

Additional export documentation

In case of an export, a registered person must keep the following documents:

• a tax invoice

• a stamped SAD 500 as proof of export

• proof of consignment or delivery of goods in an export country (where requested).

The SAD 500 must correspond with the tax invoice.

Record-keeping

Accounting records must be kept for a period of five years. Records cannot be kept solely in electronic form — paper copies are still necessary. The original purchase invoices and copies of all sales invoices must be kept in Namibia. Accounting records (trial balances, general ledgers, cashbooks, etc.) may be kept in another country, provided they are kept on an electronic system linked to Namibia and that printouts can be provided within 24 hours after receiving a request from Inland Revenue.

Specific VAT rules

Bad debts

Amounts written off as bad debts qualify for a deduction as input tax.

Land and buildings

Services to non-residents directly in connection with land or buildings in Namibia are subject to VAT. Supplies of goods and services comprising the sale of immovable property, or the erection of or extension to a building used for residential purposes are zero-rated for VAT purposes.

VAT at 15% is applicable to the sale and the leasing of commercial property.

In the case of a sale of commercial property, VAT is levied in addition to transfer duty.

Leasing

Promotional gifts

Used goods

A deemed input tax credit is available to a registered person when acquiring used goods (excluding immovable property) from a person who was not entitled to claim input tax on such goods. This provision requires that the person from whom the used goods have been acquired must have paid input tax on the original acquisition of such goods and was not entitled to claim an input tax credit on such goods.

In essence, where the goods were originally acquired before the introduction of VAT in Namibia (i.e. prior to November 2000) and are sold by a non-registered person as second hand goods to a VAT registered person, the VAT registered person is not entitled to claim input tax on such goods as no VAT was incurred by the seller on the initial purchase.

Input tax on used goods may be claimed by a registered person where the goods are acquired from a person who initially acquired the goods subsequent to the introduction of VAT in Namibia and used the goods to make exempt supplies.

‘Used goods’ refer to any inanimate goods (including vehicles, but excluding animals) that were previously owned.

Tourism industry

Transfer of a business

The sale of a business as a going concern is a zero-rated supply for VAT purposes. However, in order to obtain the zero-rating, notification to Inland Revenue is required within 21 days of the date of the sale.

It is thus not possible to obtain a zero-rating for a backdated sales transaction.

Warranty repairs

Agents and auctioneers

Where a VAT-registered agent makes a supply of goods or services on behalf of a VAT-registered principal, the supply is deemed to be made by the principal and not the agent, provided that where the agent is a registered person, the agent may issue a tax invoice, tax credit or tax debit note as if the agent had made a taxable supply.

In such cases, the principal is not allowed to issue a tax invoice, tax credit or tax debit note for the same taxable supply.

Where an agent imports any goods into Namibia on behalf of a principal, the importation is deemed to be made by the principal and not the agent, provided that the customs declaration may be held by the agent.

Despite the above provision, where a VAT-registered agent imports goods on behalf of a foreign principal not registered for VAT in Namibia and the goods are sold by the foreign principal to a local customer, the importation is deemed to have been made by the agent and not the principal, provided that the agent obtains and retains acceptable documentary proof that they paid the import VAT and that the agent and principal agreed in writing that the import VAT paid by the agent will not be reimbursed by the principal.

In such a case, the agent is deemed to have made a supply of goods to the local customer at the time the import VAT was paid at a consideration equal to the import value of the goods plus the import VAT paid.

An auctioneer and principal may agree that auction sales will be deemed to have been made by the auctioneer in the course of the auctioneer’s taxable activity and will be subject to VAT.

The VAT Act makes provision for an apportionment method to be used by persons rendering a mixture of taxable and exempt supplies (mixed supplies).

Other indirect taxes

Customs and excise duties

Customs duties are due on goods imported from outside the Southern African Customs Union (SACU). Excise duties are due on certain manufactured goods such as liquor and tobacco. No customs duties are levied on intra-SACU trade.

As a co-signatory of the SADC Trade Protocol, Namibian importers and exporters benefit from lower or duty-free tariffs with regard to imports from or exports to other signatories to the Protocol. These include Zambia, Kenya, Mozambique and Mauritius. A free-trade agreement with Zimbabwe provides for customs-duty-free imports of goods of Zimbabwean origin, and vice versa. However, import VAT is payable on such imports.

Preferential trade arrangements between SACU and MERCOSUR were finalised and entered into force on 1 April 2016. Namibia’s importers and exporters therefore already benefit from lower or duty-free rates being applied in terms of that agreement.

The new Economic Partnership Agreement with the European Community has been signed and implemented. Lower duty rates apply on certain products, subject to certificates of origin obtained from authorities in the export country.

Imports under  EFTA  (Goods originating from Switzerland, Iceland, Norway and Liechtenstein) quality for customs duty-free or lower duties in terms of the EFTA Agreement. 

Namibia acceded to the African Continental Free Trade Agreement (AfCFTA), allowing trade under this Agreement as from 1 January 2021. The preferential duty rates have been duly published in the Government Gazette of 16 March 2021 allowing preferential duty imports under this substantial and large trading bloc, consisting of 55 African countries.  Goods originating in Namibia enjoy similar lower duties when imported into other member states of AfCFTA.

As with all free trade agreements, the rules of origin as provided for in the agreements, must be complied with, as well as compliance with the procedures of the competent issuing authority.   A certificate of origin is required for goods imported under any of the above agreements.

Fuel levy

A portion of the levy on fuel is transferred to the Road Funds Administration for road maintenance. Fuel levies are payable per customs and excise credit account arrangement by fuel wholesalers registered with the Ministry of Mines and Energy to Customs and Excise, based on the importation of petrol, diesel and paraffin into Namibia.

Increased fuel levy rates were recently introduced and are effective from the date of publication in the Government Gazette, i.e. 2 August 2019 (Government Notice No 225).

The fuel levy of 120c/litre on kerosene has been abolished, which means that the price of kerosene (illuminating paraffin) should be lowered to assist many households in Namibia. The abolishment has been confirmed by Government Gazette No. 7239 dated 12 June 2020.

Transfer duty

Non-agricultural

• value of property less than NAD600,000 — nil

• more than NAD600,000 but less than NAD1m — 1% of value exceeding NAD600,000

• more than NAD1m but less than NAD2m — NAD4,000 plus 5% of value exceeding NAD1m

• more than NAD2m — NAD54,000 plus 8% of value exceeding NAD2m.

Agricultural

Natural persons benefiting under the Affirmative Action Loan Scheme for Purchases of Farm Land pay transfer duty as follows:

• value of agricultural land less than NAD1,5m — nil

• value of agricultural land more than NAD1,5m but less than NAD2,5m — 1% of so much of the value of the agricultural land as exceeds NAD1.5m

• value of agricultural land exceeding NAD2,5m — NAD10,000 plus 3% of the value exceeding NAD2,5m

The current transfer duty rate for companies, close corporations and trusts remains at 12%.

Environmental levy

Carbon emission tax

Incandescent bulbs and vehicle tyres

Since 11 July 2016, environmental duties are levied on electric filament lamps at NAD3 per lamp.

On the tyre environmental levy, if a tyre is fitted to a wheel or rim, a NAD10 environmental duty per tyre will apply (tyre treads and tyre flaps of rubber used in the manufacture of tyres are excluded from the levy).

Plastic bag levy

Lubricants and certain oils

Since August 2019, a levy of NAD1.80 per litre of most lubricants and certain oils is levied by Customs on importation or manufacturing in Namibia. The products include:

• lubricating grease

• prepared lubricating oil

• base oils manufactured from refining of used lubricating oil

• transformer and cable oil

• hydraulic transmission fluids

• waste oils.

Batteries

Export levy

The export levy was promulgated in June 2016 and came into force on 1 June 2017. Exporters of Namibian raw material products will be liable to pay export levies. Once a customs entry is assessed by Customs Namibia on export of the listed products, the exporter is liable to pay the levy to the customs authority.

The levies will range from 0.5% to 2% of the export value, depending on the commodity exported and state of beneficiation. It makes provision for certain administrative arrangements and the charging of export levies on products listed in the Schedules to the Act such as:

• the Commissioner for Customs and Excise is responsible for collection and administration of the export levy

• an exporter may lodge an objection within 90 days of any assessment of the levy by Customs Namibia

• the exporter must keep records of all customs declarations and related documents for five years

• a penalty of double the export levy is prescribed if the exporter provided false or misleading statements to the customs authority.

Schedule 3 to the Export Levy Act was amended by publication in the Government Gazette No. 7080 on 20 December 2019 to include a detailed list of forestry products subject to an export levy with a rate of 15% based on the export value. The 15% export levy rate has now been abolished and replaced with a rate of Two (2) NAD based on the mass in kilograms of wood and timber products exported from Namibia in terms of Government Gazette No. 7401 published on 30 November 2020. 

It should be noted that exports of wood and timber products to an EU member country are ‘free’ from the export levy in terms of the previously mentioned Government Gazettes to confirm Namibia’s commitments under the EPAS agreement with the EU ratified by the Namibia Parliament in 2016.