What is VAT?

A value-added tax, known in some countries as a goods and services tax, is a type of tax that is assessed incrementally. It is levied on the price of a product or service at each stage of production, distribution, or sale to the end consumer

Overview of VAT in Namibia

VAT is levied on every taxable supply by a registered person. A taxable supply means any supply of goods or services in the course or furtherance of a taxable activity. A taxable activity means any activity that is carried on continuously or regularly in Namibia that involves the supply of goods or services for consideration.

VAT is payable on all imports for home consumption in Namibia, subject to certain exemptions (e.g. in terms of a technical assistance agreement, donations to the state, goods of which the local supply is zero-rated).

Import VAT is payable on the greater of the free on board (FOB) value plus 10% or the market value. The payment may be deferred in terms of an import VAT account registered with the Namibia Revenue Agency (“NamRA”) to the 20th day of the month following the month of importation. Penalties of 10% per month or part of a month and 20% interest on outstanding import VAT, according to the Customs Asycuda reports on import VAT account numbers, are levied by the NamRA. 

How To Register For VAT In Namibia

VAT is levied at the standard rate of 15% on the supply of most goods and services and on the importation of goods.

It is mandatory for a person who carries on a business with an annual taxable turnover above N$500,000 to apply for VAT registration.

A person may choose to register for VAT if the annual taxable turnover does not exceed N$500,000 but exceeds N$200,000 but will not be registered if the Commissioner is satisfied that such a person:1) Has no fixed residence or place of business;
2) Does not keep proper accounting records;
3) Has previously been registered but failed to comply with the Act; and
4) Has failed to comply with the Income Tax Act.

“Every registered person who is liable for the payment of value added tax is required to maintain accounting records in the English language at the place of business in Namibia”

Administrative Requirements for VAT registration
An application for VAT registration should be accompanied by:
1. Proof of Banking Details
2. Fitness Certificate
3. Founding Statement
4. Indication of expected turn over for 12  months.

“A registered person must submit a VAT return on or before 25th day of the month following the end of the period”

Frequently Asked Questions (FAQ’s)

When must you register for VAT in Namibia?

A company/branch is required to register for VAT if it supplies goods or services on a regular basis for consideration and if its taxable supplies (standard rated and zero-rated supplies) exceed 500,000 Namibian dollars (NAD) in any 12-month period.

Can an individual register for VAT in Namibia?

Any entity that’s required to register for VAT is referred to as a Vendor by SARS. Vendors can be individuals, trust funds, partnerships, businesses, organisations, foreign donor funds or municipalities. Your business is eligible for voluntary VAT registration when you exceed R50 000 over the same period of 12 months.

Is it better to be VAT registered?

So, if your turnover exceeds the VAT threshold of £85,000 then you must register for VAT. Registering for VAT can ensure that you are ready to grow as a business – creating a positive impression about your intent – and allows you to reclaim VAT on purchases you make.

Is interest paid Vatable in Namibia?

Interest. A WHT of 10%, calculated on the gross amount of interest, is payable on interest accruing to any person, other than a Namibian company, from a registered banking institution or unit trust scheme in Namibia. The tax withheld is a final tax, and the financial institution is responsible to withhold the tax.

How does Namibia tax work?

A sliding scale is used to determine the tax rates applicable to individuals. For all years of assessment effective 1st March 2009, the minimum rate is 0% and the maximum rate applied is 37%. The Namibian tax year commences on 1 March to the last day of February that subsequent year.

What is the purpose of VAT?

The Value Added Tax, or VAT, in the European Union is a general, broadly based consumption tax assessed on the value added to goods and services. It applies more or less to all goods and services that are bought and sold for use or consumption in the European Union.

How do we calculate VAT in Namibia?

Take the gross amount of any sum (items you sell or buy) – that is, the total including any VAT – and divide it by 117.5, if the VAT rate is 17.5 per cent. (If the rate is different, add 100 to the VAT percentage rate and divide by that number.) Multiply the result from Step 1 by 100 to get the pre-VAT total.

How do I calculate VAT back in Namibia?

To calculate VAT having the gross amount you should divide the gross amount by 1 + VAT percentage. (i.e if it is 20%, then you should divide by 1.20), then subtract the gross amount.

How do you add VAT to a price in Namibia?

If you want to add VAT to the price, you just need to divide the price by 100 and then multiply by (100 + VAT rate). That’s all, you got the price including VAT – Gross price.

Are donations tax deductible in Namibia?

A specific deduction for donations is allowed, provided that it is made to a registered welfare organisation or an approved educational institution. However, this deduction may not create or increase a tax loss.

What is Namibia withholding tax?

A WHT of 10%, calculated on the gross amount of interest, is payable on interest accruing to any person, other than a Namibian company, from a registered Namibian banking institution or unit trust scheme. The tax withheld is a final tax, and the financial institution is responsible to withhold the tax.

Is income tax paid monthly or yearly?

Income tax is applicable to be paid by individuals, corporates, businesses, and all other establishments that generate income. Even though income tax is paid every month from the monthly earnings, it is calculated on an annual basis. The amount of income tax an individual has to pay depends on a number of factors.

Do you pay tax on dividends in Namibia?

Dividends – Dividends paid to nonresidents and certain foreign held residents are subject to NRST at 10%, unless the rate is reduced under an applicable tax treaty. Interest – Both residents and nonresidents are taxable on Namibian interest income (subject to certain exemptions and tax treaty relief).

Is tax calculated on gross or net income?

In this case, income tax is based on the gross salary of the employee and is deducted as a source by the employer. Moreover, the basic salary of an employee should be at least 50-60% of his/her gross salary. Let’s assume Mr. Dhruv falls between the salary range of Rs 2,00,001-Rs 5,00,000 and comes under 10% tax-slab.

Is rental income taxable in Namibia?

premises, land, building, house, backyard flat, and office space. Income received from any agreement for the usage of the property is taxable, provided that such a property is situated in Namibia. Money paid to terminate the rental agreement is also taxable and should be included in the income for the year.

Is there capital gains tax in Namibia?

There is no capital gains tax in Namibia. Namibia also has thin capitalisation rules in terms of which the deduction of interest may be disallowed.

Is a bonus taxable in Namibia?

Bonuses are paid at the end of each tax year and accrue evenly throughout the year. The company car, with a cost of USD50,000 is used for both business and private and the employer is responsible for maintenance and petrol costs, i.e. the taxable benefit will be 18 percent of the cost of the car per annum.