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12 March 2018 Namibia issues 2018 budget On 7 March 2018, Namibia's Honorable Minister of Finance, Mr Calle Schlettwein, delivered the 2018 budget speech (the Budget). The key tax proposals in the Budget are summarized below. The Tax Bills containing the proposed amendments to be tabled in the National Assembly may contain changes and include items not referenced in the Minister's speech. Changes to the Income Tax Act will come into effect in 2019. The effective date of the changes will depend on the adoption thereof in the National Assembly. The Budget proposes the phasing out of preferential tax treatment available to certain existing manufacturers. To assist with the phasing out of such treatment, support instruments for small and medium enterprises and start-ups will be introduced and developed to encourage business development and job creation. Under the Budget, the Export Processing Zone (EPZ) Act is repealed and Special Economic Zones are introduced. Current operators with EPZ status would be subject to phase-out provisions. The Budget reduces the lower bracket tax rate from 18% to 17% and introduces new tax rates of 39% and 40% for individuals earning over N$1.5 million and N$2.5 million respectively. The Budget introduces a 10% dividend tax for dividends paid to Namibian residents. Dividends received by Namibian residents or distributions by a close corporation to any Namibian resident member will be affected by the introduction of this tax. The Budget proposes the abolishment of the conduit principles currently applied in the taxation of trusts. In future, trusts will be taxable at the company tax rate and not the rates applicable to individuals. Income derived from commercial activities by charitable, religious, educational and other types of institutions that are currently exempt from tax under section 16 of the Income Tax Act will be subject to tax. These institutions will be required to register as taxpayers and submit annual income tax returns. As proposed, the proceeds on the sale of shares of a company owning commercial immovable property will become subject to VAT at 15%. The proposed changes to the excise taxes will become effective upon gazetting of the amendment Acts. Expected changes include:
Excise duty rates on certain alcohol and tobacco products increased retroactively with effect from 21 February 2018 as is required in terms of the Southern African Customs Union (SACU) agreement. The following increases were announced:
Document ID: 2018-5392 |
