Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

April 6, 2020
2020-5534

Namibia announces Economic Stimulus and Relief Package to mitigate impact of COVID-19

Namibia’s new Minister of Finance, Honorable Iipumbu Shiimi, announced, on 1 April 2020, the launch of an Economic Stimulus and Relief Package to mitigate the impact of COVID-19 in Namibia. The first phase of the Economic Stimulus and Relief Package is geared at addressing the negative effects resulting from the first 21-day lockdown period which ends on 20 April 2020.

The Government of the Republic of Namibia (the Government), in collaboration with stakeholders and development partners adopted a Stimulus and Relief Package amounting to N$8.1 billion in total. It comprises approximately N$2.1 billion in direct support to businesses and households, N$3.8 billion in accelerated value-added tax (VAT) refunds and payments for goods and services supplied to the Government as well as N$2.3 billion by way of loans to be guaranteed by the Government.

The relief package inter alia includes measures aimed at supporting businesses and households by way of wage subsidies and government-backed loans to formal and informal businesses in sectors which are directly affected by the lockdown measures and one-time income grants to persons who have lost their jobs due to the pandemic and its fallout.

For businesses, the following measures are proposed to maintain business cash flow and continued productive economic activities:

  • Wage subsidy of N$400 million for the hardest hit sectors, being the tourism, travel and aviation, and construction sectors to avoid further retrenchments
  • The accelerated repayment of overdue and undisputed VAT refunds of about N$3 billion
  • The accelerated payment of overdue and undisputed invoices for goods and services provided to the Government of about N$800 million
  • The facilitation of a non-agricultural small business loan scheme of N$500 million to be provided by the Development Bank of Namibia and guaranteed by the Government
  • The facilitation of an agricultural business loan scheme for farmers and agricultural businesses of N$200 million to be provided by the Agricultural Bank of Namibia and guaranteed by the Government Capital repayment moratorium on the principal amounts due from borrowers to the Development Bank of Namibia and the Agricultural Bank of Namibia for a period ranging between 6 months and 24 months, including the recapitalization of interest owed, lengthening of the repayment periods and the waiver of penalties
  • Tax-back loan scheme for non-mining corporates of 1/12th of their tax payment in the previous tax year, capped in total at N$470 million. The loans, that may be applied for at banks, will be guaranteed by the Government. The loans will only be repayable after one year and will bear interest at the prime lending rate less 1%
  • The relaxation of labor regulations to avoid major retrenchments and business closures by allowing employers to negotiate a temporary 20% reduction of salaries and wages during the crisis period (and a reduction of salaries of up to 40% for the worst-hit industries)

For households, the following measures are proposed to cope with reduced income, increased health-related spending and other hardships due to the virus outbreak:

  • A one-time emergency income grant of N$750 to employees who have lost their jobs due to the pandemic and its fallout, limited to a maximum of N$562 million in total. Only Namibian citizens between the ages of 18 and 60 years old who do not receive any other social grants qualify for this grant. Payments will be by the Government in collaboration with the Social Security Commission.
  • Tax-back loan scheme for tax-registered and tax-paying employees and self-employed individuals who have lost income or part thereof equal to 1/12th of their tax payment in the previous tax year. The loans may be applied for at banks, will be guaranteed by the Government and will only be repayable after one year and will bear interest at the prime lending rate less 1%. The total guarantee will be capped in total at N$1.1 billion.
  • Water subsidy estimated at N$10 million to ensure that water points are kept open without a need for water cards during lockdowns to be subsidized by NamWater and local authorities.

The relief measures will take effect immediately. The Minister of Finance has given the assurance to the business community at large that the Government will continue to support economic activities as well as households during the lockdown and the recovery phase thereafter. He has also called on domestic and external financiers, development partners and stakeholders to work in partnership with the Government during this challenging time. The Minister also urged the business community and employers to avoid laying off workers at this point in time.

______________________________________________________________________________________

For additional information with respect to this Alert, please contact the following:

Ernst & Young Namibia, Windhoek
Ernst & Young Namibia, Walvis Bay
Ernst & Young Advisory Services (Pty) Ltd., Africa ITTS Leader, Johannesburg
Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London
Ernst & Young LLP (United States), Pan African Tax Desk, New York

ATTACHMENT

 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2024, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct