NAMIBIA NATIONAL BUDGET HIGHLIGHT 2024/2025

INTRODUCTION 

On the 28th of February 2024, the Minister of Finance and Public Enterprises, Honourable Iipumbu Shimi, delivered the National Annual Budget Speech in parliament. Even though no new tax policy proposals were tabled, the Minister stated that the implementation of the previously introduced specific tax policy proposals, aimed at providing tax liability relief to increase domestic demand and expand the tax base of the economy, are essentially maintained, with a few amendments. This summary will set out some of the potential tax implications on individuals and corporate entities registered as taxpayers in Namibia. 

TAX POLICY AND ADMINISTRATION REFORMS 

To enhance the Namibian tax system’s competitiveness, by attracting potential investors and an increasing private sector development, the Minister made mention of the following amendments to the specific proposals, some of which have already been implemented effective 1 January 2024 and others yet to be implemented in the near future: 

The tax threshold for Income Tax liability on all individual taxpayers will be increased from N$ 50 000.00 to N$ 100 00.00 per annum, effective 1 March 2024. Revised tax tables are still to be published officially. 

• This means individuals who earn less than N$ 100 000.00 per annum will be exempted from income tax liability on their Namibian source-based income.
• Furthermore, all individuals will be exempted from paying income tax on the first N$100,000 of their annual income.

There will be a gradual decrease in the corporate tax rate for non-mining companies as follows:

• From 32% to 31%, which came into effect on the 1st of January 2024; 
• From 31% to 30%, effective as of the 1st of January 2025; and 
• From 30% to 28%, during the 2026/27 financial year. 

The provisions of the Income Tax Act regulating the exemption of non-resident shareholders for foreign insurance companies will be amended during the 2024/25 financial year so that such non-resident shareholders will be liable for tax.

A Special Economic Zones (SEZ) regime is in the works, in terms whereof participants and SMEs with an annual turnover below a pre-defined threshold will be liable to a corporate income tax rate of 20% and VAT will be zero-rated. The SEZ bill is expected to be tabled in the National Assembly during the 2024/25 financial year. 

The current mandatory registration threshold for VAT will increase from annual taxable activities to the value of N$ 500 000.00 to annual taxable activities to the value of N$ 1 000 000.00. 

The Ministry of Finance has created a new incentive titled “My First Job”, an Internship Tax Incentive Program aimed at encouraging employers to implement internship opportunities for graduates in their respective fields in exchange for an additional corporate tax deduction. 

The final phase of the Tax Amnesty Program will continue until the 30th of October 2024. This allows taxpayers with outstanding capital to have their interest and penalties fully written off if they pay their outstanding capital before the 30th of October 2024. 

There will be an increase in both the transfer duty and stamp duty brackets, from N$ 600 000.00 to N$ 1 100 000.00.  Additionally, the threshold to trigger the transfer duty rate of 8% will be increased to N$ 3 150 000 during the 2024/25 financial year. Furthermore, a supertax transfer duty and stamp duty bracket will be introduced for residential properties valued above N$ 12 000 000.00. 

In terms of a proposed buildings improvement deduction, a capital depreciation allowance of 10% per year will be applicable on the costs of the buildings erected, added to, extended or improved and which are used for trade purposes. 

Finally, the following changes to excise duties came into effect on the 22nd of February 2024: 

1. a 340 ml can of beer increases by 10 cents; 
2. a 750 ml bottle of wine increases by 18 cents; 
3. a 750 ml bottle of spirits increase by N$3.90; 
4. a 23-gram cigar increases by N$5.47; and
5. a pack of 20 cigarettes increases by 98 cents.

CONCLUSION 

The Minister concluded by stating that that the stable economic platform currently being experienced in Namibia has allowed room to utilize resources to provide for pressing needs in the social sectors, incentivize investment in infrastructure development, and provide relief to both households and corporations. This, the Minister provided, has been done while ensuring that upcoming debt obligations will be met, as the Ministry persists with its fiscal sustainability imperative.