Re-Imagine the Possible 2018/2019

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1 Re-Imagine the Possible 2018/2019 The Dome - Swakopmund March 2018

2 Budget Review 2017/ Key Focus Areas Numbers in the Budget Tax Comparisons Tax Reforms Namibia Budget Review 2017/ March

3 Key Focus Areas 3

4 Three-pronged fiscal policy actions Budget deficit reduction Stimulating growth: Industrial development/logistics hub/sme Tax Policy changes N$500 Mil 4

5 Key Focus Areas Macroeconomic Stability and Fiscal Sustainability Inclusive Growth & Economic Diversification Core Spending on Social Sectors We must do what we know must be done, we must do it with confidence and conviction and then we shall be more and better 5

6 Key Focus Areas 04 Fair Tax Policies and Efficient Tax Administration 05 Enhanced policy effectiveness and strengthened economy competitiveness a budget anchored on the gains of the necessary but difficult decisions which we have taken since

7 Structural Policy Reforms 01 Public Procurement Act ITAS/ NAMRA Investment Promotion Act NEEEF Bill Poverty Eradication and Social Welfare 7

8 Structural Policy Reforms 06 Basic & Tertiary Education Public Asset Management PPP Legislation Public Sector Performance Management Public Entity Fiscal Discipline 8

9 The Numbers 9

10 Revenue vs. Expenditure 70,000 60,000 66,054 65,003 65,682 56,811 56,696 57,743 50,000 N$ in Billions 40,000 30,000 20,000 10,000 - (10,000) 2017/ / /20 (9,243) (8,306) (7,939) (20,000) Total Revenue Total Expenditure Budget Surplus / (Deficit) 10

11 Tax Revenue vs. Non-Tax Revenue Non-Tax Revenue N$3.442bn N$57bn N$53.26bn Tax Revenue N$ billions / /19 N$57bn 2017/18 N$56bn Total Revenue compared to previous year 11

12 Total Tax Revenue (N$ billion) 42% Taxes on Income and Profits 0% Property tax Customs & Excise 33% 25% Indirect Taxes 0% Other taxes 12

SACU Receipts 25000 N$ in Billions 20000 15000 10000 N$19,597bn

13 SACU Receipts N$ in Billions N$19,597bn N$17,374bn N$16,219bn N$17,045bn / / / /21 13

Namibian Economic Statistics Caiundo Unemployment Rate Inflation at January 2018 Tombua Cahama Opuwo ANGOLA NAMIBIA Tsumeb Khorixas Okakarara Mavinga Rundu ZAMBIA Kataba Sesheke Luiana Livingstone

14 Namibian Economic Statistics Caiundo Unemployment Rate Inflation at January 2018 Tombua Cahama Opuwo ANGOLA NAMIBIA Tsumeb Khorixas Okakarara Mavinga Rundu ZAMBIA Kataba Sesheke Luiana Livingstone Kongola Tsau ZIMBABWE 34% 1.2% 3.6% N$ Omaruru Windhoek Walvis Bay Maltahöhe South Atlantic Ocean Lüderitz Epata Gobabis Aranos Aroab Ghanzi Mamuno Kang BOTSWANA Tshabong Kuruman Orapa Gaborone Mafikeng Karasburg Upington Kimberley GDP Growth USD: NAD Exchange Rate NAMIBIA Kilometers Springbok Bitterfontein SOUTH AFRICA De Aar Victoria West Miles 14

15 Expenditure Execution Rates 100% 80% 60% 40% 20% 0% 96.40% 94.60% 87.40% 15

16 Debt Stock as % of GDP 2018/ /20 N$84.6bn N$92.72bn 45% 16

17 Top 10 Budget Allocations Education, Arts & Culture Finance Health & Social Services Defence Ministry of Safety & Security Transport Poverty Eradication & Social Welfare Higher Education, Training & Innovation Agriculture, Water & Forestry Urban & Rural Development N$ in Billions 17

Estimates of total expenditure EXPENDITURE

Transfers, NAD 796,773 Interest Payments and

and Equity Participation, NAD 0 Statutory

Current Transfers, NAD 15,777,737 SME Development

18 Estimates of total expenditure EXPENDITURE ESTIMATES BY MAIN ITEMS 2018/19 (N$) Capital Transfers, NAD 796,773 Interest Payments and Borrowing Related Charges, NAD 5,782,798 Lending and Equity Participation, NAD 0 Statutory Expenditure and other, NAD 0 Subsidies and Other Current Transfers, NAD 15,777,737 SME Development Goods and Services, NAD 6,196,028 Personnel Expenditure, NAD 28,933,244 18

19 Tax Comparisons 19

20 Comparisons: Corporate Tax Rates 100% 80% 60% 40% 20% 28% 22% 32% 35% 25% 30% 0% South Africa Botswana Namibia Zambia Zimbabwe Angola 20

21 Comparisons: VAT Rates 20% 10% 15% 12% 15% 16% 15% 10% 0% South Africa Botswana Namibia Zambia Zimbabwe Angola 21

22 Tax Reforms 22

23 Proposed Tax Amendments Revenue Expectancy N$500 million 01 Preferential Tax Treatment - Manufacturers 03 Individual Tax: Lower bracket 17% from 18% EPZ Act replaced with Special Economic Zones sunset clause 04 Individual Tax: Higher brackets > N$1.5mil 39%, > N$2.5mil 40% 23

24 Proposed Tax Amendments Revenue Expectancy N$500 million 05 Resident Dividend Tax = 10% 07 Charitable/Religious/ Educational with commercial activities compulsory registration Taxing of trusts Abolish conduit principle 08 Taxation of foreign income 24

25 Proposed Tax Amendments Revenue Expectancy N$500 million 09 Betting and gaming activities 37% 11 Sale of shares/cc membership in property company Vatable VAT on income of listed asset managers 12 Fuel levy increase 25c per litre 25

26 Proposed Tax Amendments Revenue Expectancy N$500 million 13 Export levy expansion on agricultural, forestry, game and mining products Additional National Sin Tax on Alcohol and Tobacco products 5% 26

27 SACU Excise Duty Increases Sin Taxes effective 21 February 2018 Rise in tobacco and alcohol excise duties: Increase 340 ml malt beer N$ ml bottle of unfortified wine N$ ml bottle of sparkling wine N$ ml bottle of spirits (whiskey, brandy, vodka etc.) N$4.80 Pack of 20 cigarettes N$ ml bottle ciders & alcoholic fruit beverages N$

28 Other Reforms Transfer Pricing NAMRA 01 March 2019 Inland Revenue Reforms Roll out ITAS July 2018 Small Business Tax Registration Targeted Recovery of Tax Post Tax Amnesty 11 March

29 Reimagine the possible Change is evident, and in tough times that we are facing we can be sure that new challenges will come forward. Our duty is to re-imagine the possible. Nangula Uaandja Managing Partner Namibia 29

30 Thank you The Budget Speech and presentations are available on: The information contained in this publication by Namibia is provided for discussion purposes only and is intended to provide the reader or his/her entity with general information of interest. The information is supplied on an as is basis and has not been compiled to meet the reader s or his/her entity s individual requirements. It is the reader s responsibility to satisfy him or her that the content meets the individual or his / her entity s requirements. The information should not be regarded as professional or legal advice or the official opinion of. No action should be taken on the strength of the information without obtaining professional advice. Although take all reasonable steps to ensure the quality and accuracy of the information, accuracy is not guaranteed., shall not be liable for any damage, loss or liability of any nature incurred directly or indirectly by whomever and resulting from any cause in connection with the information contained herein PricewaterhouseCoopers ( ), the Namibian firm. All rights reserved. In this document, refers to PricewaterhouseCoopers in Namibia, which is a member firm of PricewaterhouseCoopers International Limited (IL), each member firm of which is a separate legal entity and does not act as an agent of IL.

Stronger Together Namibia Budget Review 2017/2018

www.pwc.com.na Safari Court Hotel & Conference Centre March 2017 Stronger Together Namibia Budget Review 2017/2018 Budget Review 2017/2018 01 02 03 04 Key Focus Areas Numbers in the Budget Tax Comparisons