doing business in Namibia

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1 doing business in Namibia country profile time zone GMT+2 official language English population currency Namibian Dollar ( NAD ). The NAD is pegged to the South African Rand ( ZAR ), which is also accepted as legal tender in Namibia. government structure economic data Executive: The president is the chief of state and head of government, is directly elected and may serve a maximum of two five-year terms. The cabinet is appointed by the president from among members of the National Assembly. Legislative: Namibia has a bicameral parliament. Judicial: The Namibian court system is made up of three tiers. The Lower Courts, consisting of Magistrate, Labour and Customary Courts, the High Court and the Supreme Court, which is the highest court of appeal. Next presidential and parliamentary elections: November Nominal GDP (USD billions): GDP per capita (USD): Inflation rate (% change): 6.00 Government revenue (% of GDP): Government gross debt (% of GDP): *Source: IMF Namibia s economy is heavily dependent on the extraction and processing of minerals for export. Rich alluvial diamond deposits make Namibia a primary source for gem-quality diamonds and Namibia is the world's fifthlargest producer of uranium. The Chinese-owned Husab uranium mine is expected to start producing uranium ore in 2017 and once it reaches full production, Namibia is expected to become the world s second-largest producer of uranium. Namibia also produces large quantities of zinc and is a smaller producer of gold and copper. international treaties and memberships international and regional organisations and customs unions bilateral treaties related agreements / institutions dispute resolution intellectual property ( IP ) treaties African Caribbean and Pacific Group of States African Development Bank African Union British Commonwealth Common Market for Eastern and Southern Africa East African Community International Monetary Fund Southern African Customs Union Southern African Development Community Free Trade Protocol United Nations World Bank World Trade Organization Namibia receives preferential treatment under the following agreements: Namibia has entered into Reciprocal Promotion and Protection of Investment Agreements with Angola, Austria, Cuba, Finland, France, Germany, Italy, Malaysia, the Netherlands, Spain, Switzerland and Vietnam. Treaties have been signed with China and Russia but these have not yet entered into force. The Multilateral Investment Guarantee Agency African Growth and Opportunity Act Namibia is a member of the following dispute resolution bodies (either directly or through South Africa): International Centre for Settlement of Investment Disputes; and United Nations Commission on International Trade Law. A comprehensive list of IP-related treaties signed by Namibia is available at: See the trade marks section below for further detail. risk ratings World Economic Forum Global competitive index ( ): 84/138 World Bank ease of doing business (2017): 108/190 Corruption perception index (2016): 142/

2 legal regime applicable legal regime dispute resolution land acquisition, planning and use competition The Namibian legal regime is strongly influenced by South African law and is based on Roman, Roman-Dutch and common law. To an extent, the regime is also influenced by English law, and a very remote German law influence is linked to the principles underlying the mineral laws. There is currently no arbitration court in Namibia. However, informal arbitration is in use with reference to the Arbitration Act, handled by a voluntary arbitration association, the Professional Arbitration and Mediation Association of Namibia, which presides over cases involving labour and commercial disputes. The Foreign Investment Act also allows for settlement of commercial disputes by international arbitration, in which case arbitration shall be in accordance with the Arbitration Rules of the United Nations Commission on International Trade Law in force, unless an alternative method is selected by the government and foreign investor. Foreign is restricted in relation to agricultural land. The Agricultural (Commercial) Land Reform Act prohibits the acquisition of ownership of land and leases exceeding 10 years for commercial agricultural land by foreigners or foreign-controlled entities without the prior written consent of the Minister of Lands, Resettlement and Rehabilitation. Generally, all land not situated within declared local authority areas, not being communal land or not being state land, would ordinarily be commercial agricultural land. merger control The Namibian Competition Act, regulates merger control in Namibia. The Competition Act defines a merger as the direct or indirect acquisition or establishment of direct or indirect control by one or more undertakings over the whole or part of the business of another undertaking. The Competition Act provides examples of what constitutes control for the purposes of merger regulation. In calculating merger thresholds, Namibia uses financial thresholds based on turnover in, into or from Namibia and/or asset value in Namibia. Mandatory notification applies to undertakings that have a minimum combined threshold of NAD30-million and the turnover or asset value of the target undertaking is above NAD15-million. Filing fees are payable on a sliding scale between NAD and NAD The Namibian competition authority will take into account public interest considerations in making a determination on the merger. Namibia has a pre-implementation regime, therefore approval must be sought from the Namibian competition authorities prior to implementation of the proposed transaction. Undertakings that implement a merger in contravention of the Competition Act may be liable for a penalty of an amount not prohibited practices employment exceeding 10% of the global turnover (during the preceding year) of the undertakings in question. Namibia is not a member of any regional competition bodies. The Competition Act prohibits horizontal and vertical agreements between undertakings, decisions by associations of undertakings or concerted practices by undertakings that have as their object or effect the prevention or substantial lessening of competition in trade in any goods or services in Namibia, or a part of Namibia, unless they are exempt. Conduct such as price fixing, market division, collusive tendering, minimum resale price maintenance, applying dissimilar conditions to equivalent transactions, the bundling of contracts, are prohibited by the Competition Act. The Competition Act prohibits abuses of dominance. The Namibian competition authority adopted a draft leniency policy in As at August 2017, Namibia s corporate leniency programme is not yet operational. A firm that engages in a restrictive horizontal or vertical agreement or abuses its dominant position in contravention of the Competition Act may be liable for a penalty not exceeding 10% of the global turnover of that firm during its preceding financial year. A person who contravenes, or fails to comply with, an interim or final order of the High Court of Namibia given in terms of the Competition Act commits an offence and shall be liable, on conviction, for imprisonment up to 10 years or to a maximum fine of NAD , or both. immigration In terms of the Namibian Immigration Control Act, any person who intends to enter or reside in Namibia for the purpose of productive work must apply for a work visa if the duration of stay does not exceed six months. For any period exceeding six months, a work permit application must be completed and submitted to the Ministry of Home Affairs and Immigration. A valid employment visa or permit is to be obtained prior to entering Namibia. Depending on the purpose and duration of the visit or stay in Namibia, different immigration applications are required by the Ministry of Home Affairs and Immigration. local employment vs secondment typical employment fixed term contracts and In terms of labour legislation, an employee may be seconded to Namibia and it is not a requirement for the employee to be employed by a local Namibian entity when performing services in Namibia. Local employment may be required and/or preferred for tax or immigration purposes. Fixed-term contracts are permitted. However, an employee is presumed to be employed indefinitely, unless the employer can

3 temporary employment services participation in statutory schemes payment in local currency restraint of trade agreements foreign regime regime registration / licensing non-industry specific registration / licencing municipal council licence establish a justification for fixed-term employment, other than in the case of a managerial employee. In terms of Namibian law, every employee must be a member of the Social Security Fund, except if he/she is a member of any other fund or scheme approved by the minister on recommendation of the Social Security Commission. Remuneration must be paid in NAD. For expatriates working in Namibia, up to two-thirds of their earnings may be remitted outside Namibia. Expatriates may also repatriate all their savings at the completion of the employment contract in Namibia. Restraint of trade agreements are valid and enforceable in Namibia, subject to the requirement that they are reasonable and do not offend public policy. Foreign in Namibia is governed by the Foreign Investments Act under the auspices of the Minister of Industrialisation, Trade and Small Medium Enterprise Development and Industry ( Minister of Trade and Industry ). Foreign nationals may generally invest and engage in any business activity in Namibia, except for the following categories of business, which have been gazetted by the minister as restricted to Namibians: retail businesses, unless approval has been obtained from the minister; public transport services (taxi and shuttle services within and between towns); and hair salon, hair dressing and beauty treatment services. Upon making an eligible (an of at least NAD2-million or such other amount as specified in a Certificate of Status Investment), an application for a Certificate of Status Investment may be made to the Minister of Trade and Industry through the Investment Centre. Registration is voluntary, but the Certificate of Status Investment is a pre-requisite for acquiring agricultural land. The following general non-specific registration/licences may also be required: A company must register with the relevant municipal council in the area where it operates. In the case of Windhoek, the relevant authority is the City of Windhoek Department of Economic Development and Environment. Namibia Revenue Authority ( NRA ) Social Security Commission ( SCC ) Namibia Training Authority ( NAT ) Workmen s Compensation Commission industry-specific licences A single tax registration number is to be applied for from the NRA, with an indication of the different types of tax being registered for. Such registration number is used as the basis for the various types of tax registrations, with the last few digits of the registration number changing, depending on the type of tax (011- income tax, 014 PAYE, 015 VAT, and 016 Import VAT). In terms of the Social Security Act, every employer must register as employer and register each individual employee with the SCC. A vocational education and training levy is payable by any employer with an annual payroll of at least NAD1-million per annum. Employers are to register with the NAT for this purpose. Every employer who employs one or more employees must register with the SCC for employees compensation insurance purposes within 14 days of commencing business and pay annual assessments to the Accident Fund. Industry-specific licences may also be required. incentives Registered eligible s qualify for specific protection and incentives, including: prohibition against discrimination; compensation in the case of the expropriation; and free transfer of foreign currency from Namibia. There is the option to elect international arbitration in case of a dispute between the investor and government. Registered manufacturers are entitled to tax relief in the form of exemptions, a reduced corporate tax rate and more generous capital allowances. Incentives are also available to companies exporting goods manufactured in Namibia, and entities operating in an export processing zone. exchange control regulation types of entities available for foreign Namibia is part of the South African Rand Common Monetary Area (the CMA ) together with South Africa, Lesotho and Swaziland. Namibia applies a comprehensive regime of exchange control. The function to administer exchange control has generally been assigned by the Bank of Namibia to local commercial banks. No exchange control restrictions exist between CMA countries, provided that the flows are strictly in local currency, eg ZAR and/or NAD. Transactions that involve the transfer of funds to countries outside the CMA are subject to Bank of Namibia approval. Investment in Namibia may be undertaken through a variety of business forms, including: sole proprietorship partnership joint venture

4 private limited liability company minimum number of shareholders minimum share capital trust limited liability company close corporation branch A company must have at least one, but no more than 50, shareholders. There is currently no local shareholding. However, if the New Equitable Economic Empowerment Framework should come into operation by virtue of the enactment of the New Equitable Economic Empowerment Bill, a minimum of 25% of the shareholding in any entity for gain must be held by racially disadvantaged persons. There are no prescribed for minimum share capital, but a company must be solvent before it undertakes certain activities. Shelf companies generally have authorised share capital of NAD4 000 and issued share capital of NAD100. directors A company must have at least one director. No local directors are required and all the directors may be foreigners. company secretary A company must appoint a resident company as secretary. auditor A private limited liability company must appoint an auditor/s who must be qualified to act as such under the Namibia Public Accountants' and Auditors' Act. registered address A company is required to have in Namibia: a postal address to which all communications and notices may be addressed; and a registered office to which all communications and notices may be addressed and at which all process may be served. It is allowed to use the address of a local law or audit firm as its registered address. shelf companies It is possible to purchase a shelf company in Namibia. Shelf companies are widely offered by company secretarial firms and are often used by corporates. registration process It takes approximately one to two weeks to register a company with the Registrar of Companies once all required documents have been submitted. tax tax system Namibia has a source-based taxation system. corporate residence corporate tax rate capital gains tax ( CGT ) withholding tax ( WHT ) rates double tax agreements ( DTAs ) Namibian income tax law does not use the term residence with reference to companies, but rather the term domestic company, which is defined as referring to: a Namibian incorporated or established association, corporation, company or body; or a company managed and controlled in Namibia. The standard corporate tax rate applicable to domestic companies and branches of foreign companies is 32%. Petroleum entities are taxed at 35%, mining companies (other than diamond mining) at 37.5% and diamond mines at an effective rate of 55%. Registered manufacturers may qualify for a reduced rate of 18% for the first 10 years of operation. Namibia does not impose tax on capital gains. WHT rate (%) payment to residents non-residents branch profits N/A dividends declared by the foreign head office are subject to nonresident shareholder s tax of 10% dividends N/A 10% if at least 25% shareholding, otherwise 20% interest N/A 10% royalties N/A 10% management, consulting and technical service fees N/A 10% DTAs are in place with France, Germany, India, Malaysia, Mauritius, Romania, Russia, South Africa, Sweden and the United Kingdom. losses Ordinary losses can be carried forward indefinitely, provided the company continues to carry on trading in Namibia. transfer pricing In terms of Namibia s transfer pricing provisions, transactions between connected persons are to reflect an arm s length price. Practice Note No. 2 of 5 September 2006 endorses the methods adopted in the Organisation for Economic Co-operation and Development ( OECD ) Guidelines, and provides for the immediate incorporation into the practice note of any subsequent amendments to the OECD Guidelines

5 thin capitalisation employee taxes social security contributions Deductions by a resident company of any interest, finance charge or other consideration will be disallowed (and treated as a dividend) to the extent to which it relates to financial assistance granted by a connected nonresident person or a non-resident person with substantial (ie, at least 25%) shareholding or control in the resident company, where the Minister of Finance considers such assistance to be excessive in relation to the fixed capital of the resident company. For this purpose, a debt-to-equity ratio of 3:1 is applied in practice. The income tax rates applicable to resident individuals from 1 March 2013 are: annual chargeable income of tax rate residents (NAD) up to % % % % % % Exceeds % Every employer and employee must contribute towards the Social Security Fund 1.8% of the employee s basic salary (based on a minimum salary of NAD300 per month (approximately USD22) to a maximum salary of NAD9 000 per month (approximately USD657) shared on a 50/50 basis by the employer (0.9%) and the employee (0.9%). The minimum monthly contribution is NAD2.70 and the maximum is NAD81 (approximately USD6). payroll taxes A vocational education and training levy is payable by employers at the rate of 1% of the annual payroll of each employer that is equal to or exceeds NAD1-million. stamp duty Stamp duty is levied under the Stamp Duties Act on the issue of certain instruments. The issue and transfer of marketable securities (excluding listed securities) is subject to stamp duty at the rate of 0.2% and the acquisition of immovable property at the rate of 1.2%. VAT taxable supplies VAT is levied on the supply of goods and services by taxable companies in Namibia, imported goods an imported services (relating to non-taxable supplies) into Namibia. VAT rate Standard rate is 15% and 16.5% on imported goods registration threshold A company must register for VAT if at the beginning of any 12-month period there are reasonable grounds for believing that the total value of taxable supplies the company will make during that period will exceed NAD The company has to register within 21 days upon becoming so liable to register. reverse VAT on imported services trade marks international conventions, treaties and arrangements Reverse VAT at a rate of 15% is levied on foreign service only if such services are used for making exempt supplies. Such VAT cannot be claimed as input. African Regional Intellectual Property Rights (Banjul Protocol) (enabling legislation published but not yet enacted) Madrid Protocol (enabling legislation published but not yet enacted) Paris Convention World Trade Organization Trade-Related Aspects of Intellectual Property Rights World Intellectual Property Organization Convention classification The International Classification of Goods and Services (Nice Classification) 10 th edition applies. A separate application is to be filed in respect of each class. categories of trade marks filing Provision is made for: service marks; certification marks; and defensive marks. Name and address of the applicant; simply signed power of attorney; list of goods or services for which protection is applied; payment of the prescribed official fee; and in the case of filing a device, eight printed copies of the device are to accompany the application. procedure Applications are examined as to formalities, inherent registrability and conflict with prior existing registrations/applications. Accepted applications are advertised in the Government Gazette. oppositions Opposition may be lodged within two months following the date of advertisement of the trade mark application. Extension of the opposition period is possible at the discretion of the Registrar. duration and renewal A trade mark registration is effective for an initial period of 10 years from filing date and, thereafter, renewable for further periods of 10 years. For more information or assistance please contact: Celia Becker executive Africa regulatory and business intelligence cbecker@ensafrica.com cell: