www.pwc.com/na/en Global Mobility Services: Taxation of International Assignees - Namibia Taxation issues & related matters for employers & employees 2018
Last Updated: May 2018 This document was not intended or written to be used, and it cannot be used for the purpose of avoiding tax penalties that may be imposed on the taxpayer.
Country: Namibia Introduction: International assignees working in Namibia 4 Step 1: Understanding basic principles 5 Step 2: Understanding the Namibia tax system 6 Step 3: What to do before you arrive in Namibia 9 Step 4: What to do while in Namibia 10 Step 5: What to do when you leave Namibia 12 Appendix A: Rates of tax, penalties and interest 13 Appendix B: Double-taxation agreements 14 Appendix C: Namibia contacts and offices 15 Additional Country Folios can be located at the following website: Global Mobility Country Guides Global Mobility Country Guide (Folio) 3
Introduction: International assignees working in Namibia PwC is the world's leading provider of professional services. The People and Organisation group works together with its clients to find solutions for the challenges they encounter when transferring people from one country to another. This brochure is intended to inform foreign nationals and their employers about tax, social security and immigration issues in Namibia. This guide is not exhaustive and cannot be regarded as a substitute for professional advice addressing individual circumstances. Nevertheless, answers will be found to most of the common questions raised by an expatriate or his/her employer. More detailed advice should be sought before any specific decisions are made about these issues. More information can be obtained from our Namibia office staff specializing in People and Organisation, Global Mobility and Immigration (see Appendices). 4 People and Organisation
Step 1: Understanding basic principles The scope of taxation in Namibia 1. A foreign national working in Namibia will, in general, become liable to income tax on income sourced or deemed to be sourced in Namibia. The main taxes and levies that affect employees are: Income Tax Social Security The tax year 2. The Namibia tax year runs to the last day of February each year. 3. The tax return filing deadline for salaried individuals is 4 months after the end of the tax year; i.e. 30 June each year. 4. The filing deadlines for Business Individuals (operating Namibian businesses) is 30 September. 5. The tax payment deadline for non-provisional taxpayers is on 30 June. Partners 6. Spouses are taxed individually on their Namibian sourced income. Determination of residence 7. The Namibian tax system is based on source and not on residency. Income derived or deemed to be derived from sources within Namibia are subject to tax. 8. Taxability of an assignees income may be impacted where a Double Taxation Agreement is in place with his/her home country. Global Mobility Country Guide (Folio) 5
Step 2: Understanding the Namibia tax system Residence vs Non Residence 9. All non-resident taxpayers, have to submit a tax return in respect of their Namibian source income. 10. Where a double tax agreement ( DTA ) was concluded between the individuals host country and Namibia and all the requirements of the DTA are met, it is possible that an expatriate may be exempt from paying tax in Namibia. 11. Determining tax residence in terms of a DTA is complex and professional advice should be sought in this regard. 12. Refer to Appendix A for a source base test diagram and Appendix B for a list of DTA countries. Employment income 13. Employment income (remuneration) includes salaries, wages, leave pay, overtime, bonuses, allowances, commissions, fee, emolument, pensions, annuities, superannuation, gratuities, retiring allowance or stipend, certain lump sum payments and fringe benefits. 14. Common examples of taxable fringe benefits include, amongst others: Housing benefits; Tax equalisation; Home leave and related travel benefits; School fees; Cost of Living allowances; Personal or private usage use of employer owned vehicles and other assets; The settlement by the employer of an employee s debt; Assets acquired from the employer at a value less than market value. Employee taxes 15. Employees' tax is income tax (Pay-As-You-Earn PAYE ) an employer must deduct from remuneration paid to an employee, and pay over to Namibia Inland Revenue. The amount of PAYE tax deducted is calculated in accordance with prescribed tables Important tax compliance dates to remember 16. See Step 4. Structuring Remuneration Package 17. Remuneration packages may, subject to certain restrictions, be structured in a tax efficient manner. 18. There are tax benefits/implications relating to the following allowances that can be considered in a remuneration package: Housing allowances; Tax equalisation; Medical aid and retirement benefits; Vehicle allowance and/or company car. Taxation of investment income 19. Namibian source investment income will be subject to Namibian income tax. 6 People and Organisation
Interest 20. Withholding tax of 10% is levied on interest received by assignees from Namibian banks or unit trusts and any interest paid by a resident to a nonresident. Dividends 21. All dividends received are exempt from income tax. 22. A 10% withholding tax applies to dividends paid to foreign residents who are companies and hold more than 25% shareholding. A dividend withholding tax rate of 20% will apply in all other cases. 23. Expenditure incurred in the production of Namibian dividend income e.g., interest on loans to purchase shares, is not deductible for income tax purposes. Rental income 24. For non-residents, rental income will be fully taxable if the income arises from a Namibian source. The general rule is that the source of rental income is where the relevant property is located. 25. Generally speaking, rental expenses will only be deductible in so far as the rental income is taxable. Capital gains 26. Namibia does not currently levy capital gains tax. There are provisions to cater for taxability of capital gains where it relates to the sale of mining/petroleum interests (i.e. sale of a right to mine, interest to mine, sale of shares in a company that owns such a licence) Employee stock option plans and long term deferred compensation schemes 27. The cross-border income tax issues arising from employee stock option plans is a complex area of taxation. Consideration needs to be given to the Namibian tax implications as well as the home country tax implications and planning should be implemented at an early stage to minimize the risk of double taxation. 28. We would recommend that professional advice be sought prior to the exercise or vesting of any share options and/or the disposal of any shares acquired under an employee share option scheme. These provisions apply equally to residents and non-residents. Exchange controls 29. Namibia has exchange control regulations. The commercial banks in Namibia (commonly referred to as authorised dealers ) are agents of the Bank of Namibia BON (the Central Bank) for foreign exchange purposes. When all necessary declarations are lodged with BON via an authorized dealer, it permits foreign nationals to deal freely with their foreign assets. Foreign nationals are free to purchase residential property, although borrowing restrictions may apply. Foreign nationals in possession of valid Global Mobility Country Guide (Folio) 7
work or temporary resident permit, may borrow funds locally only subject to bank risk assessment and prevailing banking practice. Customs and temporary residents 30. Foreign nationals working in Namibia temporarily or on a contract basis may import their personal effects into the county without any customs duty and VAT being levied. These include household effects and other movable articles, such as equipment necessary for the exercise of a calling, trade or profession, television and hi-fi sets and general household appliances. All of these items must be imported for their personal use only, and must not be disposed of within a period of six months from the date of entry into Namibia. These goods may also not remain in Namibia on a permanent basis and must be returned overseas upon departure from Namibia, unless the foreign national obtains permanent resident status or citizenship in Namibia during this period. 31. An inventory of all imported personal belongings must be furnished, together with the work permit and submitted to the Namibian Customs Head Office for upfront approval. The goods will subsequently be cleared free of duties and VAT at the port of entry. This clearance is normally obtained by a shipping agent arranging the transfer of the assets and must be obtained prior to the goods arriving in Namibia. 32. An import permit is required from the Ministry of Agriculture, Water, and Rural Development s (State Veterinarian) for the import of a pet and it is advised to start the process early to avoid any delay at a border post, harbour or airport. A valid rabies vaccination certificate issued by a veterinarian in the country of export is required. The certificate must accompany the animal and must reflect that your pet had been vaccinated at least 30 days, but not more than 6 months, prior to entering Namibia. The import permit from the Namibian State Veterinarian must also accompany the pet. An export health certificate signed, stamped and dated within 48 hours of export is required for cats and dogs by a licensed government veterinarian in the country of export. A special additional permit for certain bird species are required and birds may have to stay in quarantine for a fixed period. Customs Namibia will inspect the various permits and release the pet to the owner, subject to such further conditions, e.g. quarantine and requesting the owner to take the pet to the State Veterinarian for final approval. 33. Should a foreign national wish to bring a private motor vehicle into Namibia for personal use, it is required to declare the temporary importation at the Namibian Customs Office of Importation. Security must be lodged with Namibia Customs equivalent to the customs duty, ad valorem duty (where applicable) and import VAT before the vehicle may be imported. The lodged security will be refunded to the importer once acceptable proof has been furnished that the vehicle has left the country permanently. 34. PwC can advise and assist with regards to the importing of personal vehicle and household goods. 8 People and Organisation
Step 3: What to do before you arrive in Namibia Immigration 35. In terms of the Namibian Immigration Control Act, any person who intends to enter or reside in Namibia for the purpose of employment, conducting a business or carrying on a profession is required to have a valid employment visa or permit. 36. Depending on the purpose and duration of the visit in Namibia, different immigration applications are required by the Ministry of Home Affairs and Immigration (MoHAaI). 37. The respective immigration applications for Namibia can be obtained and submitted at the nearest Namibian Embassy in the home country of the applicant or the Ministry of Home Affairs: Alien Control in Windhoek, Namibia. 38. Your PwC consultant will be able to assist you with visa or permit applications and any related queries. Visitor s Entry Permit (the business part thereof previously referred to as Business Visa) 39. A visitor s entry permit is required for a person visiting Namibia in any of the following: looking for prospects to set up formal business, exploration for business opportunities, business people attending meetings at branches or subsidiaries, official government visits, attending conferences (not as facilitator), corporate events (not work) and meetings for which no remuneration is received, attending short training courses (not more than 90 days), sports events, expositions and trade fairs and any other purpose other than employment of any kind. 40. Nationals from certain countries are exempt from the application and payment of visitor s entry permit fees. This visa is valid for a period not exceeding 90 days per annum. Kindly note, the 90 days per annum does not refer to a calendar year, rather to the day of first entry into the country by the individual. 41. The visitor s entry permit may be stamped into passport at the point of entry if the assignee is from one of the exempted countries. Work Visa 42. A work visa is required for any person who intends to enter Namibia for the purpose of employment or conducting a business or carrying on a profession or occupation. The visa should be granted to the individual prior to entering the country. 43. The work visa is only for a period not exceeding 3 months. Please note that an initial application for a 6 months work visa has the same requirements as a work permit application. Work permit 44. Any person who intends to enter or reside in Namibia for the purpose of employment or conducting a business or carrying on a profession or occupation is required to have a valid employment permit prior to entering the country; if the duration/period of stay will exceed a period of 6 months. 45. From the list of the required documents and information, most important is a police clearance certificate from the country of origin and last country of residence/work. Depending on the processing time to issue such a certificate from the respective countries, it is important to obtain such certificate in advance as this is one of the major reasons causing a delay in the process. Global Mobility Country Guide (Folio) 9
Step 4: What to do while in Namibia Registration as a taxpayer 46. A foreign national rendering services and earning income in Namibia is liable to register as a taxpayer with the local office of Namibia Inland Revenue. 47. Application for registration must be made by completing the Application to register as a taxpayer form 6-0/0310. This should be completed and returned to your PwC tax consultant. A copy of this form, together with the necessary instructions is enclosed in this document. Upon registration, Namibia Inland Revenue will allocate you an income tax reference number. Registration as a provisional taxpayer 48. Certain taxpayers are required to register as provisional taxpayers. In order to register as a provisional taxpayer, a letter must be submitted to Namibia Inland Revenue to inform them of provisional tax registration. 49. A provisional taxpayer includes: Any person who derives taxable income, in excess of N$ 5000, which is not employment related. This would include income such as rental income, interest income, self-employment income; or Any person notified by Namibia Inland Revenue that he or she is a provisional taxpayer. Directors of Namibian companies 50. In some cases, certain exemptions to register may be applicable. Provisional tax 51. Provisional tax is the payment of the income tax liability for a tax year in installments. 52. Provisional tax payments are based on estimated taxable income for the tax year and should be made no later than the last day of August and February of each tax year. At least 40% of a taxpayer s tax for the year should be paid with the 1st provisional payment and 80% with the 2nd provisional payment to avoid underestimation penalties of up to 100% of the underestimated amount). 53. Provisional taxpayers may make a third voluntary (top up) payment no later than seven months (i.e. 30 September) after the end of the tax year. Employees' tax (PAYE) 54. Employees' tax is income tax (Pay-As-You-Earn PAYE ) an employer must deduct from remuneration paid to an employee, and pay over to Namibia Inland Revenue. The amount of PAYE tax deducted is calculated in accordance with prescribed tables. All Namibian employers paying remuneration have an obligation to account for employees tax. In the case of an employer who is not resident in Namibia, any agent of such employer in Namibia having authority to pay remuneration is required to assume the obligations of the non-resident employer. Penalties and interest may be imposed by Namibia Inland Revenue if employees tax is not paid timeously. See appendices. 55. A Monthly return is due to be submitted by employer within 20 days after the month-end (month during which PAYE was deducted). 56. A yearly PAYE Reconciliation Return to be submitted by employer within 30 days from 10 People and Organisation
tax year-end (30 March each year). Social Security 57. The employer as well as each employee (irrespective whether an expatriate or not) should be registered with the Social Security Commissioner. 58. Employee contribution to social security is calculated at 0.9% based of the employee s Total- Cost-To-Company package up to a maximum amount of N$81.00 per month. The employer also contributes the exact amount deducted from the employee. 59. The Social Security Commission provide the following benefits: Maternity Leave: 100% payment of Basic Salary to a maximum amount of N$13,000 payable for a maximum of 12 weeks. Sick Leave: 75% of maximum basic salary of N$9 750 per month for the first period of 12 months of sick leave and thereafter be reduced to 65 per cent of such basic wage up to a maximum amount of N$8 450 per month for a further 12 months. Death/retirement/perm anent disability: An amount of N$8,475 can be claimed with a onceoff payment. Important tax compliance dates to remember Submission of annual income tax return (form 6-0/0014B): Salaried individual is 30 June Business individual is 30 September Submission of 1st provisional tax return (form 6-0/0132): 31 August (six months before the end of the year of assessment). Submission of 2nd provisional tax return (form 6-0/0132): 28 February (end of the year of assessment). Submission of 3rd (voluntary) provisional tax return (form 6-0/0132): 30 September (seven months after the end of the year of assessment). 60. Failure to account for provisional tax in a timely manner can lead to penalties plus interest. What to do at the end of the tax year Tax returns 61. Individuals should collate all records necessary to complete the tax return including those forms detailing remuneration for the tax year (PAYE5 certificate and form 6-0/0014B and (if required) form 6-0/0012A). Even if an individual is not paid in Namibia there may still be a requirement to prepare and submit these, and other year-end forms to Namibia Inland Revenue. 62. PwC can assist with the preparation of such tax returns if authorised to do so. 63. Assignees with less complicated tax returns may use PwC s TaxTim (https://taxtim.pwc.com/na), a digital tax assistant that helps to complete a Namibian income tax return by asking a series of simple language questions. Unless PwC is appointed to do so, assignees will be responsible to submit hard copies of tax returns to Namibian Inland Revenue. Notice of assessment 64. An income tax assessment should be issued by Namibia Inland Revenue after submission of an income tax return. 65. Objections may be lodged against the assessment, within 90 days of the date of assessment, if the individual does not agree with the calculation of the taxable income or the tax assessed. Each notice of objection should clearly state the grounds for the objection. Payment of taxes 66. Where the final tax liability in the notice of assessment exceeds the tax paid, the balance of the tax will be due, interest will be charged by Global Mobility Country Guide (Folio) 11
Namibia Inland Revenue on the outstanding amount. 67. The tax payment deadline for non-provisional taxpayers is on 30 June. 12 People and Organisation
Step 5: What to do when you leave Namibia Reporting departure 68. There are currently no provisions in terms of Immigration legislation that requires an assignee intending to leave Namibia, to report to any departure authorities. 69. The assignee would merely be required to have the date of departure from Namibia stamped into his passport by the border patrol official. Return of work permit 70. A work permit is normally valid for either 12 months or 24 months. The work permit will remain valid for the abovementioned period and will not lapse upon the assignee s departure from Namibia, nor is it required to be returned. 71. Hence, a valid work permit will only expire after 12 or 24 months from date of issue. Submission of final tax return 72. If an assignee was not working in Namibia for a full tax year (1 March 28 Feb), a final tax return should still be submitted. 73. Although no specifications are prescribed by law, best practise is to attach certified copies of passports as proof of the date an assignee left Namibia. It is further advised that a statement is done by the employee under oath that no further employment was excercised in Namibia during the remainder of the year. 74. An assignee should apply to be deregistered at the different authorities after submitting his/her final tax return. 75. A PwC consultant can assist with the deregistration process. Tax Clearance Certificate 76. An Inland Revenue Goodstanding certificate is required for a work permit renewal. Global Mobility Country Guide (Folio) 13
Appendix A: Rates of tax, penalties and interest Refer to www.pwc.com/na/en/namibia-tax-rate-card for an updated tax reference and rate card. Taxable income N$ 0-50,000 Not taxable Rates of tax for year of assessment ending 28 February 2018 (N$) 50,001-100,000 18% for each N$ above 50,000 100,001-300,000 9,000 + 25% for each N$ above 100,000 300,001-500,000 59,000 + 28% for each N$ above 300,000 500,001-800,000 115,000 + 30% for each N$ above 500,000 800,001-1,500,000 205,000 + 32% for each N$ above 800,000 Above 1,5 million 429,000 + 37% for each N$ above 1,500,000 Type Reason Penalty Interest 1st Provisional Late submission N$100 per day None 1st Provisional Late Payment 10% 20% 2nd Provisional Late submission N$100 per day None 2nd Provisional Late Payment 10% 20% 2nd Provisional Under-estimation Up to 100% of underestimation Income Tax Return Late submission None 20% Income Tax Return Late Payment 10% 20% Income Tax Return Omission/incorrect statement Up to 200% 20% Company: Employees' Tax Late submission None None Company: Employees' Tax Late Payment 10% 20% Company: Employees' Tax Failure to withhold PAYE 10% 20% Company: Withholding Tax Late Payment 10% 20% 20% 14 People and Organisation
Appendix B: Double-taxation agreements List of countries that Namibia has a DTA with: France Germany India Mauritius Romania Russian Federation South Africa Sweden United Kingdom Malaysia Botswana Global Mobility Country Guide (Folio) 15
Appendix C: Namibia contacts and offices Contacts Name: Johan Nel Tel: +264 (61) 284 1122 Email: johan.nel@pwc.com Name: Bianca Cooper Tel: (+264) 61 284 1021 Email: bianca.cooper@pwc.com Name: Estelle Walters Immigration Tel: (+264) 61 284 1208 Email: estelle.walters@pwc.com 16 People and Organisation
2018 PricewaterhouseCoopers Limited. All rights reserved. "PricewaterhouseCoopers" refers to PricewaterhouseCoopers Limited (a Zambian Limited Company) or, as the context requires, the PricewaterhouseCoopers global network or other member firms of the network, each of which is a separate and independent legal entity. PricewaterhouseCoopers and PwC may also refer to one or more member firms of the network of member firms of PricewaterhouseCoopers International Limited (PwCIL), each of which is a separate legal entity. PricewaterhouseCoopers does not act as agent of PwCIL or any other member firm nor can it control the exercise of another member firm s professional judgement or bind another firm or PwCIL in any way.