Countries with which Double Taxation Agreements were concluded:

Tax Incentives

•  In terms of the Income Tax Act, 1981 as amended, provision for tax incentives is only granted to companies, which includes close corporations, with regard to manufacturing and the export of manufactured goods and for individuals for the export of manufactured goods .

•  Companies (Registered manufacturers)

Companies that conducts or intends to conducts manufacturing activities may apply to the Minister of Finance for registration. The Minister may, with the concurrence of the Minister of Trade and Industry, approve the registration if he or she is satisfied that the manufacturing activity will be beneficial to the Namibian economy (employment creation, value-adding, replacement of imports or an increase in exports) and that it represents an investment in a new manufacturing activity.

Registered manufacturing companies are entitled to the following tax incentives:

•  An additional deduction in respect of remuneration to employees and expenditure incurred for the training of employees of 25% of the total expenditure regarding remuneration and training.

This means that 125% of the expenditure may be deducted from income.

An additional deduction in respect of export expenditure with regard to goods which are manufactured in Namibia and exported to another country . This deduction amounts to 25% of expenditure for marketing, advertising, provision of technical information, bringing customers to Namibia and the appointment of agents outside Namibia .

This means that 125% of cost can be set of against income derived from the export of manufactured goods.

An additional deduction in respect of transportation cost by road or rail of material and equipment to be used in the manufacturing activity . This deduction amounts to 25% of such transportation cost.

This means that 125% of this expenditure can be set of against income from manufacturing.

•  An allowance in respect of profits attributable to the export to manufacturers of manufactured goods, excluding fish and meat products . This allowance amounts to 80% of the total taxable income derived from such exports.

This means that only 20% of taxable income will be tax.

•  The taxable income derived from manufacturing remaining after the mentioned additional deductions and allowance is taxed at the rate of 18% for a total period of 10 years.

•  Capital expenditure allowance on buildings used solely for manufacturing purposes: 20% of the cost for newly built or newly extended buildings in the first year utilised and 8% for every subsequent year on original cost for a period of 10 years.

•  Companies and other taxpayers (Excluding registered manufacturing companies)

An allowance in respect of profits attributable to the export of manufactured goods, excluding fish and meat products, irrespective whether the goods are manufactured in Namibia or not. This allowance amounts to 80% of the total taxable income derived from such exports.

This means that only 20% of taxable income will be tax at the normal tax rates.

Latest Developments

Tax Legislation Amendments

In order to strengthen the legal base and hence ensure better compliance with the tax laws, a number of amendments to the respective tax laws, particularly the Value Added Tax (VAT) Act, Income Tax Act and Transfer Duty Act, are being introduced. The VAT Amendment Act was promulgated on 9 July 2007 . Amendments to the Income Tax Act and the Transfer Duty Act are still being worked on.

Construction of new Regional Offices

The Otjiwarongo Regional Office was completed in May 2007 and officially inaugurated on 22 June 2007 . This office will serve the Otjozondjupa and Kunene Regions. The Keetmanshoop Regional Office will be completed in early 2008.

The expansion of the tax collection offices in different parts of the country is in line with the Governments' objective to bring the services closer to the people.

Forensic Audits

In order to ensure compliance with the tax laws and therefore improve revenue collection, the Ministry of Finance instituted forensic tax audits at the regional Offices of the Directorate Inland Revenue at Oshakati and Windhoek . This exercise will eventually be rolled out to the other regional offices at Rundu and Walvis Bay . The impact of this exercise on revenue collection has so far been positive.

Treasury Department Technical Assistance

On the 5 th May 2006 , the Honourable Minister of Finance signed an agreement with the US Government for a Technical Assistance Project in the area of Tax Administration.

The areas covered by this project are: Planning and Management; Organisation Structure; Tax Audit; Taxpayer Education and Assistance; Collection and Enforced Collection; and Tax Legislation. The project is ongoing and progress is being made in building capacity in the above areas.

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