The Tax System in Namibia

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What is tax?

Tax can be defined as a "pecuniary burden laid upon individuals or property owners to support the government". In short it is payment exacted by legislative authority. Tax is enforced with an aim of helping governments in the development of various projects.

What are some of the forms of tax?

This is a contribution which in most cases is compulsory and is paid by companies who are employers. It is paid in different forms such as toll, tribute, tallage, gabel, impost, duty, custom, excise, subsidy, aid and supply.

Which tax is paid by individuals or employees?

The most common tax paid is by employees and is usually deducted through your salary. It is what is known as income tax. This is the tax levied on the income of individuals or businesses. Individual income taxes often tax the total income of the individual (with some deductions permitted), while corporate income taxes often tax net income (the difference between gross receipts, expenses, and additional write-offs). 

What taxation system is in Namibia?

The Namibian Taxation system is predominantly regulated by the Income Tax Act (which regulates personal and corporate taxes) and the Value Added Tax Act. Namibia has a source based income tax regime.  The Namibian tax system is therefore not concerned with where a taxpayer is resident, but rather looks at the place where income has been earned.

How about foreigners or non residents - are they taxed?

Non residents temporarily employed in Namibia, or a foreign company trading within Namibia, will be liable for all taxable income earned within Namibia, as provided for in article 15 of the Double Taxation Agreement.

How are individuals taxed in Namibia?

According to the country’s taxation guide, individuals are taxed on a progressive marginal scale over a series of income brackets with the highest marginal rate being 35 percent while Income Tax is levied on companies at a rate of 35 percent.  In the calculation of a taxpayer’s liability, that taxpayer may deduct from its gross income any expense incurred in the production of taxable income.

Further calculations on income tax

Namibia employs a self assessment tax regime where spouses are taxed separately on their income. Taxable income is an individual’s gross income, less exempt income and deductions. Capital gains are not normally taxable in Namibia. Taxable income is derived at by deducting exempt income and allowable deductions from gross income. Gross income is defined in Section 1 of Namibia’s Income Tax Act and is made up of all amounts received by or accrued to a person from a source within Namibia.