Experts endorse Shiimi’s tax stance
By Hilary Mare
PWC’S tax partners have spoken on the tax reforms announced by finance minister Iipumbu Shiimi during his national budget presentation in Parliament last week highlighting that the minister seems to have consulted widely on the potential impact of the previous tax proposals and has taken these consultations into account.
Shiimi made a number of announcements on tax policy and administration reforms in his budget with the aim to strengthen fair and equitable principles of the tax system and also ensuring increased compliance by more effectively administering taxes.
Chantell Husselmann PWC country senior partner and tax leader welcomed the tax announcements further stating that the majority of the proposals are likely to be implemented in the 2022/2023 budget year.
“We welcome the fact that new investment incentives are proposed to be rolled out under the Special Economic Zone policy framework. We trust that this along with the tabling of the revised Namibia Investment Promotion Bill and the revised NEEEB Bill that will be tabled later this year will achieve the desired results in terms of increased investment into the Land of the Brave,” she said.
Corporate tax partner, Johan Nel noted that it is with relief once again that no increase in tax rates were announced further adding that it is with great appreciation that new taxes that have been proposed in the past are not being introduced in the current year.
“The minister indicated that certain long awaited tax proposals would most likely be introduced in the 2022/2023 budget year. This gives taxpayers the benefit of time to plan accordingly for changes in tax legislation and the impact on their business. The most significant of these are the introduction of the local withholding tax on dividends and the levying of VAT at 15 percent on the management fees of listed asset managers. Further good news is that the tax rate for non-mining companies may reduce in the near future and will be communicated in the Mid-Year Budget Review during October of this year,” Nel said.
During the budget speech, Shiimi announced the increase in sin taxes effective February 24 2021 in line with the SACU agreement. Overall it represents an increase of eight percent on the prior year. Further proposals to take note of that may be implemented in the near future are the zero-rating for VAT purposes on the supply of sanitary pads.
“It was also announced that efforts will be conducted towards the reviewing and strengthening of the freight tax provisions to ensure that there is equitable compliance across taxpayers and traders. An unexpected announcement was made in terms of reviewing the withholding tax on interest from unit trusts in respect of Namibian companies, and we are eager to obtain more clarity on the matter as this may relate to Namibian companies potentially receiving less investment income,” further affirmed Ansie Rossouw Partner in Charge, Walvis Bay.
Conclusively, Riana Esterhuyse, PWC tax associate director echoed the same sentiment also welcoming the announcement that Namibia Revenue Agency will become operational next month.
“A number of changes in tax policy and tax administration were mentioned during the budget speech this year by the Honourable Minister of Finance. They are likely to take effect in the 2022/2023 budget year. The administration of withholding tax on services would be amended to require proof that withholding tax was in fact paid, before the services would be allowed as a tax deduction. We view this as a positive change that will increase compliance in the withholding tax space.
“The increase in the threshold for deductions from N$40 000 per annum to N$150 000 per annum relating to contributions towards pension, retirement and educational policies is also likely to come into effect in the near future. This will ensure that Namibians save more for retirement.
The long awaited Namibia Revenue Agency is planned to be operational on the 7th of April this year. We look forward to the positive change that this will bring in ensuring tax compliance and effectiveness of tax administration affairs,” Esterhuyse said.