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Quick Tax Guide 2016/17

Driving progress

Introduction

In this budget edition of our newsletter we summarise some economic and tax comments made by the Honourable Minister of Finance, Calle Schlettwein, during the reading of the 2016/2017 Budget Speech on 25 February 2016

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Budgeted revenue and expense breakdown

Total revenue for 2014/2015 was N$ 49.9 billion (of which tax revenue was N$ 46.8 billion) and estimated total revenue for 2015/2016 is N$ 56.7 billion (of which tax revenue is estimated to be N$ 54.3 billion). Estimated revenue for 2016/2017 is N$ 57.8 billion (of which tax revenue is expected to be N$ 55.5 billion).

“in 2016, it is time to turn words into reality, it is time to implement ...“

- President Hage Geingob, 2016
Tax revenue analysis 2016/2017 (billion)

Tax policy proposals

The Minister re-confirmed the introduction of the environmental and export levies announced in prior year budgets.

Carbon tax and environmental levies

A carbon tax and environmental levies to be introduced on incandescent light bulbs and tyres. The expected rates are:

Carbon tax:

Motor vehicles principally designed for the transport of persons – N$ 75 per g/km CO² and on motor vehicles principally designed for the transport of goods – N$ 100 per g/km CO².

Amongst the motor vehicles which will likely not be not subject to the carbon tax are tractors, motor vehicles for the transport of ten or more persons (including the driver), special purpose motor vehicles (including crane lorries, fire fighting vehicles, concrete-mixer lorries).

Pneumatic tyres:
N$ 10 per tyre

Incandescent light bulbs:
N$ 3 per bulb

Export levies


Export levies to be introduced to promote domestic value-addition in the primary commodity and natural resources sectors. Expected rates are between 0% and 2%. The Minister further confirmed that work will continue on the feasibility of a presumptive tax for SMEs which was announced in the 2014/2015 budget.

Other tax policy proposals

The Ministry will continue with the development of a double tax agreement policy and a policy to leverage from international tax cooperation and transfer pricing. This is in line with current developments in the international tax arena.

Fuel Levies

Fuel levies in terms of the Customs and Excise Act will be increased, but the Minister did not mention the percentage increase.  This will be the first increase since 1998. Current rates are between 10c/l and 12c/l depending on the type of fuel imported into Namibia.

Customs Bill

A Customs Bill that is aligned to domestic and international best practices are at the legal drafting stage.

Tax Recovery

Strengthening of tax recoveries and deployment of the Integrated Tax System will continue during 2016/2017.  Transitional modalities for the establishing of a semi-autonomous Revenue Agency will also be implemented during 2016/2017.

Solidarity Wealth Tax

In 2015 the President of Namibia announced a solidarity tax aimed at poverty eradication and the Minister elaborated on this in his speech today. He confirmed that consultations will continue before the tax will be implemented.
The Minister made it clear that the tax is not aimed at broadening the tax base, but rather to redistribute wealth. From the Minister’s speech it seems if the tax will have a relatively high tax threshold.

This is very different from the initial indications that all income above N$ 78 000 will be subject to this redistribution tax. 

Generally, any tax that is collected needs to be effectively recovered and the money utilised in funding government operations and projects.  More so for a tax that has a specific aim such as this tax.  We would therefore expect to see very specific policies for the objective of this tax to be achieved. In this regard the Minister did mention that the tax will accrue to a designated fund that will be audited and approved by Parliament.

Sin Taxes

The 2016/2017 excise duty rates were reviewed in line with the provision of the SACU Agreement. The South African Minister of Finance announced increases between 6% and 8.5% on 24th February 2016. The new excise duty rates translate to:

  • Beer 11c/ 340ml
  • Fortified wine 27c/750ml;
  • Spirits 394c/750ml;
  • Cigarettes 82c/packet of 20;
  • Cigars 432c/23g

Taxes not mentioned

No changes were announced to individual tax rates, corporate tax rates, VAT rates or any other indirect tax rates.

No further relaxation of exchange control measures were announced.

Infographic - Namibian Budget 2016-17

The information contained in this guide is for general guidance only and is not intended as a substitute for specific advice in considering the tax effects of particular transactions. While every care has been taken in the compilation of the information contained herein, no liability is accepted for the consequences of any inaccuracies contained in this guide.

The full Budget Statement as presented by the Minister is available on the Ministry of Finance website, through this direct link.

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