Indirect tax - Namibia

Value-Added Tax (VAT) is the main type of indirect taxation in Namibia.

It is a tax on consumption which is applied during the production and distribution process to most goods and services. It is also applied to goods entering the country. VAT on imported services is only payable by the importer if he does not utilise the service in the making of taxable supplies. Although VAT is ultimately borne by the ‘end user’ by being included in the price paid, the responsibility for charging, collecting and paying the tax to the tax authority at each stage of the process rests with the registered person making the supply.

A registered person must charge VAT (output tax) on his taxable supplies and pay VAT (input tax) on his purchases (including any VAT paid on goods imported). The difference between the output tax and the deductible input tax in each tax period will be the amount of VAT payable by the business to the tax authority. Where the input tax exceeds the output tax, a refund can be claimed.

A transaction is within the scope of Namibian VAT if the following conditions are met:

• it is a supply of goods or services to any other person for consideration;
• it takes place in or partly in Namibia;
• it is made by a registered person;
• it is made in the course or furtherance of any taxable activity carried on by the person.

Businesses that make exempt supplies are unable to claim the input tax related to making the exempt supplies, so the VAT paid to suppliers will be an actual cost to the business.

Most goods imported into Namibia are subject to VAT. The tax must be paid by the importer at the time of importation or in the month following importation if the importer has been granted a VAT import account. Where the import is directly connected with the making of taxable supplies, the registered person is allowed a claim for the import VAT paid (subject to certain rules).

A 'person' who either makes or intends to make taxable supplies of goods or services must register for VAT if the value of his taxable supplies in Namibia exceeds or is expected to exceed an annual threshold of N$ 500 000. A business can register on a voluntary basis if it expects that its taxable supplies will exceed N$ 200 000 annually.

A 'person', as defined, includes any legal entity. Once a person is registered for VAT, all of his business activities will be covered by the registration - even if the nature of those activities are different. A registered person can make taxable as well as exempt supplies.

Each company in a group of companies must register separately for VAT in Namibia.

A penalty may be imposed by the tax authority if a business fails to register at the correct time.

Yes.

No.

All taxpayers need to appoint a public officer in Namibia, who must be a natural person resident in Namibia.

VAT returns normally cover a tax period of two months, ending on the last day of a calendar month. A business can request a specific accounting cycle to coincide with its financial or management reporting. A registered person who conducts farming activities only, may choose to be registered for a two, four, six or twelve month tax period.

All VAT returns must be submitted no later than the 25th of the month following the end of the tax period, together with any tax due.

A registered person who imported goods and who is in possession of a VAT import account, must submit a return together with the payment of the VAT by no later than the 20th of the month following the month of import.

A penalty will be imposed by the tax authority if VAT returns are not submitted on time, or the related tax is not paid by the due date.

The late submission of the return carries a penalty of N$ 100 for each day that the return is late.

Late payment of the tax due carries a penalty of 10% for every month or part of a month during which the payment is made late. The penalty imposed may not exceed the tax amount due.

The late payment of the VAT also attracts simple interest of 20% per annum. The interest charged may not exceed the tax amount due.

No.

Yes. Penalties can be imposed where businesses do not comply with the VAT rules.

Criminal proceedings may be brought in the case of more serious matters.

No. Only persons registered for VAT in Namibia can claim input tax paid by them.

A VAT invoice must show:

• the words 'tax invoice' in a prominent place;
• the name, address and VAT registration number of the registered person making the supply;
• the name and address of the recipient of the supply; 
• the individualised serial number and the date on which the invoice is issued;
• a description of the goods or services supplied; 
• the quantity or volume of the goods or services supplied; 
• the total amount of the tax charged, the consideration for the supply, and the consideration including tax. 

Only one ‘original’ tax invoice may be issued. Any copy supplied, must be marked ‘copy’.

The only document which must be submitted with the VAT return is the proof of payment of the tax due.