Namibia must shed ‘Tax Haven’ label

Niël Terblanché

The Namibian Government has announced plans to phase out its Export Processing Zones (EPZ) in favour of establishing Special Economic Zones (SEZ) in a significant policy shift aimed at revitalizing its international economic reputation.

This strategic move, revealed by Minister of Finance and Public Enterprises, Ipumbu Shiimi, during the National Budget announcement in Parliament, comes in the wake of the European Union (EU) blacklisting Namibia as a tax haven.

According to Shiimi, the Special Economic Zones (SEZ) Bill, earmarked for introduction in the National Assembly in the 2024/25 financial year, is a proactive approach by the government to address and rectify the concerns leading to the EU’s designation.

He added that the transition from EPZ to SEZ is set against a backdrop of urgency, with the existing EPZ regime set to expire in 2025.

The finance ministry, in collaboration with the Ministry of Industrialisation and Trade, aims to leverage the SEZ framework to foster competitive industrial zones that align with global best practices.

Under the proposed SEZ regime, participants will benefit from a corporate income tax rate of 20 percent, with standard capital allowances and the added incentive of zero-rated Value Added Tax (VAT).

Shiimi said the overhaul of the policy is not merely a response to international criticism but a forward-looking strategy to enhance Namibia’s appeal as an investment destination.

By addressing the EU’s concerns, Namibia endeavours to shed the tax haven label and reposition itself as a compliant and attractive location for global business operations.

According to the minister, the introduction of SEZs is expected to serve as a cornerstone for Namibia’s ambitious industrialization and trade objectives, providing a conducive environment for both local and international investors.

The EU’s blacklisting of countries as tax havens has significant implications for their access to international markets and financing.

Shiimi said that by taking decisive steps to phase out the EPZ and introduce the SEZ, Namibia is actively working to mitigate these impacts and ensure its economic policies are in harmony with international standards and are indicative of the country’s commitment to transparency, fiscal responsibility, and the cultivation of a competitive, sustainable economy.

This policy shift will eventually become an essential juncture in Namibia’s economic development trajectory that will offer a roadmap to enhanced global integration and economic resilience.

Related Posts