Tax relief injects N$646m into taxpayers’ pockets

Martin Endjala

Minister of Finance and Public Enterprises, Iipumbu Shiimi has announced that government will inject N$646 million directly into taxpayers’ pockets.

This means all individual taxpayers will be exempted from paying tax on the first N$100 000 per annum, of their first income as of 1 March 2024.

This follows the tabling of the National Budget for the 2024/25 Financial Year in the National Assembly yesterday.

The budget for the year under review stands at N$100.1 billion, which is a 12 percent increase from the previous year, under the theme Continuing the Legacy of late President Hage Geingob by Caring for the Namibian Child.

Shiimi said the provision is to provide tax relief to low-income earners. As a result, the threshold of income tax on individuals has been increased from N$50 000 to N$100 000 per annum

Further provision has been made in the two outer years of the Medium-term expenditure frameworks (MTEF) to adjust all tax brackets for inflation creep.

In this regard, a total of N$712 million per annum in direct relief to taxpayers has been provided for.

Furthermore, Shiimi announced, that the non-mining company tax rate will be reduced by two percentage points during the MTEF.

Accordingly, the tax rate will be reduced to 31 percent effective on 01 January 2024, with a further reduction to 30 percent taking effect on 01 January 2025.

To improve competitiveness against regional peers and in keeping with global developments in corporate income taxes, the non-mining company tax rate will be reduced further to 28 percent during the 2026/27 financial year.

To maintain tax neutrality, Shiimi noted that this reduction will be undertaken alongside broadening the corporate income tax base by replacing the 3:1 thin capitalisation ratio with a 30 percent limit on interest deductions; capping assessed losses carried forward at 5 years for normal companies and 10 years for companies operating in the natural resources sectors.

Introducing a 10 percent dividend tax effective on 01 January 2026 to address the existing disparity in the investment arena dividends paid to non-resident shareholders are subject to tax. Shiimi emphasised that the proposed reforms on corporate income tax are expected to ensure revenue enhancement through improving corporate tax compliance and easing the administrative and audit burden on the Namibia Revenue Agency (NamRA).

Overall, the changes are estimated to yield additional taxes of more than N$ 600 million per annum. McHenry Venaani, the President of the Popular Democratic Movement commended the tax relief stating that it has been long overdue and he is happy to see the government spending into the economy. He, however, believes that the ministry could have done more to assist taxpayers.

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