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Details

  • Service: Tax, Global Indirect Tax
  • Type: Regulatory update
  • Date: 11/1/2012

Namibia: VAT essentials 

Essential information regarding VAT as it applies in Namibia.


Scope and Rates

What supplies are liable to VAT?


Value-added tax (VAT) is due on every taxable supply by a registered person. A taxable supply includes any supply of goods or services in the course or furtherance of a taxable activity (other than exempt supplies). A supply of goods or services includes sale of goods, grant of use or right to use of any goods, and provision of energy and water; and a supply of services includes anything done which is not a supply of goods. Supply includes all forms of supply, whether voluntary, compulsory or by operation of law. A taxable activity in turn, means any activity carried on continuously or regularly by any person in Namibia whether for monetary profit or not which involves the supply of goods or services.


What is the standard rate of VAT?


The standard rate of VAT is 15 percent.


Are there any reduced rates, zero rates, or exemptions?


Yes.


There is an extensive list of zero-rated supplies, including:


  • export of goods
  • supply of a taxable activity as a going concern
  • certain foodstuffs and fuel
  • certain services supplied to non-residents
  • services physically rendered outside of Namibia
  • international transport of goods and passengers
  • supply of funeral undertaking services
  • supply of goods or services by a charitable organization, children's home, old age home or orphanage.

The list of exempt supplies includes:


  • supply of financial services
  • supply of residential accommodation
  • supply of educational services
  • supply of local public transport services
  • supply of goods or services as a fringe benefit to an employee
  • supply of goods or services to Heads of State of foreign states
  • supply of services by a trade union excluding supplies of a commercial nature
  • supply of management services by a body corporate to its members
  • supply of medical and paramedical services.

Note: it is not possible to recover VAT incurred for purposes of making exempt supplies.


What are the other local indirect taxes beside VAT?


Stamp Duty: stamp duty is levied in terms of the Stamp Duties Act on instruments executed in Namibia or instruments executed outside of Namibia that relates to the transfer or hypothecation of property situated in Namibia or any matter or thing to be done in Namibia.


Transfer Duty: transfer duty is levied in terms of the Transfer Duty Act on the value of any property acquired by any person by way of a transaction or in any other manner, or on the amount by which the value of any property is enhanced by the renunciation of an interest in or a restriction upon the use or disposal of that property.

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Registration

Who is required to register for Namibian VAT?


Any person, which includes a non-resident company, who carries on a taxable activity and whose value of taxable supplies exceeds, or is likely to exceed N$ 200,000 in a 12-month period must register for VAT. A taxable activity includes any activity continuously or regularly carried on in, or partly in Namibia, whereby goods and services are supplied to another person for a consideration.


Are there penalties for not registering or late registration?


Not registering on time for VAT is an offense and the offender may be liable to a fine (depending on the circumstances of N$8,000 or N$4,000) or imprisonment (depending on the circumstances two years or one year) upon conviction.


Where a person fails to register, the person will be liable for payment of a penalty equal to double the amount of output tax payable from the time the person became liable for registration until an application for registration is submitted to the Commissioner.


Is voluntary VAT registration possible for an overseas company?


Yes, provided that the overseas company conducts a taxable activity in Namibia or partly in Namibia and such person has a fixed place of business in Namibia.


Are there any simplifications that could avoid the need for an overseas company to register for VAT?


No.


Does an overseas company need to appoint a fiscal representative?


Where a non-resident company is liable to register for VAT purposes, a VAT representative must be appointed.


The VAT representative, who is a natural person, will be responsible for the duties and obligations, as imposed by the VAT Act on the company.

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VAT grouping

Is VAT grouping possible?


No.


Can an overseas company be included in a VAT group?


N/A.

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Returns

How frequently are VAT returns submitted?


Returns are submitted on a two-monthly basis, other than where the taxable activities are farming activities, in which case returns are submitted every, two, four, six or twelve calendar months as elected by the registered person at the time of registration.


Are there any other returns that need to be submitted?


Yes, in the case of imported goods or services a registered person needs to submit an import VAT form - Declaration in respect of imported goods and/or services. Imported goods are goods brought into Namibia from a foreign country or place. Imported services relate include services supplied by a non-resident (or by a resident person from a business outside Namibia) to a Namibian resident, to the extent that the services are utilized in Namibia and are used for non-taxable purposes.


If a business receives a purchase invoice in foreign currency, which exchange rate should be used for VAT reporting purposes? (e.g. central bank’s exchange rate applicable on the date of the invoice)


In the case of an import the Minister may prescribe the date on and the time at which the price paid or payable in respect of imported goods shall, if expressed in foreign currency, be converted into the currency of Namibia. The regulations made by the Minister may provide for:


  • different dates and times in respect of different kinds or categories of goods imported from different territories; and
  • such conditions relating to such conversion and the payment of the price payable,

In any other case the foreign currencies are to be converted at the exchange rate applicable at the time of supply.

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VAT recovery

Can a business recover VAT if it is not registered?


A person may recover VAT where VAT has been charged in excess (by more than N$20) of the amount chargeable in terms of the VAT Act. Also, where an individual, not holding a Namibian passport has acquired goods in Namibia and proceeds to remove the goods from Namibia as personal accompanied baggage to any other country. This scheme is mainly aimed at tourists, but is not restricted to them.


Does your country apply reciprocity rules for reclaims submitted by non-established businesses?


No, VAT can be, subject to the provisions of the Namibian VAT Act, recovered through the VAT Refund Administrator, irrespective of the foreign reciprocity.


Are there any items that businesses cannot recover VAT on?


In general, registered persons cannot recover VAT (input tax) in respect of the following:


  • acquisition of goods and services for the purpose of entertainment or providing entertainment, except in certain circumstances
  • fees or subscription paid by the registered person in respect of membership of any club, association or society of a sporting, social or recreational nature, and
  • the acquisition of passenger vehicles, except in certain circumstances.

No VAT can be recovered on the supply or import of goods or services received which is directly connected with the making of exempt supplies in Namibia.

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International Supplies of Goods and Services

How are exports of goods and services treated?


Goods


Where goods are exported to a customer (business or private) outside of Namibia, VAT is chargeable at a zero rate percentage, provided the supplier accepts responsibility for delivery of the freight in the foreign country (i.e. the goods are exported by the supplier) and retains the prescribed documentary proof of the sale and export.


Services


A supply of services to a customer (business or private) who is outside of Namibia at the time the services are provided are zero-rated provided the customer is not a resident of Namibia for VAT purposes (which includes a person who does not carry on taxable or other activities in Namibia and does not have a fixed place relating to such activity in Namibia),the service is not directly in connection with immovable property or movable property situated in Namibia (unless subsequently exported) and the service does not comprise refraining from undertaking a taxable activity in Namibia or tolerating the undertaking of a taxable activity in Namibia by someone else.


Furthermore, where the service is physically rendered outside of Namibia, the supply is subject to VAT at a zero rate percentage.


How are goods dealt with on importation?


When goods are imported into Namibia, import VAT and customs duty may be due. This has to be paid or secured before the goods will be released from Customs' control. VAT paid on importation by a vendor can be claimed as an input tax deduction. It should be noted that special valuation rules apply for VAT purposes.


How services which are brought in from abroad are treated for VAT purposes?


Services supplied to a resident person by a non-resident person or by a business carried on by a resident person outside Namibia, which services are utilized or consumed in Namibia, will be regarded as imported services to the extent that the services are acquired for the purpose of making non-taxable supplies. This is intended to take away any VAT advantage of buying those services from outside Namibia.


Imports of services exempt from VAT, include imports in relation to an export processing zone enterprise or an export processing management company; or import of services in respect of a technical assistance agreement entered into by the Government of Namibia.


An imported service would be an exempt import if that service were to be exempt or zero-rated if rendered in Namibia.


Where VAT is payable upon an imported service, the recipient of the service is liable for the VAT. It is necessary to account for a notional amount of VAT on the Import VAT return form covering the period in which payment is made. This VAT will be charged at a rate of 15 percent.

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Invoices

Is a business required to issue tax invoices?


A registered person making a supply to another person shall on request issue a tax invoice to such other person for the supply which contains such particulars as specified by the VAT Act. A registered person is however not required to issue a tax invoice if the total consideration of the taxable supply is in cash and does not exceed N$100.


What do businesses have to show on a tax invoice?


A tax invoice must be issued where the consideration exceeds N$100. The tax invoice should contain the following information:


  • the words "tax invoice" in a prominent place
  • the name, address, and VAT registration number of the supplier
  • the name and address of the recipient
  • an individual serialized number and the date of invoice
  • full and proper description of the goods or services supplied
  • the quantity or volume of the goods or services supplied
  • the total amount of tax charged, the consideration for the supply, the consideration including tax.

Can businesses issue invoices electronically?


No, electronic invoicing is not allowed by the Namibian VAT Act.


Is it possible to operate self-billing?


Yes, in limited circumstances. Approval should be obtained from the Namibian Directorate of Inland Revenue.


Can a business issue VAT invoices denominated in a foreign currency?


For VAT purposes where a VAT invoice denominated in a foreign currency is issued a copy of such invoice expressed in the currency of Namibia must also be issued.

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Transfers of Business

Is there a relief from VAT for the sale of a business as a going concern?


Yes, provided the following conditions are met:


  • the supply constitutes a supply of a taxable activity, or part thereof
  • as a going concern
  • by a registered person
  • to another registered person
  • provided that a notice, which includes the details of the supply, in writing signed by the transferor and the transferee is furnished to the Commissioner within 21 days after the supply takes place.

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Options to Tax

Are there any options to tax transactions?


No.

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Head Office and Branch transactions

How are transactions between head office and branch treated?


Where a registered person conducts a taxable activity in branches or divisions or its more than one taxable activity which differs in nature, registered person will receive one VAT registration number. These inter branch transactions will be ignored for VAT purposes.


Any activity carried on by the branch or head office permanently located outside Namibia where the branch/main business is separately identifiable and use is made of an independent system of accounting it is not defined as a taxable activity in Namibia and will not need to be registered for VAT in Namibia.


In a situation where the head office is outside of Namibia, supplies are deemed to be made from the branch in Namibia to its head office. Such supplies, could, however be subject to VAT at the zero rates (if the head office is situated in an export country) or standard rate. The inverse also applies where the branch is located in a foreign country.

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Bad Debt

Are businesses able to claim relief for bad debts?


Businesses are able to claim back VAT previously paid on the unpaid element through your VAT return. If you subsequently receive payment for the supply then you will have to pay back the VAT element to the tax authorities in the same way.

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Anti-Avoidance


Is there a general anti-avoidance provision under VAT law?


Yes. Where the Namibia Inland Revenue Authorities determines that a person has entered into a scheme for obtaining undue tax benefits, they may determine the liability for VAT as if the scheme had not been entered into.

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Penalty Regime

What is the penalty and interest regime like?


The Namibian VAT Act is very clear and firm on the requirements one must comply with regarding registration, maintaining of records and completing and submitting of VAT returns. Penalties and interest (20 percent p.a. on unpaid tax from the first day after the date on which payment was due) levied on non-compliance is quite severe. Penalties differ according to the offence committed. The taxpayer may, however, request that penalties be waived under certain circumstances.

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Tax authorities

Tax audits


How often do tax audits take place?

The Commissioner may authorize a tax officer in writing at any time to access the records and computers of any registered person. Tax audits normally occur before a VAT refund is paid, where the amount exceeds a VAT refund of N$20.


Are there audits done electronically in your country (e-audit)? If so, what system is in use?


No.


Advance rulings and decisions from the tax authority


Is it possible to apply for formal or informal advance rulings from the (indirect) tax authority?

Yes.


Are rulings and decisions issued by the tax authorities publicly available in your country?


No.

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Miscellaneous

In your country, are there unique specific indirect tax rules (regimes) that differ from standard indirect tax rules in other jurisdictions?


None.


Are there indirect tax incentives available in your country (e.g. reduced rates, tax holidays)?


A company with Export Processing Zone status qualifies for the following VAT benefits:


  • no VAT is payable on the sale of goods or services rendered in the zone
  • no VAT is payable on goods imported or manufactured in the zone.
 

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