Thoughts on the National Budget 2019/20

10 April 2019 | Business

Limit the deductibility of fees and interest for income tax if no WHT has been paid

We understand that the rationale for this as we are aware that taxpayers are not paying over withholding tax (WHT) where due.

It is important that the proposed legislation would take into account the relief provided under double taxation treaties and that the deduction of the fees and interest would not be disallowed where double taxation relief is available, as this would be very unfair towards the taxpayer.

Deductions allowed on pensions and annuity funds

The proposal is to increase the maximum deduction threshold from N$40 000 per tax year to a 27.5% of income, limited to N$150 000 per tax year.

This is a welcome change to help taxpayers make provision for their retirement. We hope that regular increases to this threshold will take place.

Taxing charitable institutions

Our concern is that charitable, religious and educational institutions would become taxable on commercial activities that they are undertaking solely to support their main objective.

We have no problem that where there are institution abuse, their status in order to generate profit for personal gain should be stopped, but we do believe that a lot of institutions are not operating with this intention and merely act to further their main objective of solving important societal issues which sometimes are not addressed by government.

Dividends tax

The introduction of a 10% tax on dividends would reduce the return on investments for a lot of taxpayers.

This would have a negative impact on investments and taxpayers may choose to invest their money offshore as their return is now further reduced while investing in Namibian products.

One has to remember that for most investments made in unit trusts, there is a portfolio that does consist of equity (yielding dividends) and interest-bearing instruments. Thus the return in these unit trusts would become less when there is a withholding tax on dividends and in the end the individual taxpayer investing his/her hard-earned money would end up receiving less than before.

Basis of taxation

Subjecting foreign income of Namibian residents to tax would add a lot of administrative burden to the operations of Inland Revenue.

It has to be noted as well that Namibia has concluded a number of double taxation treaties with other countries. In terms of these treaties there are certain incomes that Namibia would still not be able to tax even if this change is brought about.

Repeal of EPZ and manufacturing incentives

We understand that there has been pressure from the European Union (EU) on Namibia with regards to these incentives.

We therefore understand that there is a need to abolish some of these. We are looking forward to see what the proposed Special Economic Zone will bring in terms of incentives to the taxpayer.

Under Vision 2030 and the Harambee Prosperity Plan, manufacturing is instrumental in how we want to change our economy. It is therefore of utmost importance that there will be sufficient investment and tax incentives to ensure that we draw additional investment into our economy.

The current manufacturing incentives offered has a big criticism in that it takes a substantial amount of effort and time to get such approvals from the various ministries involved and therefore has resulted in the investment into these sectors not being forthcoming.

Non-deductibility of royalties

We are very concerned that this will have a detrimental effect on the viability of existing and proposed operations of the mining industry in Namibia.

The industries are already under pressure and the financial models are cost-sensitive. Imposing additional taxes in the form of disallowing the deductibility of the royalty payments could result in unwanted consequences for the economy in the form of loss of jobs and withdrawal of investment from the country.

Taxing of trusts

We do recognise that there are structures that have been abused when it comes to tax planning by making use of trusts.

We do however encourage that the changes to the legislation makes a distinction between business/trading trusts and other trusts.

One of the main reasons for setting up a trust is for the founder to divest control over assets and to protect his/her assets on a long-term basis.

Careful consideration should also be given to how a “bewind” trust would be taxed as this is one of the investment vehicles used by the Government Institutions Pension Fund (GIPF) to investment pension funds of government employees.

Chantell Husselmann is a tax leader at PwC Namibia. Contact her at [email protected]

Similar News

 

Hands-free sanitiser units in production

1 day - 04 June 2020 | Business

Augetto Graig Advanced Biotech is the name chosen for this entrepreneurial start-up, ventured into by the Beukes brothers - serial entrepreneur Sylvanie and his...

Company news in brief

1 day - 04 June 2020 | Business

Renault finalised on Wednesday, 3 June 2020, a five-billion-euro (US$5,6 billion) loan from with the French government, strengthening the carmaker's finances in the wake of...

2020 Mining Expo and Conference cancelled

2 days ago - 03 June 2020 | Business

Phillepus Uusiku The Mining Expo and Conference that was scheduled for 2-3 September 2020, after having been postponed from 22-23 April, has been cancelled. The...

NBL ready to deliver

2 days ago - 03 June 2020 | Business

Phillepus UusikuLife is slowing returning to normal as Namibians navigate the country’s gradual reopening following an easing of trade restrictions which were necessitated to combat...

Shanghai copper hits 3-month high

2 days ago - 03 June 2020 | Business

Shanghai copper prices rose to their highest in nearly three months on Tuesday, as demand in top metals consumer China continued to recover, though gains...

Company news in brief

2 days ago - 03 June 2020 | Business

Aeroflot losses widen as traffic slumpsRussian airline Aeroflot on Tuesday reported its first-quarter net loss widened to 22.48 billion roubles (US$326.2 million) after traffic...

Company News In Breif

3 days ago - 02 June 2020 | Business

London Metal Exchange cancels events The London Metal Exchange (LME) said on Monday it cancelled all of its events during the LME Week in London...

De Beers to shift diamond viewings from Botswana

4 days ago - 01 June 2020 | Business

Brian Benza - Global diamond giant, De Beers is working with Botswana's government to temporarily move viewings to places closer to international diamond centres, with...

Alrosa expects big drop in May sales

4 days ago - 01 June 2020 | Business

Polina Devitt - Russian diamond producer Alrosa expects its sales for May to total tens of million US dollars, down sharply from May 2019 but...

MTC most admired brand in Nam

4 days ago - 01 June 2020 | Business

Phillepus Uusiku - Massive investment, consistency, accessibility and giving clients an exceptional experience are some of the most important tools in transforming a product or...

Latest News

More details emerge of bribery...

1 hour ago | Justice

OGONE TLHAGEWINDHOEKThe money trail in the Fishrot saga was further unravelled yesterday when Anti-Corruption Commission (ACC) investigator Willem Olivier testified that money had been paid...

EFN speaks on media assaults,...

1 hour ago | Disasters

Staff ReporterWINDHOEKThe Editors' Forum of Namibia (EFN) has taken exception to the ever-increasing government practice of allowing only state-owned media institutions at certain public engagements,...

Kapana seller claims police brutality

1 hour ago | Police And Crime

MICHELLINE NAWATISESWINDHOEKDavid Shambo (50), who sells kapana from his home in Windhoek's Havana informal settlement, claims he was the victim of police brutality this week.According...

Press becoming an endangered species

1 hour ago | Opinion

“I disapprove of what you say, but I will defend to the death your right to say it.”With those powerful words, French philosopher Voltaire was...

Confessed killer pleads not guilty

1 hour ago | Justice

KENYA KAMBOWERUNDUCastro Domingo (34), who had previously confessed to having killed and buried his girlfriend two years ago, yesterday pleaded not guilty in the Rundu...

Drugs worth N$3.4m seized, 159...

1 hour ago | Crime

ELLANIE SMITWINDHOEKDrugs worth more than N$3.46 million were seized in May and 159 suspects were arrested on drug-related charges.According to the police 140 of those...

Long wait for Nust students

1 hour ago | Education

STAFF REPORTERWINDHOEKThe Namibian University of Science and Technology (Nust) says students will not be able to return to campus before 3 August.Under stage three of...

Sharing the gospel through music

MICHAEL KAYUNDE WINDHOEKHaving been active on the gospel music scene in different capacities, including event organising and being part of choirs, since 2015, Spazza &...

tjil introduces new platforms

MICHAEL KAYUNDE WINDHOEKIn efforts to offer more platforms to Namibian entertainers, Namibia Media Holdings (NMH), through its publication Namibian Sun, will tonight launch tjil Sessions...

Load More