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

 

The shame of our marble mines

4 days ago - 12 July 2019 | Business

Health and safety hazards, below-minimum wages, harsh working conditions and working without employment contracts are just some of the issues marble miners continue to endure...

The new era for market research

1 week ago - 03 July 2019 | Business

When we look at market research over time, it can be said that it has always had a special role to play in the marketing...

Chinese business presence no deterrent

1 week ago - 03 July 2019 | Business

Commentators are of the opinion that the presence of Chinese investors will do nothing to deter Western-aligned investors from making any investments in Namibia. This...

Rössing sale approved

2 weeks ago - 28 June 2019 | Business

The Namibia Competition Commission (NaCC) has approved the sale of Rössing Uranium Limited to the China National Uranium Corporation (CNUC), with stringent conditions.NaCC spokesperson...

NaCC approves Rössing sale

2 weeks ago - 27 June 2019 | Business

The Namibia Competition Commission has approved the sale of Rössing Uranium Limited to China National Uranium Corporation, but with stringent conditions, its spokesperson Dina Gowases...

Namibian beef finally enters Chinese market

2 weeks ago - 27 June 2019 | Business

Meatco's first consignment of Namibian beef was finally released into the Chinese market this week after it was exported in March. Namibian ambassador to China...

Singapore rejects Ohorongo deal

2 weeks ago - 25 June 2019 | Business

The planned purchase of a majority stake in Ohorongo Cement by Sino-Singaporean firm International Cement Group was rejected this week by the Singapore Stock Exchange....

Spotlight on blue economy

3 weeks ago - 25 June 2019 | Business

Key stakeholders met last week to begin work on shaping and finalising a blue economy policy, in an effort to ensure a framework to sustainably...

Get your pockets ready!

3 weeks ago - 25 June 2019 | Business

Justicia Shipena Standing for quality, value and service, Nictus Furnishers Namibia will host a scratch and dent auction alongside a local market on 29...

Major commercial deal for diamond vessel

3 weeks ago - 21 June 2019 | Business

In the largest commercial transactional deal this year to boost marine diamond recovery operations in Namibia, five commercial banks partnered in a N$5.6-billion financing deal...

Latest News

APP on warpath over late...

6 hours ago | Politics

The All People's Party (APP) is threatening to stop the Oshakati East by-election after its candidate Tangy Mike Shilongo failed to register in time.The deadline...

Houses turned into ablution blocks

6 hours ago | Education

Three incomplete teacher's houses constructed at Kasivi Combined School in the Kavango West Region have been turned into ablution facilities for learners.When Namibian Sun visited...

Making waves

6 hours ago | People

Justicia Shipena Alexander Skinner started swimming at a very young age and has had an exciting pool career to date. Skinner, who trains at the...

When accountability gathers dust

6 hours ago | Opinion

In August 2014, just months before the election that swept President Hage Geingob to power, commentators bemoaned the fact that outgoing head of state Hifikepunye...

‘Whomst’ are you?

6 hours ago | Columns

Justicia Shipena How do you respond to someone who asks: “What are you?” Clearly, there’s no right answer to such a weighty inquisition; yet,...

Genocide negotiations 'too slow'

6 hours ago | International

In Germany there is no doubt about the suffering that imperial Germany caused Namibians, says Daniel Günther, the president of the Bundesrat of the Federal...

Dam levels dismal

6 hours ago | Disasters

It appears that the only town in Namibia which is safe from water restrictions is Keetmanshoop. The latest dam bulletin, released by NamWater...

NDF troops accused of assault

6 hours ago | Crime

The Chinese owner of Alfa Construction Company at Ongwediva lost N$700 000 after his business partner allegedly transferred the money from the business bank account....

Poverty ministry clarifies its position

6 hours ago | Agriculture

Lot Ndamanomhata, spokesperson for the poverty eradication ministry, sent a statement to Namibian Sun to clarify the position of the ministry in terms of procurement...

Load More