Worldwide VAT, GST and Sales Tax Guide
Namibia
Windhoek
EY
Mail address:
GMT +1
Street address:
Cnr Otto Nitzsche and Maritz Streets
P.O. Box 1857 Klein Windhoek Windhoek Windhoek Namibia
Indirect tax contacts
Nikia Bauernschmitt
+264 (61) 289 1276 nikia.bauernschmitt@na.ey.com
Friedel Janse Van Rensburg +264 (61) 289 1211 friedel.janse.van.rensburg@na.ey.com
A. At a glance
Name of the tax
Local name
Value-added tax (VAT)
Value-added tax (VAT)
Date introduced 27 November 2000
Trading bloc membership
Southern African Customs Union (SACU)
Southern African Development Community (SADC)
African Continental Free Trade Area (AfCFTA)
Administered by Namibian Revenue Agency (NamRA)
VAT rates
Standard 15%
Other
Zero-rated (0%) and exempt
VAT number format 0123 4567
VAT return periods Bimonthly
Thresholds
Registration NAD1 million
Recovery of VAT by non-established businesses Yes, subject to certain conditions
B. Scope of the tax
VAT applies to the following transactions:
• The supply of goods or services made in Namibia by a registered person
• Reverse-charge services received by a person in Namibia that is not entitled to claim full input tax credits (referred to as imported services)
• The importation of goods from outside Namibia, regardless of the status of the importer
Goods imported from countries in the Southern African Customs Union (Botswana, Eswatini, Lesotho, Namibia and South Africa) are not subject to customs duty but are subject to import VAT.
Note that the term “taxable person” is not used in the Namibian VAT Act, and instead “registered person” and “taxpayer” are used.
for VAT, VAT paid on invoices can be claimed as an input tax deduction. To the extent that the non-established business will not be liable to register for and levy VAT, no VAT liability will arise unless the customer makes exempt or mixed (taxable and exempt) supplies, in which case VAT on imported services will be payable by the customer on the inverse of its apportionment ratio.
There are no other specific e-commerce rules for imported goods in Namibia. VAT on imported goods is payable by the importer.
Online marketplaces and platforms. No special rules exist for online marketplaces and platforms in Namibia.
Registration procedures. The Integrated Tax Administration System (ITAS) allows applications for VAT registration electronically. However, in practice a manual application is often processed quicker by NamRA. The VAT registration application (VAT 1) must be completed and submitted to NamRA in hard copy. The person applying for VAT registration should have a Namibian bank account and a fitness certificate for the premises from which they will be conducting the taxable activity. The VAT registration, once approved by NamRA, becomes effective on the first calendar day of the second month after the registration letter was received from NamRA. On specific application the registration can become effective on the first calendar day of the month following the receipt of the registration confirmation.
Deregistration. A person may apply for deregistration if the value of such person’s taxable supplies in a period of 12 months (begin on the date of application) will be less than NAD1 million per year.
Changes to VAT registration details. A registered person shall notify NamRA in writing within 21 days of any change to:
• The name, address, place of business, constitution or nature of the principal taxable activity
• The address from which, or name in which, any taxable activity is carried on by the registered person
D. Rates
The term “taxable supplies” refers to supplies of goods and services that are liable to a rate of VAT, including the zero rate.
The VAT rates are:
• Standard rate: 15%
• Zero-rate: 0%
The standard rate of VAT applies to all supplies of goods or services unless a specific measure provides for the zero rate or an exemption.
Examples of goods and services taxable at 0%
• Exports of goods and related services
• International transport of passengers and goods and related services
• Certain supplies of goods that are used exclusively in an export country
• Services supplied outside Namibia and to foreign branches and head offices
• Certain basic foodstuffs
• Supply of land to be used solely for residential accommodation purposes
• Supply of goods or services to erect or extend a residential building
• Supply of a business capable of separate operation as a going concern (provided all the requirements are met)
• Supply of goods subject to the fuel levy
• Supply of telecommunication services, electricity, water, refuse removal and sewerage to residential accounts
• Supply of livestock on the hoof
• Supply of intellectual property for use outside Namibia
• Supply of services to nonresidents subject to certain provisions
• Supply of goods or services to an export processing zone enterprise
The term “exempt supplies” refers to supplies of goods and services that are not liable to VAT and that do not qualify for input tax deduction.
Examples of exempt supplies of goods and services
• Financial services as defined
• Fare-paying public passenger transport
• Educational services
• Medical services provided by registered medical professionals
• Hospital services provided by registered hospitals
• Rental of residential accommodation
• Fringe benefits provided by an employer to employees
• Services supplied to members in the course of the management of a body corporate
• Supplies of goods or services to heads of state
• Supply of services by a trade union to or for the benefit of members if the supply is made from members’ contributions
Option to tax for exempt supplies. The option to tax exempt supplies is not available in Namibia.
E. Time of supply
The time when VAT becomes due is called the “time of supply” or “tax point.” In Namibia, the basic time of supply is the earlier of the issuance of an invoice or the receipt of payment.
Other tax points are used for a variety of transactions, including successive supplies like rentals, sale of fixed property, betting transactions, construction, supplies made from vending machines and “lay-by” sale agreements.
Deposits and prepayments. There is no special time of supply rules in Namibia for deposits and prepayments. As such, the general time of supply rules apply (as outlined above). Deposits will only be subject to VAT once it is applied as a consideration for a supply.
Continuous supplies of services. The tax point for continuous supplies is the earlier of the date on which payment is due or the date on which the invoice relating to the payment is issued.
Goods sent on approval for sale or return. There is no special time of supply rules in Namibia for supplies of goods sent on approval for sale or return. As such, the general time of supply rules apply (as outlined above).
Reverse-charge services. The VAT on the import of services is payable withing 20 days of the end of the month during which any import of services was made . The normal time of supply rules (as outlined above) will apply to the time of the import.
Leased assets. The supply of goods under rental agreements is deemed to take place at the earlier of when a payment becomes due or is received.
Imported goods. The tax point for imported goods varies depending on the source of the goods being imported. The following are the applicable rules:
• For goods that are imported from a member of the Southern African Customs Union – when the goods enter Namibia at the border post
• For goods imported from other countries – when the goods are cleared for home consumption
• For goods imported and entered into a licensed customs and excise storage warehouse – when the goods are cleared from the warehouse for home consumption
• Air transport of goods within Namibia
• Aviation fuel
• Trading stock
• Raw materials
• Marketing expenditure
• Stationery
Partial exemption. Input tax directly related to the making of exempt supplies is not recoverable. If a taxable person makes both exempt and taxable supplies, it may recover only a portion of the input tax incurred. The direct attribution method is used to claim input tax if taxable and exempt supplies are made by a VAT registered person.
In Namibia, the deductible portion is determined using the following two-stage calculation:
• The first stage identifies the input tax directly attributable to taxable and exempt supplies. Input tax directly attributable to taxable supplies is deductible in full, while input tax directly related to exempt supplies is denied in full.
• The second stage identifies the amount of remaining input tax (for example, input tax on general business overheads) that cannot be directly attributed to the making of taxable or exempt supplies. Such input tax may be deducted only to the extent that it relates to the making of taxable supplies. In general, the deductible portion is determined by comparing the value of taxable supplies to total supplies. However, a registered person may apply to the Directorate of NamRA for another equitable apportionment method (for example, apportionment based on floor space or activity), particularly if significant investment income, foreign-exchange gains or other nontaxable passive income is realized. The input tax ratio calculated for a financial year is applied to the following financial year and amended annually when a financial year comes to an end. A de minimis rule applies, and if taxable supplies are 90% or more of the total supplies, the full input tax deduction may be claimed and there will be no requirement to apportion the input tax claim.
Approval from the tax authorities is not required to use the partial exemption standard method in Namibia. Special methods are allowed in Namibia, but subject to approval.
Banks must obtain approval from NamRA to apply the ratio for the following year.
Capital goods. Capital assets are defined in the VAT Act as any asset, or a component of any asset, that is subject to the deduction of capital allowances in terms of the Income Tax Act. The normal input tax recovery rules apply in respect of the acquisition of capital goods. Only the portion of capital goods used to make taxable supplies can be claimed as an input tax deduction. The normal timing rules apply.
Refunds. If the amount of input tax recoverable in a period exceeds the amount of output tax payable in that period, a refund of the excess may be claimed.
Pre-registration costs. No VAT paid may be claimed prior to the effective date of registration unless it relates to trading stock or consumables on hand at the date the VAT registration becomes effective, and the goods were acquired within four months of the effective date of the VAT registration. The VAT paid in respect of the acquisition of capital goods prior to registration may not be claimed.
Bad debts. A registered person will be entitled to claim the VAT as an input tax deduction where bad debts have been written off. There should be proof that the registered person did in fact try to recover the bad debts before the VAT can be claimed back. The tax fraction will be applied to the total debt amount to the extent it includes VAT.
Noneconomic activities. Input tax incurred on purchases that are used for noneconomic activities is not recoverable in Namibia.
G. Recovery of VAT by non-established businesses
Input tax incurred by non-established businesses that are not registered for VAT in Namibia is not recoverable. However, VAT incurred by businesses that are neither established nor registered in Namibia may be recovered only with respect to goods that are subsequently exported from Namibia. A refund may be claimed from the VAT refund administrator. No claim may be made in respect of services (such as hotel accommodation and restaurant meals) consumed in Namibia.
H. Invoicing
VAT invoices. Registered persons are required to issue a tax invoice for all supplies made if the consideration (that is, the total amount received exclusive of VAT) amounts to NAD100 or more. If the total amount in money for the supply is less than NAD100, the supplier may issue an abridged tax invoice. Only hard copy tax invoices qualify as valid tax invoices.
-To claim input tax, the claimant must be in possession of a valid tax invoice for each supply including periodic supplies.
Credit notes. A tax credit note, or debit note may be used to reduce VAT charged and reclaimed on a supply of goods or services. A credit note or a debit note may be issued only if the tax charged is incorrect or if the supplier has paid incorrect output tax because of one or more of the following circumstances:
• The supply has been canceled
• The nature of the supply has been fundamentally varied or altered
• The previously agreed consideration has been altered by agreement with the recipient of the supply
• All or part of the goods or services has been returned to the supplier
If a credit note adjusts the amount of VAT charged, it must be clearly marked “tax credit note” and must refer to the original tax invoice. It must briefly indicate the reason that it is being issued and provide sufficient information to identify the transaction to which it refers.
Electronic invoicing. Electronic invoicing is not allowed in Namibia.
Scope of electronic invoicing. For B2B, B2C and business-to-government (B2G) supplies, electronic invoicing is not allowed in Namibia. The Namibian VAT Act requires that all tax invoices be issued in hard copy. In practice, invoices are often emailed but are then required to be printed for input tax recovery.
Simplified VAT invoices. Simplified invoices are permitted in Namibia. There is no requirement to issue a tax invoice if the supply is for less than NAD100. A receipt is sufficient.
Self-billing. Self-billing is allowed in Namibia. It is only allowed provided the Commissioner has provided prior written approval for the issue of tax invoices by a recipient. The recipient and the supplier must agree in advance that the supplier shall not issue any tax invoices where the recipient has issued a tax invoice in this regard. Then the tax invoice is provided to the supplier, and a copy thereof retained by the recipient.
Proof of exports. Exports can be classified as either direct exports or indirect exports. Direct exports (that is, the seller is responsible to deliver the goods at an address outside Namibia) can be zero-rated if the documentary requirements are met. The seller may not zero-rate exports if the goods are not delivered or consigned and delivered at an address in a country outside Namibia.
Documentation that must be retained to substantiate an export includes the following:
• The original customs export documentation (such as Form SAD500, Form 178 and any export certificate or certificate of origin)
• Commercial and tax invoices for the supply
These documents must be stamped by the customs and excise officials at the port of export.
The import documentation into the country of import may also be requested by the Directorate of NamRA in support of the export from Namibia.
Foreign currency invoices. In general, a tax invoice must be issued in the domestic currency, which is the Namibian dollar (NAD). If an invoice is issued in a foreign currency, the NAD equivalent must be determined using the appropriate exchange rate on the date on which the invoice is issued and must be reflected on the tax invoice.
Supplies to nontaxable persons. Full tax invoices are only required to be issued if requested by the purchaser. It is, therefore, not a requirement to issue full VAT invoices to private consumers; abridged tax invoices should be sufficient.
Records. In Namibia, examples of what records must be held for VAT purposes include all tax invoices, tax credit and debit notes issued and received, and import documents received. All records must be held in English in Namibia (specifically for tax invoices, tax credit and debit notes). In Namibia, VAT books and records can be held outside the country. This is only allowed if the accounting records are maintained on a centralized computer system that is linked to the registered person’s place of business in Namibia, and NamRA can readily access the records.
Record retention period. All records should be retained for a period of five years after the end of the tax period to which it relates.
Electronic archiving. Electronic archiving is allowed in Namibia. The original tax invoices, tax credit notes and tax debit notes received, and copies issued, should be kept physically in Namibia. Accounting records can be kept outside Namibia but should be maintained on a centralized computer system that is linked to the registered person’s place of business in Namibia.
I. Returns and payment
Periodic returns. The tax return period is bimonthly for all registered persons other than those persons who conduct only farming activities. Registered persons who carry on only farming activities may elect four-monthly, semiannual and annual tax periods.
VAT returns must be filed by the 25th day after the end of the tax period. If the due date falls on a Saturday, Sunday or a public holiday, the due date is the next business day.
Import VAT returns for the declaration of the import of goods are due monthly by the 20th day of the month following the month of import and must be submitted even if no goods were imported in a particular month.
Periodic payments. Payment of VAT is due in full on the same date as the VAT return submission deadline, i.e., by the 25th day after the end of the tax period.
Payment of import VAT is due in full on the same date as the import VAT return, i.e., by the 20th day of the month following the month of import. If the payment date falls on a Saturday, Sunday or a public holiday, the due date is the next business day.
All VAT and import VAT payments can be made electronically or in cash. It is important to use the correct payment reference number to make payment so that the payment is allocated to the correct tax liability.
Electronic filing. Electronic filing is allowed in Namibia, but not mandatory. However, while electronic filing is not mandatory, it is highly recommended, as manual submissions can only be used in exceptional circumstances. NamRA’s electronic system, Integrated Tax Administration System (ITAS), became operational from 1 January 2019. Taxable persons should activate their online tax registration to file returns electronically.