SERVICES RENDERED IN NAMIBIA: KNOW WHEN YOU ARE LIABLE FOR TAX

The Namibian tax system is a source-based income tax system, meaning that Namibia can tax income if it is from a Namibian source or deemed Namibian source. The legislation specifically includes in its deeming provisions “any service rendered or work or labour done by such person in Namibia”, even if paid offshore.

Namibia does not recognise the concept of a permanent establishment in its local legislation. This only applies to instances where a double taxation agreement is in place with the country from which the service provider or contractor is tax resident.

Namibia also does not have an exemption relating to short- term contracts or assignments. Accordingly, where services are rendered or work is done by an individual in Namibia, the amount is immediately subject to tax for the time spent here (that is, provided that the individual income tax threshold of N$100,000 per annum is exceeded) unless they are tax resident in a country with which Namibia has a double tax agreement.

Namibia currently has agreements in place with South Africa, Botswana, Mauritius, the United Kingdom, Russia, Sweden, Germany, Romania, France, India and Malaysia. Where companies or their employees from these countries work in Namibia there may be provisions in the relevant double taxation agreements that will indicate if Namibia has a taxing right.

Services rendered in Namibia on a continuous and regular basis also create a risk for VAT exposure in Namibia. Any taxable activity carried out in Namibia that renders more than N$1 million in any 12-month period creates an obligation to register for VAT and pay over VAT on turnover at a rate of 15%.

Therefore, visitors should carefully consider the potential tax risks arising from travels to Namibia for business purposes, especially when performing work in Namibia (even if it is for a short period of time).