Last Updated on December 27, 2023 by Elidge Staff

Understanding Value Added Tax in Namibia

This article aims to provide an in-depth understanding of VAT in Namibia, including who should register for VAT (Value Added Tax in Namibia), administrative requirements, tax invoices, non-compliance penalties, and more. Value Added Tax (VAT) is a consumption tax that is imposed on the supply of goods and services, as well as on the importation of goods. In Namibia, VAT is levied at a standard rate of 15%.

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Who should register for VAT? (Value Added Tax in Namibia)

In Namibia, it is mandatory for a person who carries on a business with an annual taxable turnover above N$500,000 to apply for VAT registration. However, a person may choose to register for Value Added Tax in Namibia even if their annual taxable turnover does not exceed N$500,000 but exceeds N$200,000. There are certain conditions under which a person may not be registered for Value Added Tax in Namibia, such as not having a fixed residence or place of business, not keeping proper accounting records, or having previously failed to comply with the VAT or Income Tax Act.

Administrative Requirements for VAT Registration

When applying for VAT registration in Namibia, there are several administrative requirements that must be fulfilled. These include:

Proof of Banking Details: The applicant must provide proof of their banking details.
Fitness Certificate: A fitness certificate, indicating the applicant’s eligibility to carry on the business, is required.
Founding Statement: A founding statement, outlining the nature and purpose of the business, is necessary.
Indication of Expected Turnover for 12 Months: The applicant must provide an estimation of their expected turnover for the next 12 months.

Tax Invoice

A registered person in Namibia is required to issue a tax invoice when conducting business transactions. The tax invoice should include the following particulars:

The words “tax invoice”
Name and address, as well as the VAT number, of the registered person
Name and address of the recipient
Description of goods or services provided
Total amount exclusive of Value Added Tax in Namibia
VAT charged
Total amount inclusive of Value Added Tax in Namibia

It is important for registered persons to ensure that tax invoices are issued accurately and in compliance with the requirements.

VAT Returns (Value Added Tax in Namibia)

Every registered person in Namibia who is liable for the payment of value-added tax must submit a VAT return. The VAT return should be submitted on or before the 25th day of the month following the end of the period. Failure to submit the VAT return within the specified timeframe may result in penalties or interest.

Non-Compliance Penalties

Non-compliance with VAT regulations in Namibia can lead to penalties and interest charges. The penalties and interest rates vary depending on the nature of the non-compliance. Some examples include:

Late Submission: N$100 per day penalty with no interest charge.
Late Payment: 10% penalty and 20% interest charge.

It is crucial for businesses to comply with VAT regulations to avoid incurring unnecessary penalties and interest.

VAT Import on Services

Value Added Tax in Namibia is payable on any imported service. An imported service refers to a supply of service by a non-resident person to a non-registered Namibian resident or to someone who makes exempt supplies. When a registered person imports a service to make taxable supplies, it is considered an exempt import. The Value Added Tax in Namibia payable on imported services is calculated based on the amount paid to the service provider, and the standard rate of 15% is applied.

Value Added Tax Import Account

As per the Value Added Tax amendment Act 12 of 2015, specific provisions are made for the importation of goods and the payment of Value Added Tax in Namibia. In general, importers are required to furnish the Commissioner with an import declaration and pay the tax due in respect of the import. The specific requirements may vary depending on factors such as the country of import and the use of a VAT import account.

Objecting to Appealable Decisions

If a person is dissatisfied with an appealable decision regarding Value Added Tax in Namibia, they have the right to lodge an objection. The objection must be lodged with the Commissioner within 90 days after the date of issue of the notice of assessment.

Conclusion

Understanding and complying with VAT regulations is essential for businesses operating in Namibia. This article has provided an overview of VAT in Namibia, covering topics such as VAT registration, administrative requirements, tax invoices, VAT returns, non-compliance penalties, importation of services, and more. By adhering to VAT regulations, businesses can avoid penalties and ensure smooth operations in line with Namibian tax laws.

Sources:

Frequently Asked Questions about Value Added Tax in Namibia (VAT in Namibia)

Q: What is Value Added Tax (VAT)?
A: Value Added Tax (VAT) is a consumption tax imposed on the supply of goods and services, as well as on the importation of goods in Namibia.

Q: What is the standard rate of VAT in Namibia?
A: The standard rate of VAT in Namibia is 15%.

Q: Who should register for VAT in Namibia?
A: It is mandatory for a person who carries on a business with an annual taxable turnover above N$500,000 to apply for VAT registration. However, a person may choose to register for VAT even if their annual taxable turnover does not exceed N$500,000 but exceeds N$200,000.

Q: What are the administrative requirements for VAT registration in Namibia?
A: The administrative requirements for VAT registration in Namibia include providing proof of banking details, a fitness certificate indicating eligibility to carry on the business, a founding statement outlining the nature and purpose of the business, and an indication of the expected turnover for the next 12 months.

Q: What information should be included on a tax invoice in Namibia?
A: A tax invoice in Namibia should include the words “tax invoice,” the name and address of the registered person along with the VAT number, the name and address of the recipient, a description of the goods or services provided, the total amount exclusive of VAT, the VAT charged, and the total amount inclusive of VAT.

Q: When should VAT returns be submitted in Namibia?
A: VAT returns in Namibia should be submitted on or before the 25th day of the month following the end of the period for which the return is being filed.

Q: What are the penalties for non-compliance with VAT regulations in Namibia?
A: Non-compliance with VAT regulations in Namibia can result in penalties and interest charges. For example, late submission of VAT returns may incur a daily penalty of N$100 without interest, while late payment may result in a 10% penalty and a 20% interest charge.

Q: Is VAT payable on imported services in Namibia?
A: Yes, VAT is payable on imported services in Namibia. The VAT payable on imported services is calculated based on the amount paid to the service provider, and the standard rate of 15% is applied.

Q: What is the process for objecting to appealable decisions regarding VAT in Namibia?
A: If a person is dissatisfied with an appealable decision relating to VAT in Namibia, they have the right to lodge an objection. The objection must be lodged with the Commissioner within 90 days after the date of issue of the notice of assessment.

These FAQs provide a brief overview of Value Added Tax (VAT) in Namibia. For detailed information and specific cases, please refer to the sources provided in the original post.

NamRA Business Tax in Namibia

Individual Tax in Namibia

NamRA Levies and Duties in Namibia

Namibian Taxation: Tax in Namibia

Application form for Clearing Agent in Namibia

If you have more questions, look through our blog for answers!