Event organisers react to NamRA's 'withholding tax'
Reinforcing compliance in showbiz
While NamRA seeks to enforce compliance with tax regulations, event organisers and stakeholders in the sector are grappling with the potential financial implications and challenges posed by this new requirement.
Earlier this month, the Namibia Revenue Agency (NamRA) published an article titled 'Your tax obligations when importing services of foreign entertainers'.
According to legal services manager Loide Hamutumwa and audit and compliance manager Memory Mbai, per Section 35A of the Income Tax Act, any Namibian resident who enlists the services of a foreign entertainer for a performance in Namibia becomes "liable to deduct and withhold from that payment an amount of tax known as 'withholding tax', calculated at the rate of 25%", and must pay that percentage over to NamRA on behalf of the foreign entertainer.
Should the local person fail to meet their withholding obligations, they become personally liable for the tax not withheld, it said.
The revenue agency's decision to enforce this regulation has sparked concerns within the local entertainment industry.
tjil reached out to local event organisers to hear their takes.
Additional financial burden
Gordon Jay from Mindscape Events Namibia, the company that hosted Burna Boy for his ‘Love Damini Tour’ in Windhoek last year, shared that as an event organiser who frequently engages foreign entertainers, he is cognisant of the significant consideration surrounding the payment of income tax by performers.
He highlighted that the entertainment industry - despite its allure and glamour - is inherently risky, particularly when it comes to the financial burdens faced by event organisers, who often receive limited sponsorship.
“Notably, artists typically charge fees that exclude taxes, in addition to other expenses like travel, accommodation and hospitality. Consequently, the requirement to pay tax on top of these costs poses an additional financial burden for event organisers, who already shoulder the responsibility for the event's overall costs and success. Not to mention that some of these events can flop and fail to break even.”
While acknowledging this burden, Jay maintained that it is imperative for event organisers to comply with tax requirements, as they are legal obligations and contribute to government's revenue generation and the country's development.
Jay believes that despite the financial challenges, event organisers can mitigate risks through meticulous event planning and budgeting.
“Exploring innovative avenues for revenue generation - such as securing sponsorships, grants or partnerships - can also help alleviate the burden.
“Ultimately, it is crucial for these policies to consider striking a balance between the financial burdens faced by event organisers and the growth and sustainability of the events industry,” he said.
Potential deterrent
Jaimeelou Motoomull, an event organiser from The Loft, shared similar sentiments. She argued that income tax is already part of the expenses incurred when running a club.
The new tax requirement will adversely affect the local music business, she said, adding that it could potentially deter event organisers from hosting international acts.
"As the entertainment industry, we feel targeted by NamRA. There are many benefits that come with bringing international acts to Namibia. Not only the entertainment value, but they also inspire our local acts to produce world-class performances. All of these benefits will be affected by this [regulation]," she said.
Budget compromised
Another concert organiser, who preferred to remain anonymous, expressed his reservations.
He voiced concerns about the impact of this income tax requirement on event budgets, explaining that event organisers already have numerous service providers to pay.
"I do not see how this will work because it will compromise our budgets as event organisers when it comes to bringing in artists from outside the country," he said.
According to legal services manager Loide Hamutumwa and audit and compliance manager Memory Mbai, per Section 35A of the Income Tax Act, any Namibian resident who enlists the services of a foreign entertainer for a performance in Namibia becomes "liable to deduct and withhold from that payment an amount of tax known as 'withholding tax', calculated at the rate of 25%", and must pay that percentage over to NamRA on behalf of the foreign entertainer.
Should the local person fail to meet their withholding obligations, they become personally liable for the tax not withheld, it said.
The revenue agency's decision to enforce this regulation has sparked concerns within the local entertainment industry.
tjil reached out to local event organisers to hear their takes.
Additional financial burden
Gordon Jay from Mindscape Events Namibia, the company that hosted Burna Boy for his ‘Love Damini Tour’ in Windhoek last year, shared that as an event organiser who frequently engages foreign entertainers, he is cognisant of the significant consideration surrounding the payment of income tax by performers.
He highlighted that the entertainment industry - despite its allure and glamour - is inherently risky, particularly when it comes to the financial burdens faced by event organisers, who often receive limited sponsorship.
“Notably, artists typically charge fees that exclude taxes, in addition to other expenses like travel, accommodation and hospitality. Consequently, the requirement to pay tax on top of these costs poses an additional financial burden for event organisers, who already shoulder the responsibility for the event's overall costs and success. Not to mention that some of these events can flop and fail to break even.”
While acknowledging this burden, Jay maintained that it is imperative for event organisers to comply with tax requirements, as they are legal obligations and contribute to government's revenue generation and the country's development.
Jay believes that despite the financial challenges, event organisers can mitigate risks through meticulous event planning and budgeting.
“Exploring innovative avenues for revenue generation - such as securing sponsorships, grants or partnerships - can also help alleviate the burden.
“Ultimately, it is crucial for these policies to consider striking a balance between the financial burdens faced by event organisers and the growth and sustainability of the events industry,” he said.
Potential deterrent
Jaimeelou Motoomull, an event organiser from The Loft, shared similar sentiments. She argued that income tax is already part of the expenses incurred when running a club.
The new tax requirement will adversely affect the local music business, she said, adding that it could potentially deter event organisers from hosting international acts.
"As the entertainment industry, we feel targeted by NamRA. There are many benefits that come with bringing international acts to Namibia. Not only the entertainment value, but they also inspire our local acts to produce world-class performances. All of these benefits will be affected by this [regulation]," she said.
Budget compromised
Another concert organiser, who preferred to remain anonymous, expressed his reservations.
He voiced concerns about the impact of this income tax requirement on event budgets, explaining that event organisers already have numerous service providers to pay.
"I do not see how this will work because it will compromise our budgets as event organisers when it comes to bringing in artists from outside the country," he said.
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