Entertainment tax
Entertainment is a very much sought after form of “distraction” from a busy, serious and rigid work life, where the young and the old of our generation are always on the lookout for some “entertainment” to take their minds off crazy month ends. When economic days are dark, the entertainment industry amongst other industries is one of the least affected and the recovery is always fast as dark economic days clear.
The PwC “Entertainment and Media Outlook 2017-2021: An African Perspective” publication released last year September contains interesting analysis and forecasts for this industry.
Having the above in mind and keeping in mind future entertainment events hosted in Namibia, it is important to know that the Income Tax Act imposes a 25% withholding tax on entertainment fees paid to a non-Namibian resident by any Namibian resident.
An entertainment fee for the purposes of withholding tax on services is defined as: … any amount payable to an entertainer (including a cabaret, motion picture, radio, television or theatre artiste and any musician) or a sportsperson, and includes any payment made to any other person in relation to such activity…
The Act further states that a resident person who fails to deduct from the payment or withhold the 25% tax from the entertainment fee paid to a non-Namibian resident, or deducts the 25% and fails to pay the withheld amount to Inland Revenue is liable for that amount as if it is tax due by the Namibian resident (i.e. personally liable).
There are penalties and interests imposed for any non-compliance to the provisions imposing the 25% withholding tax.
Entertainment agencies, festivals, shows, gala dinners, trade fairs, concerts, films and theatre organisers should therefore be mindful of the tax consequences when they make payment to foreign entertainers.
Remember that not knowing whether you are supposed to withhold tax or not is not an excuse in itself to not withhold. Make sure that you understand that potential tax implications of making payments for entertainers, and ensure that you follow the correct steps.
Johan Nel is a partner: corporate tax service at PwC Namibia. This series on tax is published in Market Watch bi-monthly on a Monday.
The PwC “Entertainment and Media Outlook 2017-2021: An African Perspective” publication released last year September contains interesting analysis and forecasts for this industry.
Having the above in mind and keeping in mind future entertainment events hosted in Namibia, it is important to know that the Income Tax Act imposes a 25% withholding tax on entertainment fees paid to a non-Namibian resident by any Namibian resident.
An entertainment fee for the purposes of withholding tax on services is defined as: … any amount payable to an entertainer (including a cabaret, motion picture, radio, television or theatre artiste and any musician) or a sportsperson, and includes any payment made to any other person in relation to such activity…
The Act further states that a resident person who fails to deduct from the payment or withhold the 25% tax from the entertainment fee paid to a non-Namibian resident, or deducts the 25% and fails to pay the withheld amount to Inland Revenue is liable for that amount as if it is tax due by the Namibian resident (i.e. personally liable).
There are penalties and interests imposed for any non-compliance to the provisions imposing the 25% withholding tax.
Entertainment agencies, festivals, shows, gala dinners, trade fairs, concerts, films and theatre organisers should therefore be mindful of the tax consequences when they make payment to foreign entertainers.
Remember that not knowing whether you are supposed to withhold tax or not is not an excuse in itself to not withhold. Make sure that you understand that potential tax implications of making payments for entertainers, and ensure that you follow the correct steps.
Johan Nel is a partner: corporate tax service at PwC Namibia. This series on tax is published in Market Watch bi-monthly on a Monday.
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