Expats in Namibia: Tax considerations

Johan Nel - Namibia has a source-based tax system.

Income that has accrued, or deemed to have accrued, from sources within Namibia will form part of gross income. This means that Namibian residents and non-residents are taxed on the same basis in respect of income earned from Namibian sources or deemed sources. Treaty relief may be available.

Taxability of expatriate employees

Expatriate employees working in Namibia and earning Namibian source income will be taxable in Namibia.

The expatriate employees will only be taxable on the portion of their earnings relating to Namibian sources or deemed sources. This means that an expatriate employee can be taxable the moment they arrive in Namibia, as Namibian legislation does not cater for a “threshold” in terms of the number of days that you can be present without being subject to tax.

There is a risk, depending on the tax legislation of the base country, that an expatriate employee may be taxable in both Namibia and the employee’s base country (i.e. there is a risk of double taxation). Relief may be available if Namibia has concluded a double taxation agreement (DTA) with the individual’s base country.

Treaty relief

An expatriate employee may be exempt from paying taxes in Namibia where:

* A DTA was concluded between Namibia and the individual’s base country, and

* All the requirements of the DTA are met.

Namibia has DTAs in place with Botswana, France, Germany, India, Malaysia, Mauritius, Romania, Russia, South Africa, Sweden, and the United Kingdom.

Requirements to be met for an expatriate employee not to be taxable in Namibia:

· A DTA agreement should be in place with the individual’s base country,

· The employee should not be present in Namibia for a period exceeding 183 days in aggregate in a tax year,

· The remuneration should be paid by a non-resident employer,

· The employer who is paying the remuneration should not have a permanent establishment in Namibia.

Please note that all the requirements should be met before an expatriate employee will be exempt from paying taxes in Namibia.

In all other cases thus the expatriate should be taxable from the date of entering into Namibia where the remuneration for the time he/she is present in Namibia exceeds N$50 000 for the tax year.

It is therefore important to ensure that appropriate planning is done for this.

Johan Nel is a tax partner at PwC Namibia. Contact him at [email protected]