Finance minister Iipumbu Shiimi said the government is now targeting multinational companies to ensure that tax avoidance is minimised. 

He said big companies in the country have been avoiding paying taxes for almost 15 years, with the excuse of making losses. 

A tax loss carry forward is a provision that allows businesses or individuals to carry a tax loss from one year into future years to offset a portion of their taxable income.

“You will find a company that has been in operation for 15 years claiming to have been making losses,and not paying company tax for that period. We are now saying that there must be a limit of five years for a non-mining company, and 10 years for a mining company,” he said on Tuesday in the National Assembly.

The principle is that companies can no longer carry on losses forever. 

They must reach a stage where they can pay tax. 

He was introducing a Bill to amend the Income Tax Act of 1981 to provide for youth internship allowance, limitation of the setting-off of assessed losses and for incidental matters, as well as to increase the threshold on income tax payable by individuals and reduce the tax rate payable by non-mining companies. 

These amendments, are targeted to stimulate domestic activities, provide relief for household incomes, and create a conducive environment for businesses to thrive and expand investments. 

Delivering the national budget in February, Shiimi confirmed the increase of the threshold for income tax on individuals from the current N$50 000 to N$100 000, which he announced last year. 

He said this action would result in an injection of N$646 million directly into the pockets of taxpayers. 

Effectively, all individual taxpayers will be exempted from paying tax on the first N$100 000 of their income as of 1 March 2024.

He said this will result in N$12 000 tax relief per person annually. 

In addition, to improve Namibia’s competitiveness against regional peers, the non-mining tax rate is amended from 31% in 2024 to 30% during the following year. 

“I trust shareholders of companies that are going to benefit from this tax reduction to reinvest tax savings into their businesses, grow the economy, and create more employment opportunities,” said the minister. 

– mndjavera@nepc.com.na