Personal Income Tax Returns – Who, Why, When and a little bit more…
Namibians are often misinformed when it comes to our taxation laws and how they work. Firstly, let me define a few things which might help you understand our tax legislation a little better:
- Namibia’s income tax legislation applies a source basis method of taxation and is not residency based. This means if your income is from a Namibian-based source, your income will be taxable in Namibia.
- The first step to determining your taxable income is to understand what the term “gross income” means. It is defined as follows:
- “The total amount, in cash or otherwise, received by or accrued in favour of a person during such year or period of assessment from a source within or deemed to be within Namibia, excluding receipts or accruals of a capital nature”.
- Your taxable income in Namibia is then calculated as follows:
- Gross Income less specific exemptions = Income
- Income less allowable deductions = Taxable Income
- Taxation payable for individuals is calculated by multiplying the taxable income by the relevant tax rate. Below are the current tax rates for individuals in Namibia:
|Taxable Income||Rates of tax for the year of assessment ending February 2021|
|Less than 50,000||Not taxable|
|50,001 – 100,000||18% of each N$ above 50,001|
|100,001 – 300,000||9,000 + 25% of each N$ above 100,000|
|300,001 – 500,000||59,000 + 28% of each N$ above 300,000|
|500,001 – 800,000||115,000 + 30% of each N$ above 500,000|
|800,001 – 1,500,000||205,000 + 32% of each N$ above 800,000|
|429,000 + 37% of each N$ above 1,500,000|
So to sum it up, if you receive or accrue any income from a source or deemed source in Namibia and it is not of a capital nature, the amount will be taxable in your personal capacity.
Who needs to submit income tax returns?
All individuals who are registered as taxpayers in Namibia need to submit an income tax return annually. For individuals, the financial tax year runs from 1 March up to 28/29 February every year. The tax return is due for submission as follows:
- On or before 30 June – If you are a B-Filer (you not a provisional taxpayer and do not trade as a sole proprietor)
- On or before 30 September – if you are an A-Filer (you are a provisional taxpayer and you have several sources of income and/or trade as a sole proprietor)
How to submit your income tax returns
In previous years, taxpayers had to submit their income tax returns manually on either a blue, brown or yellow income tax return form. However, a few years ago, Inland Revenue introduced the ITAS system (Integrated Tax Administration System) through which you can now submit your tax returns electronically. The integration from the old system to the new one is currently not where it should be and there still are a few hiccups, but it is definitely a move in the right direction. Returns are submitted electronically and in most cases your return is assessed in minimal time, although there are exceptions. You can also view any outstanding balances and returns on the system as well as request or upload any changes to be made, although these do need to be approved.
Why do I have to submit a tax return?
By law, if you are registered as a taxpayer, you need to submit a yearly tax return. Your income tax return is a declaration of the income you have received for the year and what taxes you have paid during the year. The difference between the taxes you have paid and what is calculated is then either payable to you, or receivable by you from the Receiver of Revenue. Late payment of taxes due by you attracts late payment penalties and interest, so it is very important to ensure your tax affairs are in order. Yes, it can be very frustrating, but this is something that we all need to comply with. Keep your tax returns up to date, and make use of ITAS, which is faster than physically queueing to hand in your tax return. With the world still moving through different phases of the pandemic, it is a good idea to test ITAS from the comfort of your home.