Tax haven cost government millions
Tax haven is of critical importance for developing countries as it attracts the necessary investment but it cost governments millions in potential tax revenue.
Registered manufacturers in Namibia will only have up to 31 December 2025 to enjoy the tax incentives granted in the Income Tax Act and the Export Processing Zones Act.
In 1996, the government implemented a policy for the establishment of an Export Processing Zone (EPZ) regime to serve as a tax haven for export-oriented manufacturing enterprises in the country, in exchange for technology transfer, capital inflow, skills development and job creation. The Income Tax Amendment Act, 2 of 2020 was gazetted on 22 June 2020. According to Nicole Dreyer of BDO Namibia, exporters will qualify for the allowance on exports up to 31 December 2025 irrespective of their year-ends. EPZ enterprises in possession of export processing zone certificates under the Export Processing Zones Act on 31 December 2020, will continue to qualify for the tax incentives up to 31 December 2025.
Section 17C of the Income Tax Act which provides for the deduction of 80% of the taxable income derived from the export of goods which are manufactured in Namibia by way of an allowance, which was not limited to registered manufacturers, is repealed in the Amendment Act, she said.
New regime
The repeal of registered manufacturer status is effective on 31 December 2020.
The repeal of the section 17C is effective at the end of five years commencing 31 December 2020 to 31 December 2025.
The repeal of the tax incentives granted to export processing zone enterprises under the Export Processing Zones Act is effective at the end of five years commencing 31 December 2020 to 31 December 2025, Dreyer said.
Since 31 December 2020, manufacturing enterprises could no longer apply to Inland Revenue to be classified as a registered manufacturer.
However, based on the wording of section 2(2) of the Amendment Act, the manufacturing incentives will continue to apply to any tax year ending on or before 31 December 2021.
For example, for a registered manufacturer with a June tax year end, the manufacturing incentives will be available up to June 2021, Dreyer pointed out. – [email protected]
In 1996, the government implemented a policy for the establishment of an Export Processing Zone (EPZ) regime to serve as a tax haven for export-oriented manufacturing enterprises in the country, in exchange for technology transfer, capital inflow, skills development and job creation. The Income Tax Amendment Act, 2 of 2020 was gazetted on 22 June 2020. According to Nicole Dreyer of BDO Namibia, exporters will qualify for the allowance on exports up to 31 December 2025 irrespective of their year-ends. EPZ enterprises in possession of export processing zone certificates under the Export Processing Zones Act on 31 December 2020, will continue to qualify for the tax incentives up to 31 December 2025.
Section 17C of the Income Tax Act which provides for the deduction of 80% of the taxable income derived from the export of goods which are manufactured in Namibia by way of an allowance, which was not limited to registered manufacturers, is repealed in the Amendment Act, she said.
New regime
The repeal of registered manufacturer status is effective on 31 December 2020.
The repeal of the section 17C is effective at the end of five years commencing 31 December 2020 to 31 December 2025.
The repeal of the tax incentives granted to export processing zone enterprises under the Export Processing Zones Act is effective at the end of five years commencing 31 December 2020 to 31 December 2025, Dreyer said.
Since 31 December 2020, manufacturing enterprises could no longer apply to Inland Revenue to be classified as a registered manufacturer.
However, based on the wording of section 2(2) of the Amendment Act, the manufacturing incentives will continue to apply to any tax year ending on or before 31 December 2021.
For example, for a registered manufacturer with a June tax year end, the manufacturing incentives will be available up to June 2021, Dreyer pointed out. – [email protected]
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