National Budget Speech: "Together defeating Covid-19, together thriving again"

In the national budget speech, under the theme “Together defeating Covid-19, together thriving again” delivered on 27 May 2020 Minister of Finance, Ipumbu Shiimi, announced very few changes on taxes in Namibia. There will not be any changes to the personal income tax brackets and the proposal to disallow tax deductibility of royalties for mining entities has been withdrawn to promote local and international investment.

Subsequent to the proposed repeal of the tax exemptions on corporate income tax for EPZ entities and the tax incentives for registered manufacturers and exporters of manufactured goods, he confirmed that these amendments are due for implementation commencing this year and will include certain “grandfathering” provisions. No further details were provided but this means that EPZ entities and registered manufacturers will retain certain benefits under the repealed legislation for a certain time.

Other tax amendments previously announced, such as withholding tax on dividends paid to residents, the basis of taxation of trusts, the taxation of commercial income of charitable, religious and educational institutions and exempted entities under section 16, are still under review. Further stakeholder consultation will take place regarding the aforementioned, which also applies to the proposed application of VAT to asset manager income and supplies of sugar and certain other commodities. He mentioned that the scope of the export levy may be expanded after consultation to include specific agricultural, forestry, game products and other mining products currently not covered.    

The highest allocations in the budget are as follows:

• Ministry of Education, Arts and Culture to receive N$14.1 Billion
• Ministry of Health to receive N$ 7.9 Billion
• Ministry of Defense to receive N$ 6.22 Billion
• Ministry of Finance to receive N$ 6.21 Billion

The GDP of Namibia is projected to contract by 6.6% in 2020/21 and 1.1% in 2021/22. The new normal average growth rate is predicted to be 3.6% from 2022 onwards. The Government spending budget has been reduced by N$ 2.5 billion from 2019/20 to 2020/21.  Government spending budgeted to be N$64.3 billion in 2020/21.

The impact of Covid-19 is projected to reduce exports by 11.9% year-on-year in 2020, compared to the 2019 decline of only 1.1%. The mid-year budget review will shed more light on the full economic impact of Covid-19. The budget for Ministry of Education, Arts and Culture and the Ministry of Health show that the Government is focused of the health and education of the youth.

Sin taxes to be increased as follows:

• 8c extra per can of beer or cider
• 14c per 750ml bottle of wine
• 61c per bottle of sparkling wine
• N$ 2.89 per bottle of spirits
• 74c per packet of 20 cigarettes
• 40c per 25grams of pipe tobacco
• N$ 6.73 per 23 gram cigar