Faculty of Management Sciences Unit 7: Withholding taxes (non- residents) Different withholding taxes levied in Namibia iro of non-residents Final tax – s 41 -48; 35; 35A; 35B Final tax – no other taxes are further levied Types: ◦ ◦ ◦ ◦ NRST (non-residents shareholders tax) WHTS (withholding tax on services) WHTR (withholding tax on royalties) WHTI (withholding tax on interest) ➢ Late payments: ➢10% penalties per month or part thereof, limited to amount of tax ➢20% interest p.a Tax on dividends received by a non-resident shareholder. Dividends defined – includes any amount distributed by a co. to its shareholders or any amount distributed out of the assets pertaining to a unit portfolio to shareholders of the unit portfolio. Excludes: payments made from share premium account unless it arose out of transfers to it from distributable reserves. Person liable: person who receives the dividend Recovery of tax: Co. declaring the dividend. ◦ Withhold the NRST ◦ Pay over to RoR Tax on services obtained from non-resident. Services: management fees; consultancy; entertainment and directors fees. Management & consulting fees specifically defined: ◦ “Any amount payable for administrative; managerial; technical or consultative services or any similar services; whether such services are of a professional nature or not” Person liable: person who renders the service Recovery of tax: Person who makes payment for service: ◦ Withhold tax on services ◦ Pay over to RoR Tax on royalties paid by a resident to a nonresident A royalty includes: ◦ Payment for the use or right to use any patent; design; trademark; copyright; model; pattern; plan; formula or process or any other property or right of a similar nature. ◦ The imparting of any scientific, technical; industrial or commercial knowledge or information for use in Namibia. ◦ The right to use industrial, commercial or scientific equipment (i.e including rental therof). Nature of fee to be carefully examined in order to conclude if WHTR are applicable. Person liable: person that received the royalty payment Recovery of tax: person making the royalty payment: ◦ Withhold the tax on royalty ◦ Pay over to RoR Tax on interest received by or accruing to a non-resident Enacted on 30 December 2015 S35B defines interest Interest is deemed to be paid on the earlier of the date on which: ◦ it is paid or; ◦ becomes due and payable Due and payable not defined in the Act - use SA case law: “amount not only owing but due to be paid” WHTI triggered when interest is actually paid or becomes due and payable, whichever is the earlier. Person liable: person that the interest is received by or accrued to Recovery of tax: Person that is liable to pay the interest. ◦ Withhold the tax on Interest ◦ Pay over to RoR Taxation of Avoidance and Tax evasion. Tax Administration Income Tax Act no.24 of 1981 LexisNexis: Concise guide to Tax in Namibia by D Clegg & C Kotze. 2018 PwC: Namibian Income Tax Guide. 2021