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 that while there will be no changes to the personal income tax brackets, there will be an increase in sin taxes.
Shiimi stated that in terms of the SACU Agreement and taking into account sales volumes and targets set for the total tax burdens on respective excisable commodities, the following increases, effective from 27 February 2020 which include an 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 and N$ 6.73 per 23 gram cigar.
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were provided but this means that EPZ entities and registered manufacturers will retain certain benefits under the repealed legislation for a certain time.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.
Shiimi further stated that 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 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 the Ministry of Education, Arts and Culture and the Ministry of Health show that the Government is focused on the health and education of the youth.