Says employers have until February 2025 to pay employees’ tax refunds
Business Reporter
THE Minister of Finance and Public Enterprises, Iipumbu Shiimi, has shed clarity on the Pay As You Earn (PAYE) tax refunds, which Namibian citizens were promised after the minister, in the budget speech earlier this year, announced tax relief measures that would see Namibians earning less than N$100,000 exempted from paying PAYE.
The finance ministry, over the past weekend, issued a notice directing employers to adjust the PAYE deducted from employees’ salaries to reimburse the over-deducted taxes subtracted from the employees’ salaries since 1 March 2024.
“I will give clarity: the notice that we issued to fast-track the refund process has caused confusion, and it warrants further clarification. So, in particular, the Tax Amendment Act—as you may recall, when we announced that in the budget, we announced that we would increase the tax threshold from N$50,000 to N$100,000—this means that those Namibians who earn less than N$100,000 per year will no longer be liable to pay tax. Previously, that threshold was N$50,000,” Shiimi explained.
He added that, additionally, those who are above the N$100,000 threshold will also get tax relief on the first N$100,000 of their salary.
“So, how will that work? Now, this law, the Amendment Act, was made effective from the 1st of March 2024 this year, although the law only came into effect yesterday (16 September 2024). The effective date is 1st March 2024. What that means is that the employers will refund the employees the amount over-deducted, sooner than next year, sooner than between March and June 2025. Those employers that are able to do it at once, already starting from October, should give the refunds back. If, for example, I pay N$100 in tax, and the amount that was over-deducted is N$30, the state owes me N$30. So, instead of the employer paying N$100 to the state, they should just pay N$70. The N$30 must be refunded to the taxpayer. That is a quicker way of providing relief to the taxpayer, instead of waiting for the end of the financial year or the end of the tax year. So that’s the notice that we have issued,” Shiimi said.
He added that he has seen concerns that this might have some financial implications for employers, which is not supposed to be the case, as they are not supposed to have any cash flow implications at all.
“In that example, the employer was to pay that money over to NamRA. We are saying that instead of paying NamRA, pay that portion that belongs to the employee to the employee, and only pay NamRA the balance. And, of course, if there is an employer who cannot do it in one go, you have up to February next year to do it on a monthly basis, or perhaps every second month, or something like that. That flexibility is given to the employer to manage their cash flow in such a way that a burden is not placed on employers. The statement that a burden would be placed on employers is not factual,” Shiimi concluded.
