Business Reporter
THE Namibian Income Tax Amendment Act, which recently came into effect and allows Namibians earning less than N$100,000.00 to be exempt from paying tax, has been met with trepidation by some employer representatives. Concerns have been raised about the lack of consultation by the government with employers, while some businesses feel they will be tasked with duties that should fall under the Namibia Revenue Agency (NamRA).
These concerns were shared by the Namibia Employers’ Federation (NEF), the Namibian Local Businesses Association (NALOBA), as well as labour unions, including the National Union of Namibian Workers (NUNW) and the Trade Union Congress of Namibia (TUCNA).
A Ministerial Statement issued on 17 September 2024 by the Namibian Minister of Finance and Public Enterprises, Iipumbu Shiimi, directed employers to reimburse the PAYE over-deducted from employees between 1 March 2024 and 30 September 2024. Employers are to deduct the reimbursed PAYE from the monthly employee tax amount to be paid to NamRA between 1 October 2024 and 28 February 2025.
According to the Namibia Employers’ Federation, although the increase in income tax thresholds is supported in principle, the method of reimbursing employees is of great concern. This could have been avoided if stakeholders had been consulted.
“While we understand the government’s intentions, employers are concerned that, in many cases, this will have financial implications. The immediate impact of reimbursing employees for over-taxation, as well as managing deductions from future income tax, may pose challenges for businesses, particularly in terms of cash flow management and budgeting. Additionally, implementing the reimbursement process and accurately calculating and deducting the reimbursement amounts from future income tax payments will require additional administrative work. This may lead to an increased workload and complexity in payroll processing for employers. It will be especially daunting for employers without specialised expertise in tax matters, who will need to ensure compliance with the new regulations and navigate the complexities of tax calculations,” the employers’ federation said.
They further added that, considering the financial, administrative, and compliance implications, it is particularly concerning that the government did not consult relevant stakeholders before implementing these regulations, opting instead to communicate the changes solely through the media. “This is likely to create difficulties, as employees’ expectations have been raised due to the public announcement, without consideration of the implications. This can impact work relations,” the NEF said.
Erastus Shapumba, President of NALOBA, commented: “Despite the fact that income tax threshold increases will generally be very good for households, as they are expected to kick-start the economy, we cannot expect employers to take on the work that NamRA should be doing. We have not been consulted by the government. This has administrative implications for all businesses, especially smaller businesses, which will really struggle with the additional administration. Financially, as well, the higher threshold means many employees will no longer be required to pay income tax. From which returns should employers then recover the expenses? How will they pay tax consultants to support them with the required implementation?”
Labour union representatives have echoed these sentiments, emphasising the importance of inclusive decision-making processes that take into account the perspectives and concerns of all stakeholders. They have called for greater transparency and dialogue between the government, employers, and employees to address issues related to taxation and to ensure that policies are implemented in a manner that is equitable and sustainable.
