Section 35A of the Namibian Income Tax Act obliges Namibian taxpayers to withhold tax on invoices issued to foreign suppliers rendering services in Namibia and pay the amount withheld to Inland Revenue by the 20th of the month following the month in which the payment was made.
As of 30 December 2015, the withholding tax rate on services performed by non-residents was reduced from 25% to 10%. Within this net of “services” fall fees on management services, consulting services, entertainment services and directors’ services.
Management and Consulting Fees are defined in our Income Tax Act to include "any amount payable for administrative, managerial, technical or consultative services or any similar services, whether such services are of a professional nature or not".
Entertainment fees are defined in our Income Tax Act to include "any amount payable to an entertainer (including a cabaret, motion picture, radio, television or theatre artiste and any musician) or a sportsperson, and includes any payment made to any person in relation to such activity".
Directors’ fees payable to foreign directors will also fall within the net of “services”.
A recently proposed tax amendment bill was released, indicating that the initial reduction in the rate of withholding tax on services was intended to be applicable to management fees and consulting fees only. The current legislation will likely be amended in the near future to exclude entertainment fees and directors’ fees and tax on such fees will be withheld at the original percentage of 25%.
Countries who have Double Taxation Agreements with Namibia should review the specific requirements which provide relief of being taxed in both countries. Namibia has Double Taxation Agreements with Botswana, France, Germany, India, Malaysia, Mauritius, Romania, Russia, South Africa, Sweden and the United Kingdom.