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6.3. Depreciation and Amortization

Capital allowances are granted on fixed assets for tax purposes. The applicable rates are given as below:

Initial Allowance Annual Allowance
Commercial building (refer note 1) 20% 4%
Industrial building (refer note 2) 20% 8%
Machinery, vehicles, utensils, articles, ships, and aircraft (refer note 3) 3 equal annual amounts

Note 1 – Commercial buildings used for business purposes are eligible for an initial allowance of 20% of construction cost of the buildings in the year they are first put to use. Thereafter, an annual allowance of 4% is granted for the following 20 years. Additions to existing buildings (not alterations, improvements, or repairs) are not eligible for such capital allowances.

Note 2 – Industrial buildings of a registered manufacturer are eligible for an initial allowance of 20% of construction cost in the year it is first put to use and thereafter an annual allowance of 8% for next 10 years.

Note 3 – The cost of machinery, motor vehicles, utensils, articles, ships, and aircraft is deducted/written off in 3 equal annual amounts, beginning from the year of acquisition. No amount is deducted in the year of disposal of the asset.

Prospecting and development expenses incurred before the commencement of the mining operations are allowed as a deduction in the first year in which the income is earned from the mining operations. Subsequent developmental expenses are written off over a period of 3 years.

The cost of developing/ purchasing/ registering intangible assets, such as patents, copyrights, designs, trademarks, not exceeding NAD 200 and used in the production of income is allowed as deductible expenditure. If the cost is more than NAD 200, then it is amortized over the estimated useful life of the asset or 25 years, whichever is shorter.

A capital allowance previously claimed is recaptured/included in the gross income if the asset is disposed of, sold or withdrawn from trade for non-trade purposes or removed from Namibia. The value of recapture is computed on the basis of sale proceeds or market value of the asset.