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10. INCENTIVES AND SPECIAL REGIMES

In order to promote industrial development and exports, and to create employment, various incentives are available to both domestic and foreign investors wishing to invest in Namibia.

Registered Manufacturing Enterprises

The Revenue Authority, in consultation with the Ministry of Trade and Industry, may approve certain enterprises to be registered as 'qualified manufacturers'. Approval is granted only if the enterprise is engaged in manufacturing and if the activities are economically beneficial to Namibia or its residents.

Effective 31 December 2020, the registration of companies as registered manufacturers and the corresponding tax benefits are repealed. Pursuant to the Income Tax Laws Amendment Act of 2021, manufacturers that are registered as on 31 December 2020, will continue to benefit from the following tax incentives until 31 December 2025:

  • Reduced corporate tax rate of 18% for the first 10 years from registration as a manufacturer;
  • An additional deduction of 25% of the cost of wages paid to the staff directly involved in manufacturing;
  • An additional deduction of 25% of approved training expenses incurred on the staff directly involved in manufacturing;
  • An additional deduction of 25% of expenses incurred on transporting, by road or rail, raw materials, and equipment used in the manufacturing activity or equipment imported for use in the manufacturing process for the first 10 tax years as a manufacturer;
  • An additional deduction from taxable income of 25% of export marketing and advertising expenses; and
  • An allowance/deduction of 80% of taxable income derived from the export of goods manufactured in Namibia (excluding fish or meat products) Such allowance is not limited to registered manufacturers and is applicable to any exporter who is exporting domestically produced goods.

In addition to the above benefits, registered manufacturers are eligible for a capital allowance on building at the rate of 20% in the first year and 8% over the following 10 years which may continue to be available to the registered manufacturers after 31 December 2025.

The benefits (excluding the corporate tax rate and capital allowance) may not create or increase tax losses.

Export Processing Zone (EPZ)

EPZ enterprises are established and managed under the EPZ Act, 1995. EPZ companies have the advantage of setting-up operations anywhere in Namibia, either as single factory enterprises or in any of the two industrial parks, namely Walvis Bay and Oshikango.

Enterprises that undertake manufacturing, assembly, re-packing, and break-bulk operation, which export at least 70% of their manufactured products to countries other than the Southern African Customs Union (SACU) and which create employment for Namibians, are eligible for EPZ status. EPZ enterprises cannot engage in a retail business.

The following Incentives are available to EPZ Enterprises until 31 December 2025, if the EPZ enterprise certificate is issued on or before 31 December 2020:

  • Exemption from corporate tax;
  • No VAT on the sale of goods or services, import of goods, or manufacture of goods in the EPZ;
  • No customs or excise duty on goods imported into the EPZ;
  • No stamp duty or transfer duty on the transfer of movable or immovable property in the EPZ; and
  • Refund/reimbursement of 75% of the expenditure incurred on the training of Namibian citizens.

The tax exemptions for EPZ companies, goods manufactured in EPZs, and the movement of goods in and out of EPZs are repealed effective 31 December 2025 for companies having an EPZ enterprise certificate on or before 31 December 2020. No exemption is granted effective 31 December 2020, if the EPZ enterprise certificate is issued after 31 December 2020. However, the benefits under the VAT law may continue to be available to EPZ companies.