Windhoek—Finance Minister Iipumbu Shiimi has assured that the recent amendments to the income tax laws will not cause businesses to collapse, following the enactment of the Income Tax Amendment Act, 2024.
According to Namibia Press Agency, Shiimi responded to worries from a business forum that the directive for businesses to reimburse employees for over-deducted Pay-As-You-Earn (PAYE) taxes might financially strain particularly smaller enterprises. The amendments under Act No. 4 of 2024, passed by Parliament, enable PAYE deduction reimbursements from March 1, 2024, to September 30, 2024. Subsequently, employers are instructed to offset the reimbursed PAYE by reducing the monthly employee tax payments to the Namibia Revenue Agency (NamRA) from October 1, 2024, to February 28, 2025.
The ministry issued General Notice 09/2024 to provide authority for these reimbursements. In his ministerial statement, Shiimi clarified, “I would like to dispel the misconception that the directive for employers to refund PAYE could force businesses to close down. There is no truth in such an assertion.” He emphasized that there would be no net cash flow impact on businesses since the reimbursement simply adjusts the tax payable to NamRA.
Shiimi acknowledged potential challenges for some employers who might not have enough tax payable to cover full reimbursements in one go, hence not prescribing a fixed schedule for these refunds. “We trust employers will determine the reimbursement period following a comprehensive assessment of their respective monthly cash flows, payroll size, and systems, as well as their internal operational and administrative procedures,” he advised, urging employees to engage with their employers to confirm the specific refund dates.
The amendment also raised the threshold for individual income tax exemption from N$50,000 to N$100,000 annually, meaning all individual taxpayers are now exempt from paying tax on the first N$100,000 of their income. This adjustment addresses the over-deduction of PAYE for all employees earning over N$50,000 during the specified seven-month period.