Windhoek—In a significant update to the Pay-As-You-Earn (PAYE) tax deductions, the Ministry of Finance and Public Enterprises announced a corrective measure for overpayments made by employees due to new statutory tax rates. The adjustments, slated to come into effect on March 1, 2024, are a response to the updated provisions under the Income Tax Act of 1981.
According to Namibia Press Agency, Minister Iipumbi Shiimi issued a notice stating that employers are mandated to align the PAYE deductions with the forthcoming tax rates as outlined in Schedule 2 and Schedule 4 of the Income Tax Act. The minister emphasized the necessity for employers to ensure the total amount of employee tax deductions for the 2024/25 financial year matches these updated tax rates. In instances where over-deductions occur, employers are obliged to refund these amounts promptly.
“The employer must deduct the reimbursed PAYE amount from future monthly employee tax payments, which are to be paid to the Namibia Revenue Agency (NamRA),” Shiimi detailed. For employees earning N.dollars 100,000 or less annually, situations may arise where there isn’t sufficient tax payable to process the refund. In these cases, the employee is required to claim the refund when submitting their 2025 income tax return by June 30, 2025.
Shiimi also addressed scenarios involving employees who changed positions during the tax year. Such individuals are advised to seek reimbursements from their previous employers while filing their 2025 tax returns on or before the specified June deadline. The minister further assured that these adjustments aim to prevent anomalies in tax payments and guarantee that employees are taxed correctly according to the revised rates for the 2024/25 tax year.
Employers are instructed to adhere closely to the directives in the notice to ensure full compliance with the Income Tax Act. Further details and updates on these tax modifications will be provided after the new statutory tax rates are officially legislated, added Shiimi.