Windhoek: Minister of Finance, Ericah Shafudah, said the proposed Financial Year 2025/26 National Budget contains macroeconomic and tax policy proposals aimed at supporting economic growth through boosting domestic demand. Shafudah said this while tabling her maiden budget in Parliament on Thursday, stating that they also aim to expand the tax base to improve revenue mobilisation and enhance the overall competitiveness of the tax system to attract investments and foster robust private sector development.
According to Namibia Press Agency, the finance ministry aims to amend zero-rated commercial properties to include state-acquired commercial properties, potentially streamlining transactions and reducing tax burdens in specific circumstances. Shafudah further indicated that they plan to increase the retirement fund commutation from N.dollars 50,000 to N.dollars 375,000. ‘This intervention aims to bolster the disposable incomes of retirees, offering a much-needed cushion against the erosion of their purchasing power due to recent high inflation,’ she said.
She added that the government intends to finalise VAT legislation on imported digital services to create a level playing field for domestic service providers and capture revenue from this expanding sector. Shafudah also indicated that they intend to introduce an annual tax benefit cap of N.dollars 400,000 on housing benefits to improve fairness of the housing fringe benefit across income brackets given the progressivity between both private and public employer groups.
The minister further said that in order to address revenue leakage estimated at approximately N.dollars 41 million annually, an anti-avoidance provision will be introduced. This will ensure that substance loans disguised as preference shares are treated as income and not tax-exempt. Shafudah further noted that due to the current constrained revenue outlook, the planned adjustments to all tax brackets to account for inflation creep will be postponed to the outer years of the MTEF, specifically the 2026/27 and 2027/28 financial years. ‘In this regard, a total of N.dollars 712.9 million per annum in direct relief to taxpayers has been provided for over the two years,’ she said.
Meanwhile, the newly appointed minister noted that in order to improve resource mobilisation, the Namibia Revenue Agency has completed its research and benchmarking exercise for introducing an electronic invoicing (e-invoicing) system for VAT-registered taxpayers.