NAMIBIA Law and Practice Contributed by: Nadine van Schalkwyk, Ralph Strauss, Bonita R de Silva, Ivo dos Santos, Chrissie Turck, Jané Louw, Nicole Freygang and Natasha Nekuta, Dr. Weder, Kruger & Haikali Inc.
• Shifts in mining and land reform policies can affect investor confidence. 5.7 Anti-Evasion Rules Namibia has anti-tax evasion and anti-avoidance rules in the Income Tax Act, 1981 (as amended), and relat - ed regulatory frameworks, enforced by the Namibia Revenue Agency (NAMRA). The framework empowers authorities to disregard artificial transactions, impose penalties, and monitor cross-border dealings to pro - tect the tax base. The following are sources of anti-evasion rules in the Republic of Namibia: • the Income Tax Act, 1981 (Act 24 of 1981), which provides the legal foundation for tax collection and anti-avoidance measures; • Section 95A (General Anti Avoidance Rule – GAAR), which introduces interest limitation and anti-avoidance measures applicable to certain financing arrangements; and • Practice Note 2 of 2006: Guidance on transfer pric - ing and arm’s length principles. The following are core measures that are taken into consideration: • General Anti-Avoidance Rule (GAAR): NAMRA can disregard artificial schemes or reprice transactions. The objective is to prevent tax avoidance through contrived structures. • Transfer Pricing Rules: The arm’s length principle for related-party cross-border transactions applies. The purpose is to stop profit shifting and base ero - sion. • Thin Capitalisation Rules: Prior to 2024, Namibia applied a 3:1 debt-to-equity thin capitalisation ratio. From 2024 onwards, interest deductions are restricted where net interest exceeds both NAD3 million and 30% of Tax EBITDA. The purpose of the rule is to prevent excessive debt financing being used to shift profits and erode the domestic tax base. • Penalties and Interest: Significant penalties may be imposed on underpaid tax, together with interest charged at 20% per annum. The high rates are a strong deterrent against evasion.
• Exchange Control Oversight: Bank of Namibia and NAMRA monitor cross-border payments. The pur - pose is to detect illicit transfers and base erosion. • Audit Powers: The Inland Revenue can demand documentation and impose adjustments to ensure compliance and transparency. There are compliance risks to consider as there can be severe sanctions for non-compliance (including penal - ties and interest). Namibia’s audit focus on cross-border related-par - ty transactions means that taxpayers are generally expected to maintain appropriate transfer pricing documentation demonstrating that transactions are conducted on an arm’s length basis. Boards of directors and audit committees integrate anti-avoidance compliance measures into governance policies, while corporate advisory support and regular transfer pricing health checks remain essential com - ponents of effective compliance management. Namibia’s framework combines specific rules, includ - ing transfer pricing and thin capitalisation provisions, with general anti-avoidance powers. Compliance therefore requires robust documentation, transparent structures, and proactive governance oversight. 5.8 Tariffs Namibia applies the Southern African Customs Union (SACU) Common External Tariff (CET), meaning its tariff regime is harmonised with Botswana, Eswati - ni, Lesotho, and South Africa. Imports are classified under the Harmonised System (HS) codes. Namibia also grants tariff preferences under regional and inter - national trade agreements such as Southern African Development Community (SADC), European Union Economic Partnership Agreement (EU EPA), European Free Trade Association (EFTA), Mercosur, African Con - tinental Free Trade Area (AfCFTA), and the UK SACU Mozambique FTA. Namibia’s Tariff Regime is governed by the Cus - toms and Excise Act, 1964 (schedules adopted from SACU), and administered by the Namibia Revenue Agency (NamRA). The tariff book contains scheduled regulating customs duties, excise duties, anti-dump -
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