Namibia's rental income tax is high
Taxation Researcher | March 12, 2019
Effective Tax Rate on Rental Income
|Click here to see a worked example|
Global Property Guide research
Nonresidents are taxed on their Namibian-sourced income. Married couples are taxed separately.
The tax year is from 01 March of the current year to 28 February of the succeeding year. The tax year 2019 is from 01 March 2018 up to 28 February 2019. The tax year 2020 is from 01 March 2019 up to 28 February 2020.
Income is taxed at progressive rates.
|TAXABLE INCOME, NAD (US$)||TAX RATE|
|Up to 50,000 (US$3,571)||0%|
|50,000 - 100,000 (US$7,143)||18% on band over US$3,571|
|100,000 - 300,000 (US$21,429)||25% on band over US$7,143|
|300,000 - 500,000 (US$35,714)||28% on band over US$21,429|
|500,000 - 800,000 (US$57,143)||30% on band over US$35,714|
|800,000 - 1,500,000 (US$107,143)||32% on band over US$57,143|
|Over 1,500,000 (US$107,143)||37% on all income over US$107,143|
|Source: Global Property Guide|
Rental income is taxed at progressive rates. Taxable income is computed by deducting the 15% VAT for leasing property, income-generating costs, and depreciation expense from the gross rental income. Depreciation of new buildings is computed 4% annually over a period of 20 years.
Stamp duty is payable on the aggregate rent over the period of lease according to the following scale:
|PERIOD OF TIME||STAMP DUTY RATE|
|Up to 5 years||0.5%|
|5 - 10 years||0.8%|
|Over 20 years||1.5%|
A lease for a definite period with no provision for renewal must be stamped for the entire period.
A lease for a definite period with an option for renewal, must be stamped according to the aggregate of the a) original lease period; b) definite period of continuance; and c) two years if the lease is to continue for an indefinite period after the original lease period.
A lease for an indefinite period must be stamped for two years only.
If the aggregate rent exceeds the selling price of the leased property, duty is payable only on the selling price. If the lease is terminated before the end of the lease period, a refund of a proportion of the duty can be claimed.
Value Added Tax (VAT)
VAT is levied on rental income at 15%.
There are no capital gains taxes in Namibia.
Transfer of property is subject to transfer duty. Transfer is generally levied at a flat rate of 12% on the value of property.
For individuals, transfer duty is levied at progressive rates. The transfer duty rates vary, depending on the property classification.
TRANSFER DUTY ON PROPERTY
PROPERTY VALUE, NAD (US$)
|Up to 600,000 (US$42,857)||0%|
|600,000 - 1,000,000 (US$71,429)||1% on band over US$42,857|
|1,000,000 - 2,000,000 (US$142,857)||5% on band over US$71,429|
|Over 2,000,000 (US$142,857)||8% on all value over US$142,857|
Municipal Property Tax
Local authorities or municipalities levy annual taxes on owners of immovable properties located within their boundaries. The applicable tax rates are set by the local municipalities.
For the tax year 2009-2010, the rates applicable in the municipality of Windhoek in respect of real properties are 0.001578% of the site value per month and 0.000434% of the improvement value per month.
Income and capital gains earned by companies are generally taxed at a flat rate of 32%. Income-generating expenses are deductible when calculating taxable income.