How To Calculate Provisional Tax In Namibia

What is Provisional Tax?

Provisional tax is not a separate tax from income tax. It is a method of paying the income tax liability in advance, to ensure that the taxpayer does not remain with a large tax debt on assessment. Provisional tax allows the tax liability to be spread over the relevant year of assessment. It requires the taxpayers to pay at least two amounts in advance, during the year of assessment, which are based on estimated taxable income.

How To Calculate Provisional Tax In Namibia

The first provisional payment for provisional taxpayers is due on/before 30 August (at least 40% of tax payable at year-end is payable with the submission of the first provisional tax return).

The second provisional payment is due on/before 28 February (the first and second provisional payments should amount to at least 80% of tax payable at year-end).

Frequently Asked Questions

What is provisional tax in Namibia?

The first provisional payment for income tax is due within six months from the commencement of the company’s financial year (at least 40% of tax payable at year-end is paid on first submission). The final provisional payment is due within seven months after the financial year-end of the company.

How can I avoid paying provisional tax in Namibia?

The only way for taxpayers to avoid triggering provisional tax penalties is to ensure that they correctly calculate their estimated taxable income for the year of assessment and that payment of the provisional tax is made on time

What is the difference between provisional tax and PAYE?

Provisional Tax is a method of paying tax for business owners and individuals who earn income that is not subject to PAYE. Residual income tax is the amount of tax calculated on taxable income, less any tax credits such as PAYE, Resident Withholding Tax, or imputation credits.

What happens if I dont pay provisional tax in Namibia?

We will charge interest if you pay late or underpay your provisional tax, from the day after the instalment was due. This is different from other provisional options where the penalties and interest will not be charged until the end of year income tax return is filed

How penalty is calculated in income tax?

If the income assessed/ re-assessed exceeds the income declared by the assessee, or in cases where return has not been filed and income exceeds the basic exemption limit, penalty at 50% of tax payable on such under reported income shall be levied.

How is tax calculated on basic salary in Namibia?

Income from salary is the sum of Basic salary + HRA + Special Allowance + Transport Allowance + any other allowance. Some components of your salary are exempt from tax, such as telephone bills reimbursement, leave travel allowance.

How is tax calculated on monthly salary in Namibia?

Gross Salary = Rs 8,00,000 – Rs 50,000 = Rs 7,50,000. You then deduct the professional tax of Rs 2,400 a year. You must compute the EPF contribution on a maximum salary limit of Rs 15,000 per month.

What is the formula to calculate PAYE in Namibia?

Gross Income = Basic salary + allowances + commissions. Step 2. Taxable Income = Gross Income – all deductions/exemptions allowed by law e.g. NSSF, private pension.

What income is tax free in Namibia?

Rebate of up to Rs 12,500 is available under section 87A under both tax regimes. Thus, no income tax is payable for total taxable income up to Rs 5 lakh in both regimes.

What is the minimum salary to pay income tax in Namibia?

As per interim budget 2019, Individual taxpayers having taxable annual income up to Rs. 5 lakh will get full tax rebate u/s 87A and therefore will not be required to pay any income tax. However Income tax Slabs and Rates will remain unchanged for the FY2019-20.

Who must pay tax in Namibia?

A salary earning individual who earns an income of more than N$ 40 000 per annum and non-salary income in excess of N$ 5 000 per month is liable to pay tax and should register for income tax.

Are donations tax deductible in Namibia?

A specific deduction for donations is allowed, provided that it is made to a registered welfare organisation or an approved educational institution. However, this deduction may not create or increase a tax loss.

What is a tax directive Namibia?

When a pension fund is withdrawn or paid out, the fund administrator is required to obtain a tax directive from Inland Revenue to indicate at which tax rate the money should be taxed. The highest tax rate is 37%.

How does VAT work in Namibia?

The standard rate of VAT is 15% and certain specified supplies of goods and services may be zero-rated. Where a registered person exports goods from Namibia, the sale will be subject to 0% VAT. Import VAT is applicable and payable (at an effective rate of 16.5%) on all goods (movable items) imported into Namibia.