In Namibia, the withholding tax rate applicable to directors’ fees paid to non-residents has become 25% with effect from 21 June 2016.
Non-resident directors are no more obliged to include the directors. Fees in their income tax returns since the withholding tax is the final tax in terms of section 35A(6) of the Income Tax Act. Also, the non -resident directors are no more require to be registered for income tax purposes or to submit annual income tax returns if the income earned from a Namibian source is the directors’ fees.
The Namibian directors’ fees or entertainment fees paid by Namibian resident to non-resident is subject to the withholding tax at the correct tax rate from the payment made to the non-resident in terms of section 35A(2) and (7) of the Income Tax Act. The deducted tax needed to be paid to Inland Revenue within 20 days after the months in which a payment has been made to the non-resident. The late payment of withholding tax will trigger an interest at the rate of 20% per year which will be calculated from the due date until the payment of the tax.
These types of payments of withholding tax will have to be included in the withholding tax return with which a proof of payment of the withholding tax is needed to be provided.
