Employer representatives, including the Namibia Employers’ Federation (NEF); the Namibian Local Businesses Association (NALOBA), as well as the labour unions National Union of Namibian Workers (NUNW) and the Trade Union Congress of Namibia (TUCNA), have raised concern over General Notice (09/2024) that was issued alongside the gazetting of the Namibian Income Tax Amendment Act (Act 4 2024).
The General Notice is granted authority and directed employers to reimburse the PAYE over deducted from employees between 1 March 2024 and 30 September 2024 by deducting the reimbursed PAYE from the monthly employee’s tax amount to be paid to NamRA between 1 October 2024 – 28 February 2025.
Even though in principle, the increase of the income tax thresholds receives support, the representatives highlight that the method to secure reimbursement to employees, is considered to be of great concern, which could have been avoided if stakeholders had been consulted.
“While understanding Government’s intentions, the concerns from an employer’s perspective are that in many instances it will have financial implications, where the immediate impact of reimbursing employees for over taxation and managing deductions from future income tax may pose challenges for businesses, particularly in terms of cash flow management and budgeting.
“In addition, implementing the reimbursement process and accurately calculating and deducting the reimbursement amounts from future income tax payments will require additional administrative work. This may lead to increased workload and complexity in payroll processing for employers. It will be particularly daunting for employers without specialised expertise in tax matters that would have to ensure compliance with the new regulations and navigate the complexities of tax calculations,” the representatives said in a statement.
Employers and labour union representatives highlight the importance of consultation and collaboration between the government and stakeholders in the formulation and implementation of policies that impact the business community and the workforce. The lack of prior consultation raises questions about transparency and the potential implications of the new taxation regulations on businesses and employees.
Elias Shikongo, president of the NEF says: “Without any doubt, we believe that this amendment will not only provide immediate relief to our citizens but also pave the way for a more prosperous and vibrant economy. Having said that, regrettably, we are very much concerned about the directive given to employers, without having consulted us about the implications of the process.
“We believe that it is crucial for the government to engage in meaningful consultations with employers and labour union representatives before implementing significant policy changes that affect the business environment,” states Mr Elias Shikongo, president of the NEF.
Erastus Shapumba, president of NALOBA, says: “Despite the fact that income tax threshold increases will generally be very good for our households – as it is expected to kick-start the economy – we cannot expect that employers take on the work that NamRA should do. We have not been consulted by our government. This has administrative implications for all businesses; especially
smaller businesses will really struggle with the additional administration, as well as financially, as the higher threshold will mean that many employees are no longer required to pay income tax. From which returns should employers then recover the expenses? How will they pay tax consultants to support them with the required implementation?”
Labour union representatives have echoed these sentiments, emphasising the importance of inclusive decision-making processes that take into account the perspectives and concerns of all stakeholders. They have called for greater transparency and dialogue between the government, employers, and employees to address issues related to taxation and ensure that policies are implemented in a manner that is equitable and sustainable.
Job Munario, secretary-general of the NUNW says: “We encourage open communication and collaboration between employers, employees, and government agencies to address any concerns with regard to the reimbursement process and ensure a smooth transition to the new taxation regulations. By working together, we can uphold the integrity of the tax system and promote a fair and equitable environment for all stakeholders”.
Kavihuha Mahongora, secretary-general of TUCNA says:” In principle we are happy about the potential positive impact on the lives of the Namibian people, particularly the poorest members of society. By allowing individuals to keep more of their hard-earned income, this amendment will put more money in the pockets of those who need it most. This is likely to improve the standard of living for many Namibians. It is important however, that both employers and employees are adequately supported to facilitate the refunding of the overpayment of income tax”.
Moving forward, employers and labour union representatives say they are committed to engaging constructively with the government to address their concerns and work towards solutions that benefit both businesses and employees. They emphasise the need for open communication, collaboration, and consultation to find practical solutions to resolve matters with regard to the reimbursement of over deductions.