Paying taxes in Namibia - Total Tax Contribution 2009

Internationally and locally there seems to be a perception that large companies do not pay as much tax as they should. These perceptions are seldom supported by empirical data, and are frequently hedged with generalisation.

On 27 April 2009 PricewaterhouseCoopers released the first PricewaterhouseCoopers Total Tax Contribution Survey. The survey was based on the PricewaterhouseCoopers Total Tax Contribution Framework.  This tool was designed by PwC Tax specialists internationally to enable companies to collect and report total tax information in a consistent manner, to meet the needs of stakeholders and improve transparency around tax costs.  

In an attempt to stimulate the debate on paying taxes, the survey reports on data collected on business-related taxes borne by large Namibian companies and tax collected by such companies which is remitted to the fiscus. It  aims to provide a framework for information that may be used for tax best practice financial reporting, the formulation of tax strategies and policies and the management of tax risk by companies and government alike.

There was significant interest with 23 large companies participating in the survey. The survey covered the 10 major taxes paid by the participants.

What is Total Tax Contribution?

The PricewaterhouseCoopers Total Tax Contribution Framework focuses on two areas that represent a company’s overall taxation contribution. These are:

  • Business taxes borne by the business – taxes that impact the  income statement; and
  • Business taxes collected – from customers and employees that are then remitted to government.

Taxes borne

The 2009 survey results show that:

  • The 23 participants paid N$856m (2007: N$641m) in taxes.
  • Of the total business taxes borne by survey participants, 65%, or N$555m (2007: 60%, or N$ 385m) was corporate tax.

Taxes collected

In addition to taxes borne, the 2009 survey results show that:

  • Taxes collected from customers and/or employees totalled N$577m (2007: N$516m).
  • For every N$1 of taxes borne, a further N$0.67 (2007: N$0.81) was collected on behalf of the Namibian Government.

The picture for individual participants

Tax

The taxes paid can be divided into profit taxes (1), indirect taxes (4), employment taxes (2), property taxes (2) and other taxes (1). Profit taxes refer to corporate taxes whilst indirect taxes consist of irrecoverable VAT, net VAT, withholding taxes (e.g. non-residents’ shareholding tax and royalties) and customs duties. PAYE on employees’ remuneration and social security contributions by employee and employer represent employment taxes, whilst property taxes relate to transfer duties and stamp duties respectively. Other taxes comprises primarily of industry-related levies, e.g. fishing, mining and tourism levies.    

On average, participating companies were responsible for 4.4 taxes (2007:4.43) out of the 7 taxes borne surveyed.

For tax collected, the average number of taxes collected was 3 (2007:3).

Total Tax Rate

The mean average total tax rate for participants was 38.41% in 2008, up from 33.99% in 2007.

Taxes borne and collected as a percentage of turnover

The mean average of taxes borne and collected is 14.12% in 2008 and 12.76% in 2007.

Employment taxes per employee

Participants reported a mean average of N$519.58 of employment taxes borne per employee in 2008 and N$358.91 in 2007.

Large companies

Five companies each paid more than N$50 million in taxes, which represents 78% of the corporate tax paid by the 23 participants as well as 72% of all taxes borne by participants. These 5 companies contributed 3% of the total taxes collected by government in 2008 (2007: 2.6%).