Progress with a Purpose Budget Review 2014/2015

www.pwc.com/na

20 February 2014 Safari Hotel & Conference Centre

PwC

Our presenters:

Stéfan Hugo Partner Tax Services

Chantell Husselman Partner Indirect Tax Services

“At PwC we build trust & solve problems”

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Agenda

Focus areas 2014/2015 1

Numbers in the Budget 2014/2015 2

Tax Changes 3

How do we compare 4

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Focus Area 2014/2015 Budget Review

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Key Focus Areas for 2014/2015

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1. Economic stability

2. Grow the economy

3. Up skill Namibians

4. Reduce bureaucracy

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TIPEEG’s 3rd year Targeted Intervention Programme for Employment and Economic Growth

Est. Jobs created: 83,315

Jobs creation target: 104 000 to 187 000

N$14.5bn allocated 3 year period

Jobs created:

15 829 permanent,

67 485 temporary

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2014/2015 Budget Numbers

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The Numbers

38.0 40.1

52.5 58.7

38.1 47.6

60.2 64.1

-0.1 -7.4 -7.7 -5.4

(20)

(10)

-

10

20

30

40

50

60

702013 2014 2015 2016

N$

bil

lion

s

Revenue

Expenses

Deficit

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The Numbers

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-0.1%

-6.4%

-5.5%

-3.4%

-7.0% -6.0% -5.0% -4.0% -3.0% -2.0% -1.0% 0.0%

2013

2014

2015

2016

Deficit as % of GDP

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Top 5 Ministries allocations 2014

Education – N$ 13 bn (2013: N$7,7 bn )

Defence & Police – N$10,8 bn (2013: N$4,5 bn)

Health & Social Services – N$6,1 bn (2013: N$2,7 bn)

Transport– N$4,1 bn (2013: N$ 485 mil)

Finance – N$3,5 bn (2013: N$3,6 bn)

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Top 5 Budget Cuts

Veteran Affairs

Electoral Commission

Home Affairs and Immigration

Office of the Prime Minister

Office of the President

46%

29%

25%

21%

16%

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SOE’s Budget Allocation

Air Namibia

N$472 mil

NBC N$312 mil

Namport N$100 mil

NWR N$ 104 mil

Trans Namib

N$247 mil

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Tax Revenue VS Non-Tax Revenue

Tax Revenue

N$49,213 mil

Non-Tax Revenue N$3,246

mil

Total Revenue N$52,473

mil

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Total Tax Revenue (N$49,213 million)

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Taxes on Income and

Profits 42%

Property Taxes 0%

VAT 17%

Customs and Excise

37%

Withholding taxes

2%

Other 2%

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SACU receipts

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13,796 14,727

18,117 20,336

22,564

-

5,000

10,000

15,000

20,000

25,0002013 2014 2015 2016 2017

N$

mil

lion

s

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Tax Changes

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Tax reforms

Investigation introduction of - Presumptive taxes for small business; - Capital gains tax

Commissioning of Task Team on establishment of semi-autonomous Revenue Agency

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Inland Revenue Overview - Challenges - • VAT refund processing - where audit is performed

- • Approval process on large VAT refunds

- • Income Tax assessments

- • Accurate and timeous system and payment processing

- • Legal Department capacity

- • Taxpayer communication

- • Uniformity between Receiver offices

- • Communication of implementation dates on new legislation

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Inland Revenue Overview - Progress

+

• Increased focus on compliance (vs new taxes)

+

• Commissioner appointment

+

• Faster refunds of VAT - not subject to audit

+ • Improved consultations with some industries

+

• Business Process Re-engineering project

+

• Commission of Revenue Agency task team

+

• Commission of Revenue Agency task team & ITAS system in process

+

• Improved taxpayer communication

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Tax Amendments - Proposed for introduction during 2014 / 2015

Corporate Tax rate reduction to 32%

Excise/Sin taxes as per SA budget speech (24 Feb 2014)

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Tax Amendments - Proposed for introduction during 2014 / 2015

Export tax on certain primary commodities and natural resources

Environmental Taxes Bill - Light bulbs, tyres,CO2 emission

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N$ 7 m budgeted

N$ 517m budgeted

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Tax Amendments - Proposed for introduction during 2014 / 2015

VAT registration threshold increase N$200 0000 to N$500 0000

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Mining Tax Rates

55% Diamond mining

37,5% Uranium & other mining

35% Petroleum mining

32% Other than mining

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+ Mineral royalties

+ New VET Levy

+ New Export taxes

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How do we compare?

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Manufacturing Tax rates Incentives for Industrialised Nation

28% 18% 15%

South Africa Namibia Botswana

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World Bank Report 2014 Comparisons in the World– Ease of paying taxes

13th

24th

47th

68th

142nd

155th

114th

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Mauritius

South Africa

Botswana

Zambia

Namibia

Zimbabwe

Angola

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World Bank Report 2014 Comparisons in 53 Countries in Africa Number of payments

Namibia # 37

Botswana # 34

Angola#30 Mauritius #8

South Africa #7

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World Bank Report 2014 Comparisons in Southern Africa – Tax Compliance

The time it takes in hours per year for tax administration and compliance.

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Botswana 152 hours

Zambia 183 hours

South Africa 200 hours

Zimbabwe 242 hours

Angola 282 hours

Namibia 314 hours

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World Bank Report 2014 - Namibia Setting up Business – time and procedures

• 14,7% • 66 days

• 10 steps

• ranked

• 132nd

Starting a business Procedures

Cost (% of

income per capita)

Time in Days

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Progress with a Purpose: “… We are convinced that through this budget we will fulfil our vision of Inclusive Growth and Fiscal Sustainability…” Hon. Saara Kuugongelwa-Amadhila Minister of Finance 2014/15 Budget speech

Thank You The Budget Speech and presentations are available on: www.pwc.com/na

This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PwC, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. © 2014 PricewaterhouseCoopers (“PwC”), the Namibian firm. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers in Namibia, which is a member firm of PricewaterhouseCoopers International Limited (PwCIL), each member firm of which is a separate legal entity and does not act as an agent of PwCIL.