doing business in africa: namibia and botswana · country context socio-economical • namibia is...
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www.pwc.com/na
Doing Business inAfrica: Namibia andBotswana
Agenda
1 Why this seminar
2 PwC Africa desk
3 Doing business in Namibia
4 Doing business in Botswana
Doing business in Africa: Namibia2
21 January 2014
PwC
Why this seminar?
3August 2013
Why this seminar?
The interest in investing in Africa is growing rapidly
Need for general as well as specific hands-on information and ability todiscuss developments
PwC Africa Desk to facilitate this by, amongst others, organising“Doing business in Africa” seminars:
- Zambia (March 2013)
- Mozambique (August 2013)
- Namibia / Botswana (January 2014)
- More to come!
421 January 2014
PwC Africa Desk
5
Other ways the Africa desk may support you
6
One-stopservice
Because of helicopterview, identification ofother cross-country
alternatives
Thought leadership throughAfritax newsletter, One page taxsummaries per African country,
country seminars, etc
Quick responses ongeneral and specific
questions
Proactivelyinform relevantparties on newdevelopments
Doing business in Africa 21 January 2014
The PwC presence in Africa
In Africa…
• Member firms in 31 countries with over7,360 professional staff.
• We have the largest footprint ofprofessional services on the Africancontinent.
• All our African firms are locally-owned.
• Provide a range of professional businessadvisory services to the public andprivate sectors throughout thecontinent.
• Committed to the development andprosperity of the African people andeconomies.
7
Algeria
Tunisia
Egypt
Sudan
SouthSudan
Mauritania
WesternSahara
Niger
Chad
Ethiopia
Kenya
DemocraticRepublicof Congo
Nigeria
Ben
in
Togo
Gha
na
CôteD’Ivoire
Liberia
Sierra Leone
Guinea
SenegalGambia
Guinea Bissau
Equatorial GuineaGabon
Angola
Zambia
Ma
law
i
Namibia
Botswana
SouthAfrica
Lesotho
Swaziland
Mauritius
Comores
Seychelles
Mayotte
Cape Verde
PwC member Firms
Mali
Rwanda
Burundi
Tanzania
Libya
For services in these territories
please contact a neighbouring territory
Doing business in Africa 21 January 2014
Doing Business inAfrica: NamibiaPwC Namibia21 January 2014
www.pwc.com/na
Contents
Doing business in Africa: Namibia9
21 January 2014
3. Country context
4. Business vehicle
4.1 Type of entities
4.2 Company vs branch
5. Legal and Labour
5.1. Legal system at a glance
5.2. Labour
6. Tax Framework
6.1 Tax Overview
6.2 Tax Incentives
6.3 Structuring
7. Key Issues
8. Contacts
Country Context
Slide 10
Country Context
Country contextPolitical
• Namibia has strong democratic foundations;
• SWAPO, ruling since independence in 1990, still dominating thepolitical environment;
• SWAPO is expected to maintain power and majority in the upcominggeneral election scheduled for later this year;
• It will be the 5th free and fair election
• The President, who is elected by direct popular vote for a term of fiveyears and can be re-elected for a second term of office;
• His Excellency Hifikepunye Pohamba, current president of Namibiawill finish his second term in 2015;
• Namibia enjoys a stable political environment.
Doing business in Africa: Namibia12
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Country contextSocio-economical
• Namibia is the world's 34th largest country at 825,615 km2 with apopulation of approx. 2.2 million and GDP of R104bn in 2012/13.
• Namibia falls within upper-middle-income economies for incomeper capita.
• Some social tension with increasing gap between rich and the poor.
• Employment is biggest challenge for Government.
• Average inflation rate for 2012 was 6.5% compared to the 5.0%recorded in 2011;
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Country contextSocio-economical
• Exports mainly mining - diamonds and uranium.
• Key trading partners - European Union and South Africa;
• Policy framework for national development - “Vision 2030”.
• Capital city, Windhoek - clean, loved by expats but ranked as the150th most expensive city in world.
• Growth in coastal town – mining and Walvis Bay Port
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Business Vehicle
4.1. Types of Entities
4.2. Company vs Branch
Public or Private Company
Branch of a Foreign Company
Close Corporation
Partnership, including joint venture
Sole proprietor
Business Trust
Business vehicles
Business may beconducted in Namibiain a variety of forms,as follows:
Doing business in Africa: Namibia16
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Business vehiclesBusiness entities incorporation
Doing business in Africa: Namibia17
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Registrar of Companies
Inland Revenue - income, consumption, withholding and employeetaxes.
The Social Security Commission as employer as well as for Employee’sCompensation where applicable
Appropriate governing body for the trade or industry in which thebusiness operates;
Local municipal health department for the appropriate registrationcertificate
Business Vehicles
4.1. Types of Entities
4.2. Company vs Branch
Business vehiclesCompany vs branch
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Item Distinction factor Company Branch
1 Legal personality Yes That of the parentcompany
2 Tax personality Yes Yes
3 Liability Limited toshareholding
Limited toshareholding
4 No. of Shareholders 1 – 50 1 – 50
5 Incorporation/Registration costs
Lower Higher
6 Stakeholder’sperception
Long-termpresence
Short-termpresence
Business vehiclesCompany vs branch
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Item Distinction factor Company Branch
7 Audited Accounts Mandatory Mandatory (Separatetax calculation)
8 Taxation of dividends 10% or 20%WHT onDividends declared
Possible DTA relieffrom WHT
9 Liquidation/closure Complex Complex
10 Annual duty (min.N$80, N$4 per 10 000shares or part thereof)
Based on local sharecapital
Based on foreigncompany share capital
11 Shareholders /Directors n/a All foreignshareholders anddirectors must beshareholders ordirectors of branch
Legal and Labour
5.1. Legal System at a glance
5.2. Labour
Legal and LabourLegal system at a glance
• Namibian law is rooted in South African legislation and legalprinciples;
• Judiciary operates with total independence;
• The government is committed to a free market economic system, topromote private sector development.
• No Electronic Communications Act
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Legal and Labour
5.1. Legal System at a glance
5.2. Labour
Legal and LabourLabour
Investor Considerations
• Abundant supply of unskilled labour.
• Shortage of skilled labour.
• Compulsory social security costs include workers’ compensation,maternity leave, sick leave and death benefits.
• Employment equity legislation in force.
• Vocational and Education Training(Skills) levy is proposed.
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Legal and LabourLabour
Immigration documents applicable to foreign employees:
• Business Visa valid up to 3 months (non-productive)
• Work Visa valid up to 3 months (productive)
• Work Permit for periods more then 3 months
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LabourRemuneration trend Analysis @ TGP Namibia vs SA
Doing business in Africa: Namibia26
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0
200000
400000
600000
800000
1000000
1200000
1400000
1600000
1800000
2000000
E4 E3 E2 E1 D5 D4 D3 D2 D1 C5 C4 C3 C2 C1 B5 B4 B3 B2 B1 A3 A2 A1
Namibia National Median
South Africa National Median
Expon. (Namibia National Median)
Expon. (South Africa NationalMedian)
LabourRemuneration Trend Analysis @ TGP Mining - Namibia vsSA
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0
200000
400000
600000
800000
1000000
1200000
1400000
1600000
D5 D4 D3 D2 D1 C5 C4 C3 C2 C1 B5 B4 B3 B2 B1 A1
Namibia Mining Median
South African Mining Median
Expon. (Namibia Mining Median)
Expon. (South African MiningMedian)
Tax Framework
6.1 Tax Overview
6.2 Tax Incentives
6.3 Structuring
Tax frameworkOverview
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Tax Rate
Corporate Income Tax Non-Mining Companies: 33%Mining (not diamonds) Companies: 37,5%Diamond mining companies: 55%Petroleum companies: 35%Long-term Insurers: 13,2%
Dividends 20% withholding tax ( less than 25%)10% withholding tax (more than 25%)
Capital Gains None
Individual Income Tax 18% - 37%
VAT 15% (Import VAT 16,5%)
Property Transfer Tax 0% - 12%
Social Security 0,9% (employee)0,9% (employer)
Tax frameworkOverview
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Tax Rate
Stamp Duties 0,2% - 1,2%
Mining royalties 2% - 5%
Transfer Pricing Acknowledge OECD Guidelines
Other Customs Duties, Excise Duties and Municipal duties
Tax frameworkProposed amendments
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Tax Amendment
VAT threshold Expected to increase from N$500 000 to N$1 000 000
Voluntary VAT registration Deregistered if threshold not exceeded within first 2 years
Import VAT registration Criteria prescribed by Commission for new and currentregistrations
Export levy on raw minerals 0-2%
Environmental levies Tyres, light bulbs, carbon emission
Transfer duty Property holding companies/Cc’s
Training levy 1-1.5% of payroll
Tax frameworkTax overview
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Link toThe Namibia Tax Rate and Reference Card:
http://www.pwc.com/na/en/namibia-tax-rate-card/index.jhtml
Reference & Rate CardOctober 2013
Namibia Tax
www.pwc.com/na
Tax frameworkTax overview
Ease of paying taxes
Doing business in Africa: Namibia33
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314 3421,8
Total TaxRate (%)
Number ofpayments
Time(hours)
Tax Framework
6.1 Tax Overview
6.2 Tax Incentives
6.3 Structuring
Tax frameworkTax incentives
• Registered Manufacturers
• Export Processing Zone (EPZ entities)
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Tax Framework
6.1 Tax Overview
6.2 Tax Incentives
6.3 Structuring Considerations
Tax frameworkStructuring considerations
Doing business in Africa: Namibia37
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Whichholding
location tochoose?
Exitstrategy
Repatriationof Funds
(incl Forex)
Tax frameworkStructuring considerations
Doing business in Africa: Namibia38
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Namibia concluded DTA’s with:
Botswana South Africa
Malaysia Sweden
Mauritius United Kingdom
Romania Germany
Russia India
France
Tax frameworkStructuring considerations
Doing business in Africa: Namibia39
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RecipientWHT (%)
Interest Royalties Technical fees Directors fees
Non-treaty 10* 10.2 25 25
Treaty:
Botswana 10 10 15 25
France 10 10 0 25
Germany 0 10 0 25
India 10 10 10 25
Malaysia 10 5 5 25
Mauritius 10 5 0 25
Romania 10 5 0 25
Russian Federation 10 5 0 25
South Africa 10 10 0 25
Sweden 10 5 15 25
United Kingdom N/A 5 0 25
Tax frameworkStructuring considerations
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Withholding tax on Dividends (NRST)
Country - Companyreceiving dividend % Shareholding NRST %Botswana N/A 10%France <10% 15%
>10% 5%Germany <10% 15%
>10% 10%India N/A 10%Mauritius <25% 10%
>25% 5%
Romania N/A10% - 15% depending onshareholding
Russian Federation
<25% or>25% and have directly invested lessthan USD100,000 in the equity capitalof the company paying the dividend 10%
>25% and have directly investedUSD100,000 or more in the equitycapital of the company paying thedividend
5%
Tax frameworkStructuring considerations
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Withholding tax on Dividends (NRST)
Country - Companyreceiving dividend % Shareholding NRST %South Africa <25% 15%
>25% 5%Sweden <10% 15%
>10% 5%
United Kingdom <50%15% (1-24% interest)10% (25%- 49%)
>50% 5%Malaysia <25% 10%
>25% 5%
Tax frameworkStructuring considerations
• Create a gateway through SA for holdingAfrican activities, amongst whichNamibia.
• Benefits of SA head quarter company:
• No withholding tax on dividend,interest and royalties to parent
• Participation exemption on dividendincome
• Limited exchange control
• No transfer pricing
• Treaty access
• CGT participation exemption ondisposal of assets
• “Look through” for CFC purposes
• Strict requirements to be met to qualify
Doing business in Africa: Namibia42
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SA HQcompany
AfricanOpco
SA activities
HoldCo
AfricanOpco
NamibianOpco
Key Issues
Key issues
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InlandRevenue’scompliancedrive
Drastic action byInland Revenue.Taxpayers warned onoutstanding returnsand pay arrear taxes.Suspended Import VATaccounts.
Key issues
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non-compliancepenalties andinterest
• N$100 a day for latesubmission of VAT,Import VAT andprovisional tax returns.
• 10% penalty for latepayment
• Interest levied at 20% p.a.• Interest cannot be waived
Key issues
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ASYCUDAandImport VAT
• ASYCUDA records theimport into Namibia
• IR compare Import VATclaims to ASYCUDA recordswhen assessing
• Mismatches may result inunder-declarations
Key issues
Doing business in Africa: Namibia47
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New DTAframework
• Government is in process ofdrafting national modelframework for future DTAagreements andnegotiations;
• All current negotiations havebeen postponed tillframework is final
Key issues
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Employee Taxes:Increased IRfocus
• Penalties and interestcommon with multinationals
• Incorrect tax treatment bycentralised payroll functions
• Manual system –reconciliations of PAYEcertificates
Key issues
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25% WithholdingTax on Services(consulting,technical andadmin fees)
• Currently DTA reliefapplied;
• IR has not confirmed DTArelief;
• Proposed decreased rate 15%
• Certificates
Key issues
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New TransferDuties Act
Proposed to levy transfer Dutyon member’s interest andshares in companies holdingimmovable property.
Key issues
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New skill levy in2014
• Applicable for annualpayroll over N$350,000
• 1,5% levy on total payroll
• Submitted by 20th of nextmonth
Business and investment guide
Follow the link toNamibian Business andInvestment Guide:
http://www.pwc.com/na/en/publications/business-and-investment-guide-for-
namibia.jhtml
Doing business in Africa: Namibia52
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Contacts
PwC Namibia tax practice
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Largest taxpractice inNamibia Team of 50
Specialistteams Cross
Industries
PwC Namibia tax practice
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VAT
Customs& Excise
TransferPricing
Training
PwCNamibia
Tax
CorporateTaxes
EmployeeTaxes
CompanySecretarial
Trusts &Estates
Contacts
Stefan Hugo
Country Tax Leader
Office: +264 61 284 1102
Email: [email protected]
Johan Nel
Associate Director: Corporate Tax
Office: +264 61 284 1122
Email: [email protected]
Photo
Chantell Husselmann
Indirect Tax Director
Office: +264 61 284 1327
Email: [email protected]
Nelson Lucas
Associate Director: Indirect Tax
Office: +264 61 284 1203
Email: [email protected]
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Slide 57
This publication has been prepared for general guidance on matters of interest only, and does not constituteprofessional advice. You should not act upon the information contained in this publication without obtainingspecific professional advice. No representation or warranty (express or implied) is given as to the accuracy orcompleteness of the information contained in this publication, and, to the extent permitted by law, [insert legalname of the PwC firm], its members, employees and agents do not accept or assume any liability, responsibilityor duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on theinformation contained in this publication or for any decision based on it.
© 2012 PricewaterhouseCoopers Inc. All rights reserved. In this document, “PwC” refers toPricewaterhouseCoopers Inc. which is a member firm of PricewaterhouseCoopers International Limited, eachmember firm of which is a separate legal entity.
This publication has been prepared for general guidance on matters of interest only, and does not constituteprofessional advice. You should not act upon the information contained in this publication without obtaining specificprofessional advice. No representation or warranty (express or implied) is given as to the accuracy or completenessof the information contained in this publication, and, to the extent permitted by law, PwC, its members, employeesand agents do not accept or assume any liability, responsibility or duty of care for any consequences of you oranyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decisionbased on it.
© 2013 PricewaterhouseCoopers (“PwC”), the Namibian firm. All rights reserved. In this document, “PwC” refers toPricewaterhouseCoopers 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.
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