Namibia shifts to ‘Earned Incentives’ for investors
Ogone Tlhage
Investors will no longer automatically qualify for incentives under the envisaged Namibia Investment Promotion Act. Instead, they will be required to adhere to a strict, targeted, performance-based model.
Strict vetting process
Under the new regime, the government is tightening the vetting process. Investors will be required to provide comprehensive documentation to prove their credibility and financial standing. This includes submitting investor income statements, tax clearance certificates, and proof of sufficient funds to execute the proposed investment.
The ‘Earned Incentives’ model At the heart of the new framework is the concept of “earned incentives.” Instead of receiving benefits automatically, investors must enter into a formal Performance Agreement with the government. This agreement establishes key performance indicators (KPIs) that must be met to maintain eligibility.
Should a qualifying investor fail to meet these standards—which may include targets for Namibian employment, local value addition, and foreign currency generation—their incentives certificate may expire, and benefits will cease. However, the system allows for appeals or renegotiations if external, uncontrollable circumstances impact performance.
Fiscal and non-fiscal benefits
The Act outlines a specific list of fiscal and non-fiscal benefits designed to spur economic activity.
Fiscal incentives for qualifying entities include Reduced corporate income tax rates, Zero-rated value added tax (VAT) on input supplies, VAT exemptions on imported raw materials for products intended exclusively for export markets and customs duty rebates and exemptions for specified sectors, in line with the Southern African Customs Union (SACU) agreement.
Non-fiscal benefits focus on business facilitation, including “One-Stop-Shop” services to streamline regulations, favorable employment and residence permit conditions for investors and their key staff, market share promotion schemes in selected agriculture subsectors, infant industry protection and “Authorised Economic Operator” status.
Existing investors will have a transition period of 12 to 18 months to register under the new regime once the law comes into force.
Investors will no longer automatically qualify for incentives under the envisaged Namibia Investment Promotion Act. Instead, they will be required to adhere to a strict, targeted, performance-based model.
Strict vetting process
Under the new regime, the government is tightening the vetting process. Investors will be required to provide comprehensive documentation to prove their credibility and financial standing. This includes submitting investor income statements, tax clearance certificates, and proof of sufficient funds to execute the proposed investment.
The ‘Earned Incentives’ model At the heart of the new framework is the concept of “earned incentives.” Instead of receiving benefits automatically, investors must enter into a formal Performance Agreement with the government. This agreement establishes key performance indicators (KPIs) that must be met to maintain eligibility.
Should a qualifying investor fail to meet these standards—which may include targets for Namibian employment, local value addition, and foreign currency generation—their incentives certificate may expire, and benefits will cease. However, the system allows for appeals or renegotiations if external, uncontrollable circumstances impact performance.
Fiscal and non-fiscal benefits
The Act outlines a specific list of fiscal and non-fiscal benefits designed to spur economic activity.
Fiscal incentives for qualifying entities include Reduced corporate income tax rates, Zero-rated value added tax (VAT) on input supplies, VAT exemptions on imported raw materials for products intended exclusively for export markets and customs duty rebates and exemptions for specified sectors, in line with the Southern African Customs Union (SACU) agreement.
Non-fiscal benefits focus on business facilitation, including “One-Stop-Shop” services to streamline regulations, favorable employment and residence permit conditions for investors and their key staff, market share promotion schemes in selected agriculture subsectors, infant industry protection and “Authorised Economic Operator” status.
Existing investors will have a transition period of 12 to 18 months to register under the new regime once the law comes into force.
