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Income tax amendments abolish EPZ regime and remove manufacturing incentives

Income tax amendments abolish EPZ regime and remove manufacturing incentives

Following proposed amendments to the Income Tax Act, Team Namibia this week expressed its concern over the country’s appeal for foreign investors, saying that these legislative changes will result in manufacturers being assessed at a tax rate of 32% like all other companies. Coupled with the phasing out of Economic Processing Zones, it will effectively abolished incentives for investors in manufacturing.

Team Namibia’s Account Director, Bärbel Kirchner commented, “It is such a pity that this now indeed has happened. Our members had hoped that considering the current economic environment that this drastic measures would not have taken place, and that one would have engaged in further consultation. Extensive investments and expansion took place in the past due to manufacturing status businesses had, and related incentives.”

“Team Namibia is totally in support of the manufacturing sector. We need more local produce and manufactured products for our sustainable economic development and most importantly, job creation and the reduction of poverty.”

The Ministry of Finance argued that these changes needed to be made, partially to avoid black-listing by the EU countries, and partially because manufacturing incentives and the EPZ regime brought very little benefit to the Namibian economy.

“We hope that the authorities continue to engage [the private sector] before the actual expiry date of the incentives. At the very least, it would be critical to look at best options to make good for the loss of incentives.”

Team Namibia suggested that viable alternatives could be to look at performance-based incentives that however would still contribute to a reduction of start-up as well as operational costs.

“It might be necessary to conduct some research and look at the correlation of various incentives and the different effects on the performance of businesses in the sector. A comparative study of “peer countries” would also help to identify which incentives would secure the best return-of-investments, and optimally contribute to the growth of the manufacturing sector and the economy at large,” stated Kirchner.


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