Pitfalls For Expat Employment

The Namibian skills shortage and strong growth in specialist industries in our economy require skilled expatriates to work in Namibia. These are some of the common issues that Namibian expats and their employers will have to deal with.

1. Determining taxability in Namibia

   Namibia's tax system is based on the source principle and not residency. All non-resident individuals, should submit tax returns in respect of Namibian source income. An expatriate may be exempted from paying taxes in Namibia where a Double Tax Agreement was concluded between Namibia and the individual's home country. Careful consideration should be given to the tax implications in both the home country and Namibia. Split remuneration, employee stock options and long-term deferred compensation schemes for expatriates are specific areas that require early planning.

2. Taxing Employment Income

   Any amount, including a voluntary award, received by or accrued to a person in cash or kind, in respect of rendering services or employment , will be considered to be employment income. This includes the value of fringe benefits in respect of such services or employment. Taxation paid on behalf of expatriates (who receive salaries net of taxes) is also considered a fringe benefit and a gross-up calculation should be done to determine the tax on this benefit. Employment income (remuneration) thus includes salaries, wages, leave pay, overtime, bonuses, allowances, commissions...