- Stable, democratically elected government
- Developed infrastructure
- Efficient transport system
- Efficient communication system, including cellular networks
- Sophisticated financial sector
- Moderate Inflation rate
- Relatively stable exchange rate, linked to RSA Rand
- Rich diversity of fauna and flora
Not only does Namibia enjoy one of Africa’s most peaceful and politically stable environments, but also has the infrastructure to rival those of many developed countries. What makes it more attractive is it’s natural and diverse landscapes, moderate temperature and the fact that it is one of the most sparsely populated countries in the world, with an estimate population of 2,2 million people.
With Namibia being one of the most beautiful and safest countries in Africa to visit, tourism is also a rapidly growing sector, and is becoming a major earner of foreign exchange while creating jobs and generating income for the nation.
No wonder that so many foreigners fall in love with Namibia after their first visit to the country and then want to know how to invest in Namibia and obtain Foreign Investment Status.
REAL ESTATE INVESTORS / FOREIGN PROPERTY OWNERS
While the rest of the world shudders at the potential impact of the US housing loan crisis, rising inflation and financial crisis in Europe, Namibia continues to grow. In recent years Namibia has indeed become a new international property hot spot with new developments and ambitious construction projects (both tourism and housing) springing up from the previously barren desert.
Article 16 (1) of the Namibian Constitution guarantees all persons the right to acquire, own and dispose of all forms of property in any part of Namibia.
Our laws prohibit the selling or letting of immovable property to illegal immigrants.
“Foreign national” does not mean a person is an illegal immigrant; it is the term we use to describe a person who is neither a Namibian citizen, nor a holder of a resident status/permit.
Without proof of a resident permit you really have no way to know whether such a person is really permitted by the authorities to reside here. From a conveyancing perspective, once legally allowed to be in the country and official permits provide proof thereof, foreign residents and citizens of Namibia are generally regarded as having equal status when it comes to the purchase and possession of land/real estate with the important exception of agricultural land.
The Agricultural Land Reform Act prohibits foreign nationals to enter into any agreement regarding the right to occupy or possess agricultural land or a portion thereof in Namibia, without the written permission and consent of the Minister.
To date no further restrictions are being placed on the acquisition of landownership by foreigners. As long as a foreigner did not enter Namibia illegally, and his/her permit does not prohibit the acquisition of immovable property, he/she may certainly buy, own and sell real estate in Namibia.
Capital Gains Tax, Donations Tax and estate Duty
As yet, Namibia does not have Capital Gains Tax, Donations Tax or Estate Duty. Property acquired and subsequently sold / bequeathed / donated will not be subject to any of these taxes.
Building Allowance on acquisition of property
The acquirer of property that is used for trade (rental is a trade) may claim as a tax deduction:
- Initial Allowance – 20% on original cost price in year in which it is brought into use
- Annual Allowance – 4% per annum for 20 years on original cost price
Annual Income Tax
If property is held by incorporated entity – CC / Pty – the annual taxable income from trade will be subject to 32% income tax.
Profits made on rental of Property held by individuals / trusts will be subject to income tax applicable to individuals – 0- 50 000 tax free.
Registration as tax payer
Foreigners that own Property and trade with it (i.e. rental income) will have to register for income tax in Namibia as Namibia taxes on the source principle i.e. the source of rental income will be the place where the property is situated.
Rental income earned on Property that is held by a foreign incorporated entity will also be subject to tax in Namibia and the foreign entity will have to register in Namibia for tax purposes.
Investments and transfers of funds from SA to other CMA (RSA, Lesotho, Namibia & Swaziland) countries do not require approval of Exchange Control but may require approval of the host country.
Settlements by residents of Namibia with the non-resident area may be made to and from a non-resident account and in foreign currency. (CFC account)
Exchange control regulations prescribe procedures that must be followed for making payments for imports, freight and other services, interest on foreign loans, dividend transfers etc. Payments are unrestricted on presentation of the prescribed supporting documentation to an authorised dealer in foreign exchange.
Direct investment in Namibia by a foreign Investor, including the establishment of new subsidiaries and branches, the acquisition of controlling or non-controlling interests in existing Namibian companies, and the increase of capital funds of existing local subsidiaries and associates, may be provided by way of equity or loan capital, or a combination of the two. Exchange control permission is not required for the inward transfer of equity capital but permission is required for loan funds. – Ratio 3:1
Remittance of dividends
Can be made freely without prior approval except by concerns owned 75% / more by non-residents who have availed themselves of local borrowing facilities. In these cases prior approval must be obtained before remittance. Evidence that distributions have accrued as a result of trading or from income on investment must be produced – normally an auditor’s certificate.
Withholding tax on dividends must be deducted before remittances are made.
Restrictions on local financial assistance where there is foreign ownership
Where 75% / more of a Namibian company’s capital / earnings is controlled directly / indirectly by non- residents, such a company may borrow locally up to an agreed percentage of its effective capital.
Effective capital consists of share capital, reserves and loans from shareholders as specifically approved by Exchange Control.
Regulation of business
Freedom to conduct business in Namibia. Foreign individuals must obtain residence and work or investor permit . Companies and branches of foreign companies must register with Registrar of Companies (BIPA).
Anyone can set up a business, except in occupations and professions requiring special qualifications, which are governed by regulatory bodies. Specific lines of business, e.g. the banking, insurance, pharmaceutical and food industries are regulated by separate legislation or regulations.
- Public / Private Company
- Branch of a foreign company
- Close Corporation
- Partnership including a joint venture
- Sole Proprietor
- Business Trust
- Employee Compensation Fund
- Appropriate industrial council governing trade / industry
- NamRA – Tax , VAT etc
- NamRA as employer
- Social Security