Compliance and Levies
Registrations, Compliance and Levies
The documentation discussed in the previous topic are all obtained from various government agencies, each with their own set of rules and processes. In this section, we will discuss the various requirements, levies and routine filing bidders need to adhere to in order to remain compliant.
1. Business Registration, Agency- BIPA
Business registration is a once-off exercise. Besides a yearly levy of N$120 for CCs and N$160 for PTY (depending on the share structure, there are no other requirements to keep registration active. The document is always submitted as a certified copy.
Levies: N$120 for Close Corporation, view levies for PTYs by visiting the BIPA website: https://www.bipa.na/business-registration/application-fees/
BIPA has since January 2021 started issuing two (2) types of Good Standing Certificates:
- Confirmation of Registration Certificate. This certificate validates the existence of the entity as well as that the entity is in good standing with BIPA in as far as it relates to the payment of annual duties.
- Certificate of Existence with status in Good Standing. This certificate validates the existence of the entity and certifies that all records (statutory and voluntary amendments) are in order and up to date and therefore places the entity in Good Standing with BIPA.
Business Registration Process
Step 1: Register Defensive Name, Cost: N$75
Procedure to register a Defensive Name
Step 1: A Defensive Name is the first step towards registering your business, and is registered at BIPA for the purposes of protecting such a name where the defender holds a material interest in such a name.
The Name can be defended for an initial period of 2 years and may be renewed for an additional 2 years only. Subsequently, the applicant may choose to register a close corporation or a company or cease to defend the name, in which case it becomes available to any other person. A defensive name by law should not be used for trading purposes.
To apply for a Defensive name, submit the application for ‘A Reservation of a Defensive Name’ (CM5) or apply online on the BIPA Website.
Step 2: Close Corporation
- On approval of name reservation, submit a Founding Statement, form CC1. This requires the submission of the following documents:
- Copy of the approved form for name reservation
- Founding statement in triplicate, Levy: N$150
- Consent letter from the accounting officer, Cost: N$250-N$500
- Certified Copy of passport in case of a foreigner
Consultants charge from N$850-N$1500 for basic registration (cost includes accountant letter) and N$2000-N$2500 for registration and additional documentation such as tax, SSC, SME Certificate, etc.
Step 2: Private Companies
Public Companies, Private Companies and NGOs require Memorandum and Articles of Association that need to be certified by a Notary Public who is a member of the legal profession. Therefore applicants applying for any of the business entities are encouraged to use the services of legal practitioners. The cost involve depends from legal practitioner to legal practitioner or consultant used, which can cost between N$5000-N$10000.
Defensive Names (CM5, CM8, and CM8A) are available at all offices of the Ministry of Industrialisation, Trade and SME Development (MITSMED) country-wide and at the Namibia Chambers of Commerce and Industry (NCCI) and its branches at no cost.
This requires the submission of the following documents:
- Memorandum and article of Association in triplicate of forms CM3, CM4, CM44B and CM44C.
- Copy of approved name on CM5
- Notice of postal and registered address on CM22
- List of Directors, Auditors and public Officers on CM29
- Appointment of an Auditor on CM31
- Application of Certificate of Registration of memorandum of External Company CM46
- Request for submission of additional Copies on CM51.
For detailed fees related to the registration of private companies visit the BIPA website: https://www.bipa.na/business-registration/application-fees/
2. Good standing certificate social security
A once off registration as an employer with Social Security commission is required in order to receive a good standing certificate. Good standing means you have filed all your returns and have paid all contributions over to SSC.
The registration process is free of charge.
Registration Process
After a company registers as an employer, the company can register its employees, the applicable registration forms can be found on the SSC website at https://www.ssc.org.na/. The registration process can be completed within a day and a certificate as an employer is issued on the spot.
The number of registered employees reflects on the good standing certificate. It is therefore important that the staff complement part of your company profile coincide with the number of employees indicated on the good standing certificate.
Application for Goodstanding Certificate with SSC
The application process takes up to 5 working days, a simple application form requiring the bidders’ details and information about the tender they wish to apply for is completed. If the bidder is in good standing the certificate will be issued within 3-5 working days(please note that the waiting period may vary from office to office and from period to period).
Routine filing and levies/payments
Social Security manages 2 Funds, the Maternity, Sick and Death Fund (MSD) collecting contributions of 1.8% of Basic salary. Employer 50% contributes of the 1.8% and the Employee 50%, the employer should deduct the employees’ contribution from the basic salary. The contributions should be paid over every month in order to remain in good standing with the commission.
The second fund is the Employee, Compensation Fund (ECF) which covers employees’ injury on duty: Social Insurance for Medical Expenses, Transport to Medical facilities, Temporary and Permanent Disability, Pension and Burial expenses. This fund only cover employees earning less than N$81 300pa and it is a once off yearly contribution. The return is submitted once a year at the end of the period covering 1st March to 28 February. An assessment is then made and a statement of the amount due for payment is submitted to the employer for payment.
So as a bidder in order to remain in good standing with social security commission see to it that your monthly MSD contributions are up-to-date and your annual wage return is submitted and your ECF assessment is paid.
For more information visit SSC website: https://www.ssc.org.na/
Validity of a good standing certificate with Social Security Commission
This document is generally submitted as an original document. The typical procedure is to apply for a good standing certificate every time you intend to submit a bid. The application requires that you specify the Bid Number or the reason you require the document, this will then reflect on the certificate.
Staying is good standing with SSC is not only good for the company but for its employees too as no claims can be processed if the employer is not in good standing with the commission. It is also illegal to collect employee contributions and failing to hand them over to the commission.
3. A good standing certificate with Namibia Revenue Agency
A Good Standing Certificate is issued by NamRa to confirm that a taxpayer is compliant with the Namibian tax laws in terms of submission of tax returns and payment of taxes.
This means that the bidder has should have been registered as a tax payer (this is normally done automatically within a year after the registration with BIPA or an application is logged with Inland Revenue), filed their returns, and have settled all their tax bills.
A Certificate of Good Standing can be used for amongst others:
1. Application for a Government or any other Tender;
2. Application for a work permit by a non-resident;
3. Renewal of certain trading licenses;
4. Registration as a Small and Medium Enterprise (SME); and
5. Any other purpose prescribed by the Ministry of Finance or any other Organization.
A Good Standing Certificate is issued free of charge and is valid for a period of Four (4) months from the date of issue.
Procedures for obtaining a Certificate of Good Standing:
- Apply by completing an easy form and submitting it to any office of NamRA;
- An official will check the status of your tax account (s) and advise if all the records are up to date;
- If your tax affairs are up to date, then a certificate will be issued to you on the same day; and
- If there are outstanding balances or returns, you will be asked to sort them out before a certificate is issued to you.
How do you ensure compliance with the Department of Inland Revenue?
- Submission of Returns
- Payment of Taxes
The type of taxes that companies pay in Namibia
♦ Income Tax
TAXATION OF BUSINESS INCOME
For tax purposes, all income earned from any business activities carried out in Namibia is taxable. This income is regarded as ordinary income for tax purposes.
“If you are conducting any business in Namibia, being in a formal or informal set up, know that the income you receive is subject to tax.”
♦ Employee Tax
An employer is required to deduct tax from the salary of an employee in accordance with the tax rates and pay over such an amount to Inland Revenue Department.
An employer should issue an employee with a tax certificate (PAYE 5 certificate) indicating the total remuneration and the amount of employees’ tax deducted. The certificate should be delivered:
1) Within 30 days after end of February, if the employer has not ceased to be an employer to such an employee;
2) Within 14 days if the employer has ceased to be an employer in relation to such an employee; and
3) Within 7 days if the employer has ceased to be an employer.
♦ Value Added Tax (VAT)
VAT is levied at the standard rate of 15% on the supply of most goods and services and on the importation of goods.
It is mandatory for a person who carries on a business with an annual taxable turnover above N$500,000 to apply for VAT registration.
A person may choose to register for VAT if the annual taxable turnover does not exceed N$500,000 but exceeds N$200,000 but will not be registered if the Commissioner is satisfied that such a person:
1) Has no fixed residence or place of business;
2) Does not keep proper accounting records;
3) Has previously been registered but failed to comply with the Act; and
4) Has failed to comply with the Income Tax Act.
“Every registered person who is liable for the payment of value added tax is required to maintain accounting records in the English language at the place of business in Namibia”
Administrative Requirements for VAT registration
An application for VAT registration should be accompanied by:
1. Proof of Banking Details
2. Fitness Certificate
3. Founding Statement
4. Indication of expected turn over for 12 months.
“A registered person must submit a VAT return on or before 25th day of the month following the end of the period”
♦ Value Added Tax Import Account
As per Value Added Tax amendment Act 12 of 2015, Section 1 states:
(a) by the substitution for subsection (1) of the following subsection:
“(1) Where tax is payable on an import of goods –
(a) in the case of goods required to be entered for home consumption in terms of the Customs and Excise Act, the importer shall, upon such entry, furnish the Commissioner with an import declaration and pay the tax due in respect of that import in accordance with subsection (5) or any arrangements on terms as prescribed by the Commissioner by notice made there under; or
(b) in the case of goods imported from Botswana, Lesotho, South Africa or Swaziland, the importer shall, upon such import, furnish the Commissioner with an import declaration and pay the tax due in respect of that import in accordance with [that] subsection (5) or [the said] arrangements made under that subsection; or
(c) in the case where goods, in circumstance contemplated in paragraph (a) or (b) are imported on a VAT import account arranged on condition that security may be requested before the importation of goods on such account and on such additional conditions as may be prescribed by the Commissioner by notice for the granting or refusal of such account as contemplated in subsection (5)(a)(ii)(aa) or (bb), the importer shall, not later than the twentieth day of the month following the month of import, pay the tax due in respect of the import of those goods: Provided that where during any particular month no goods were imported on a VAT import account, the importer shall, not later than the twentieth day of the month following that month, furnish the Commissioner with an import declaration reflecting that no goods were imported during that month; or
(d) in any other case, the importer shall, at the time of the import, furnish the Commissioner with an import declaration and pay the tax due in respect of that import in accordance with subsection (5)(a)(i).”;
♦ VAT Import on Services
VAT is payable on any imported service by the person importing the service into Namibia after 27 November 2000.
An imported service is a supply of a service by a non-resident person to a non-registered Namibian resident, or one who makes exempt supplies. If a registered person imports a service to make taxable supplies, this is regarded as an exempt import.
A service is imported into Namibia the earlier of:
• An invoice being issued by the service provider; or
• At the time of any payment made to the service provider.
The amount paid to the service provider must be used to calculate the VAT payable on the imported service. The standard rate of 15% must be applied to determine the amount payable.
WITHHOLDING TAX
♦ Withholding Tax on Interest
A person who pays interest to a non-resident is required to withhold tax at a rate of 10% and pay it over to Inland Revenue Department.
The Interest to non-residents is deemed to be paid on the earlier of the actual payment or the date the interest becomes payable.
“Due Date for payment of Withholding tax on interest and submission of tax return is within 20 days after the end of the month during which the amount was withheld”
Penalties and Interest
A penalty of 10% and interest of 20% of the amount of withholding tax will be levied on the late payment of tax for each month or part of the month. The penalty and interest are limited to the amount of unpaid tax.
♦ Withholding Tax on Services
A resident person liable for the payment of management fee, consultancy fee, entertainment fee etc. to a non-resident is required to withhold tax at a rate of 10%.
♦ Withholding Tax on Royalties
A person who pays an amount for the use of any patent, trade mark, and motion picture film including the right to use industrial, commercial or scientific equipment to a person not being ordinarily resident in Namibia is required to withhold tax on royalties at a rate of 10%.
♦ Non Resident Shareholders Tax (NRST)
NRST is paid on dividends declared by a company to a shareholder who is not a Namibian resident. The tax is payable by the company declaring the dividend or the agent in Namibia who is receiving the dividend on behalf of a non-resident.
NRST rate is 10% if the beneficial shareholding company holds at least 25% of the capital and 20% of the amount in all other cases.
Due Date for payment of all these taxes and submission of tax return is within 20 days after the end of the month during which the amount was withheld.
Submission of Returns
A return usually accompanies all payments made and it’s done periodically, monthly, bi-monthly, quarterly, or annually. The frequency depends on the type of tax the company is registered for or is expected to pay. The submission of returns is mandatory such that even if a company has no income or has seized operations for a period of time, returns, usually referred to as “zero returns should still be submitted to the receiver of revenue.
Since the establishment of the Integrated Tax Administration System (ITAS) all returns should be filed online and payments should be paid via bank transfer or deposit. To read more on the new filing system visit https://www.itas.mof.na/
Good standing certificates are valid for 4 months and are submitted as original.
4. A valid affirmative action compliance certificate or proof that a supplier is not a relevant supplier as per the act.
The affirmative Equity Commissioner is the agency responsible for issuing of the Affirmative Action Compliance Certificate or proof that a supplier is not a relevant employer (meaning the employ less than 25 people.
The Commission was established by act of parliament- Affirmative Action (Employment) Act 29 of 1998
The main purpose is to To achieve equal opportunity in employment in accordance with Article 10 and Article 23 of the Namibian Constitution; to provide for the establishment of the Employment Equity Commission; to redress through appropriate affirmative action plans the conditions of disadvantage in employment experienced by persons in designated groups arising from past discriminatory laws and practices; to institute procedures to contribute towards the elimination of discrimination in employment; and to provide for matters incidental thereto.
What is affirmative action and what does compliance mean?
According to the act “affirmative action” means a set of affirmative action measures designed to ensure that persons in designated groups enjoy equal employment opportunities at all levels of employment and are equitably represented in the workforce of a relevant employer.
(2) Without limiting the generality of the definition in subsection (1), an affirmative action measure referred to in that subsection includes, but is not limited to –
(a) identification and elimination of employment barriers against persons in designated groups;
(b) making reasonable efforts in the workplace to accommodate, physically or otherwise, persons with disabilities; and
(c) instituting positive measures to further the employment opportunities for persons in designated groups, which may include measures such as –
(i) ensuring that existing training programmes contribute to furthering the objects of this Act;
(ii) establishing new training programmes aimed at furthering the objects of this
Act; and
(iii) giving preferential treatment in employment decisions to suitably qualified persons from designated groups to ensure that such persons are equitably represented in the workforce of a relevant employer
According to the act the Designated groups being referred to in the above definition is:
(a) racially disadvantaged persons;
(b) women; and
(c) persons with disabilities.
(2) For the purposes of subsection (1) –
(a) “racially disadvantaged persons” mean all persons who belong to a racial or ethnic group which was or is, directly or indirectly, disadvantaged in the labour field as a consequence of social, economic, or educational imbalances arising out of racially discriminatory laws or practices before the Independence of Namibia; and
(b) “disabilities,” in relation to a person, includes any persistent physical or mental limitation which restricts such person’s preparation for, entry into or participation or advancement in, employment or occupation.
To read more on the act click here
Application Process
To apply for an Affirmative Action Compliance Certificate or proof that the employer is not a relevant employer. A Good standing certificate from social security is submitted with a completed application form (available at the commission’s office). The process for non-relevant employers takes about 3 working days. For relevant employers, a questionnaire is also submitted in addition to the application form and good standing certificate.
Subsequently, a report is compiled by the employer as per the guidelines contained in the Act. This report is evaluated by a committee to establish whether or not the employer is in compliance with the act. This process can take 2 months or more depending on the number of reports under review and the ability of the employer to submit the report in a timely and comprehensive manner.
Validity
The certificate or proof that an employer is not a viable/relevant employer is renewed each year. A certificate of good standing from SSC should always be presented. Relevant employers are expected to submit a report on their activities annually to remain compliant.
The Affirmative action compliance certificate or proof that you are not a relevant employer is valid for a period of one year and should be renewed every year.
Due to the validity of the document, the submission for bidding is always a certified copy.
5. The final requirement stated in the Procurement Act 15 of 2015 and as per the previous topic is the written undertaking as contemplated in section 138(2) of the Labour Act, 2007.
This document is completed on a template issued by the Ministry of Labour, it is typically completed and signed by the bidder for every bid submitted. It is therefore submitted as an original.
As seen of the assignment/quiz you completed there are many more standard documentation and registration required depending on the type of industry, size of business and buyers policies. It is therefore important to inspect each bidding carefully to observe the requirements in advance so that you may have enough time to apply or prepare the documentation. It is also important to speak to businesses in your industry to find out the typical registrations and compliances that are required. This can also be done by inspecting old bidding documents and Evaluation reports.
It is in your favor to be prepared so that you may take advantage of all bidding opportunities that may prevail.