By: Angie Scholtz
The Ministry of Finance and Public Enterprises has announced that employers will have to reimburse employees as soon as the new statutory tax rates are gazetted. According to a statement issued by the Ministry of Finance, the tax rates, which became effective on 1st of march 2024, are to ensure that total amount of employee’s tax deducted for the 2024/25 year assessment is equal to there amount of employees’ tax as per paragraph 12A of schedule 2 of the income Tax Act of 1981.
“Any over deduction of PAYE arising as a result of the implementation of adjusted statutory tax rates, must be reimbursed by the employer to the employees soon after the new statutory tax rates are gazetted. The employer will deduct the reimbursed PAYE from the monthly emplyee’s tax amount to be paid to Namibia revenue Agency (NamRA).
Local economist Robert McGregor explained that this would provide consumers with additional relief above the 25 basis repo rate reduction seen last month.
“The long-anticipated amendments to the income tax Act specifically those relating to the personal income tax brackets will provide some relief for salaried workers. While the precise mechanics of how and when these amendments will affect salaries is different for each employer or employee, the overall benefit to the economy in our view is beneficial,” said McGregor.
Future Media Director Stefan Hugo explains the impact of the new rates rates on businesses, saying employers would have to make the adjustments in the payroll systems, recalculate the Pay As You Earn that employees should pay for the whole tax year. “So there might be a refund amount because of the backdating to the 1st March, but that could obviously only be reflected in the payments to employees once the payrolls have been updated. It’s obviously quite an administrative process for that to happen, so the expectation from employees should be that it could take a month or two before employers are in a position to actually process these credits on the payrolls”.
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