Any person conducting a taxable activity in Namibia with a turnover or anticipated turnover of N$ 500,000 or more per annum must register for VAT purposes. The term taxable activity is widely defined in the VAT Act and includes non-profitable and even charitable organizations; but also provides for a number of entities which are exempt and do not need to register.

The registration process consists of the completion of the relevant form, confirmation of banking details by the taxpayer’s bank and inclusion of a municipal clearance certificate, indication of expected turnover for twelve months, proof of registration at BIPA for legal entities.

Registration becomes effective on the first day of the second month after date of registration by Inland Revenue.

The registration process for VAT takes an average of seven days, by which date the applicant should have received a written notification from Inland Revenue stating the effective date of the registration and the due date by when the first return must be submitted by the taxpayer and also the frequency of returns. VAT registration numbers end with the digits 015.

VAT returns need to be submitted on a bi-monthly basis by the 25th of the month following, however the first period may be for a period of three months, depending to which Category Inland Revenue has allocated the application.

VAT may not be claimed back on any capital acquisitions or imports done by the taxpayer at a date earlier than the effective date; and VAT paid on the acquisition of trading stock may only be claimed if the goods were physically on hand at the effective date of registration and have been acquired in the 4 months immediately prior to such effective date.

The duration of this process (ie. business start-up and registration, issuing of the relevant Income Tax number and finally VAT registration) poses a significant hurdle for new business entrants, as the entire process could take up to two months or longer. Since the taxpayer would want to claim the VAT paid on start-up items (eg. equipment, machinery, tools, etc.), he will only be able to acquire such items once the effective date of the VAT registration has passed. PKF FCS has a number of solutions to help speed up these processes and we can assist our clients to reduce the timespan.

Failure to register for VAT purposes in terms of the Act attracts significant penal measures and should not be underestimated.