The VAT Act contains several prescribed methods on treating VAT, accounting for VAT and declaring VAT. Considering the fast pace at which business is conducted daily, here are some useful tips on ensuring your business maintains momentum while being on the right side of the Act.
10 Important Principles
1. VAT registered entities collect VAT (output tax) on behalf of Government – please make sure that you pay it over on time, otherwise penalties and interest will be charged.
2. All prices charged, advertised or quoted by a registered person must include VAT at the applicable rate. (Presently 15% for standard rated supplies).
3. VAT charged on supplies made (output tax) less VAT paid to your suppliers (input tax) = the amount of VAT payable/refundable.
4. You need a valid tax invoice with your full name and VAT number indicated on it as proof of any input tax deductions which you want to make. You should also keep records of all your tax invoices and other records of transactions for at least five (5) years.
5. Goods exported to clients in an export country are charged with VAT at 0%. However, if delivery takes place in Namibia, you must charge VAT at 15% to your client. If your client is a registered person, the VAT charged may be deducted as input tax. If your client is not a registered person, and the goods are subsequently removed from the country, a claim for a refund of the VAT may be made at the offices of the VAT Refund Administrator (the VRA).
6. You may not register for VAT or deduct any input tax on goods or services acquired to make exempt supplies, for private use or other non-taxable purposes. Also, as a general rule, input tax may not be deducted where the expense incurred is for the acquisition or rental of a passenger vehicle or entertainment, even if utilised for making taxable supplies.
7. You are required to advise the Namibian Inland Revenue Department within 21 days of any changes in your registered particulars, including any change in your authorised representative, business address, banking details, trading name, or if you cease trading.
8. If you have underpaid VAT as a result of a mistake, report it to your Namibian Inland Revenue office as soon as possible, rather than leaving it for their auditors to detect.
9. You can pay your VAT by cheque if less than N$500 000 or with electronic funds transfer (EFT).
10. It is important to submit returns on time. Penalty on late submission of a VAT or Import VAT return is N$100 per day. Penalty on late payment of VAT or Import VAT is 10% per month on tax payable, limited to 100%. Being compliant with the above will reduce the risk of VAT becoming a cost to your business.
Being compliant with the above will reduce the risk of VAT becoming a cost to your business.