Division 7A Loan Agreement Template
17th September 2021
Ec Collective Agreement Ratification
18th September 2021

In the event that Namibia has entered into a double taxation agreement (DBA) with the foreign country of origin, that person is taxable in Namibia, unless all the requirements of the specific DBA are met. Namibia has received requests from 12 countries to start negotiations on tax agreements, at a time when the Ministry of Finance has admitted that the 11 existing contracts do not benefit the country. Tax treaties are legal agreements between two countries that determine the treatment of taxable income, profits or profits in both countries. The purpose of tax treaties is to avoid double taxation. Thus, two countries divide each other and limit each other`s tax rights. For large multinationals, only one country can tax profits. Tax treaties are maintained until they are renegotiated or terminated. Taxation Commissioner Justus Mwafongwe said Namibia does not benefit from the current Double Taxation Convention (DBA). Namibia`s tax revenues have declined over the years, a situation that has put the government in a difficult situation with regard to the availability of financial resources to fight poverty in the country. However, if Mwafongwe is to be believed, deformed DTAs, which are not beneficial to Namibia, will soon be a thing of the past. “Our approach to addressing this anomaly was to first develop the national policy of the tax treaty that we successfully concluded.

The objective of the national policy is to create a single framework for the negotiation of the DBA through a model agreement of renowned DBA. This type of agreement is used not only as a blue print to renegotiate the existing DTA, but also for any new DTAs that could be concluded,” he said. Mwafongwe said the Treasury does not have an approximate value to define revenue losses through tax treaties. Other countries that have concluded the same agreement with Mauritius have begun to strongly criticize the conditions because they increase the possibilities for large foreign companies to evade the payment of their taxes. Tax experts say double taxation treaties create loopholes for tax evasion and evasion and are exploited by companies that make “contract purchases,” denying countries much-needed tax revenues, especially in developing countries. Local critics of the DTA have called on the government to reconsider the country`s tax rights as they appear in national tax legislation, including the levying of a withholding tax on technical and administrative costs and other areas of the agreement that could undermine our tax revenue base. He added: “However, we are trying to close any applicable gaps or loopholes to ensure that in the future there will be no loss of revenue due to tax treaties.” The Commissioner for Taxation also pointed out that obligations to renegotiate existing contracts with countries with which Namibia has DTAs are already underway. According to Mr. Mwafongwe, this should adapt the agreements to Namibia`s domestic tax policy during contract negotiations, in order to ensure the protection of Namibia`s tax base and revenues while promoting foreign investment.

“A task team has been established to negotiate or renegotiate the DBA, in line with Namibia`s DBA policy. Countries ready to negotiate/renegotiate include Mauritius and Zimbabwe. The first round of denial is expected to take place in the first quarter of next year (2018),” he said. As part of the SADC Financial and Investment Protocol, SADC also developed and adopted a double taxation convention (DBA) in 2010 in the hope that SADC member States would adapt their model to SADC. The aim is to improve economic relations and minimise harmful tax competition between Member States and to guide Member States in their future negotiations. . . .

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