PAYE tax refund process explained following Income Tax Act amendment  

Minister of finance and public enterprises Iipumbu Shiimi recently announced an amendment to the Income Tax Act, which was effective from 1 March this year.

The amendment was, however, only gazetted this week and will see taxpayers receiving refunds in October.

This is how it will work:

In the past tax year, employers deducted Pay As You Earn (PAYE) taxes from employees’ salaries based on old tax rates. The introduction of the new tax rates may have resulted in some employees having been overtaxed.

An employee who earns N$350 000 annually under the old tax rates normally pays N$6 083 per month in taxes, but with the new tax adjustments will only pay N$4 916. 

Because the law was only gazetted this week, this employee was paying an excess of N$1 166 every month for the past seven months.

To refund employees, employers will have to calculate with how much employees were over-deducted during this time and refund them with this amount.

In this case it amounts to N$8 162 for the seven months. 

These refunds will be deducted from the PAYE employees pay the Namibia Revenue Agency (Namra) monthly, therefore there is no material decrease in the employer’s financial statements. 

This will continue until the over-deducted amount is offset. Employers need not pay Namra until overpayment is recovered. 

This will allow taxpayers to receive their refunds earlier, rather than waiting until February 2025 to file for a tax refund with Namra.