www.pwc.com.na Re-Imagine the Possible 2018/2019

The Dome - Swakopmund March 2018 Budget Review 2017/2018

01 02 03 04

Key Focus Areas Numbers in the Budget Tax Comparisons Tax Reforms

Namibia Budget Review 2017/2018 8 March 2017 PwC 2 Key Focus Areas

Namibia Budget Review 2018/2019 7 March 2018 PwC 3 Three-pronged fiscal policy actions

1 2 3

Budget deficit reduction

Stimulating growth: Industrial development/logistics hub/SME

Tax Policy changes – N$500 Mil

Namibia Budget Review 2018/2019 7 March 2018 PwC 4 Key Focus Areas

Macroeconomic Stability and 01 Fiscal Sustainability “…We must do what we know must be done, we Inclusive Growth & Economic must do it with 02 Diversification confidence and conviction and then we shall be more and better…” 03 Core Spending on Social Sectors

Namibia Budget Review 2018/2019 7 March 2018 PwC 5 Key Focus Areas

Fair Tax Policies and Efficient Tax 04 Administration

Enhanced policy effectiveness and 05 strengthened economy competitiveness

“…a budget anchored on the gains of the necessary but difficult decisions which we have taken since 2016…”

Namibia Budget Review 2018/2019 7 March 2018 PwC 6 Structural Policy Reforms

01 Public Procurement Act

ITAS/ NAMRA 02

03 Investment Promotion Act

NEEEF Bill 04

05 Poverty Eradication and Social Welfare

Namibia Budget Review 2018/2019 7 March 2018 PwC 7 Structural Policy Reforms

Basic & Tertiary 06 Education

Public 07 Asset Management

08 PPP Legislation

Public Sector Performance Management 09

10 Public Entity Fiscal Discipline

Namibia Budget Review 2018/2019 7 March 2018 PwC 8 The Numbers

Namibia Budget Review 2018/2019 7 March 2018 PwC 9 Revenue vs. Expenditure

70,000 66,054 65,003 65,682

60,000 56,811 56,696 57,743

50,000

40,000

30,000

20,000

N$ in N$ in Billions 10,000

- 2017/18 2018/19 2019/20 (10,000) (9,243) (8,306) (7,939)

(20,000)

Namibia Budget Review 2018/2019 Total Revenue Total Expenditure Budget Surplus / (Deficit) 7 March 2018 PwC 10 Tax Revenue vs. 80 Non-Tax Revenue 70

N$3.442bn 60 2018/19 N$57bn Non-Tax 2017/18 N$56bn Revenue 50 40 Total Revenue

N$ billions 30 compared N$57bn 20 to previous Tax 10 year Revenue N$53.26bn 2018/19

Namibia Budget Review 2018/2019 7 March 2018 PwC 11 Total Tax Revenue (N$ 53.26 billion)

42% Taxes on Income and Profits

0% Property tax

25% Indirect Taxes Customs & Excise 33%

0% Other taxes

Namibia Budget Review 2018/2019 7 March 2018 PwC 12 SACU Receipts

25000

N$19,597bn N$17,374bn N$16,219bn N$17,045bn 20000

15000

10000 N$ in N$ in Billions

5000

0 2017/18 2018/19 2019/20 2020/21

Namibia Budget Review 2018/2019 7 March 2018 PwC 13 Namibian Economic Statistics

Caiundo Tombua Kataba Cahama ANGOLA Mavinga ZAMBIA

Inflation at Sesheke Luiana Livingstone Opuwo Kongola January 2018 Rundu Unemployment ZIMBABWE Rate NAMIBIATsumeb Tsau Khorixas Okakarara

Epata Omaruru Orapa Ghanzi 3.6% Windhoek Gobabis Mamuno Walvis Bay Kang Aranos 34% BOTSWANA Maltahöhe Gaborone N$ South Atlantic Ocean

Tshabong 1.2% 11.89 Mafikeng Lüderitz Aroab Kuruman

Karasburg Upington Kimberley

Springbok USD: NAD SOUTH AFRICA GDP Growth De Aar Bitterfontein Exchange Rate NAMIBIA Victoria West 0 50 100 150 Kilometers 0 50 100 150 Miles

Namibia Budget Review 2018/2019 7 March 2018 PwC 14 Expenditure Execution Rates

96.40% 94.60% 100% 87.40%

80%

60%

40%

20%

0%

Namibia Budget Review 2018/2019 7 March 2018 PwC 15 Debt Stock as % of GDP

2018/19 2019/20 N$84.6bn N$92.72bn

45%

Namibia Budget Review 2018/2019 7 March 2018 PwC 16 Top 10 Budget Allocations

Education, Arts & Culture 13.5 Finance 9.8 Health & Social Services 6.57 Defence 5.95 Ministry of Safety & Security 5.17 Transport 3.47 Poverty Eradication & Social Welfare 3.43 Higher Education, Training & Innovation 3.22 Agriculture, Water & Forestry 2.13 Urban & Rural Development 2.15

0 2 4 6 8 10 12 14 16

Namibia Budget Review 2018/2019 N$ in Billions 7 March 2018 PwC 17 Estimates of total expenditure EXPENDITURE ESTIMATES BY MAIN ITEMS 2018/19 (N$) Lending and Equity Participation, NAD 0 Capital Transfers , NAD 796,773 Statutory Expenditure Interest Payments and and other, NAD 0 Borrowing Related Charges, NAD 5,782,798

Subsidies and Other Current Transfers, NAD 15,777,737

Personnel Expenditure, NAD 28,933,244 Goods and Services, NAD SME Development 6,196,028

Namibia Budget Review 2018/2019 7 March 2018 PwC 18 Tax Comparisons

Namibia Budget Review 2018/2019 7 March 2018 PwC 19 Comparisons: Corporate Tax Rates

100%

80%

60%

40% 35% 32% 30% 28% 25% 20% 22%

0% South Africa Botswana Namibia Zambia Zimbabwe Angola

Namibia Budget Review 2018/2019 7 March 2018 PwC 20 Comparisons: VAT Rates

20%

15% 15% 16% 15% 12% 10% 10%

0% South Africa Botswana Namibia Zambia Zimbabwe Angola

Namibia Budget Review 2018/2019 7 March 2018 PwC 21 Tax Reforms

Namibia Budget Review 2018/2019 7 March 2018 PwC 22 Proposed Tax Amendments – Revenue Expectancy N$500 million

01 02 Preferential Tax EPZ Act replaced with Treatment - Special Economic Zones Manufacturers – sunset clause 2018 03 04 Individual Tax: Individual Tax: Lower bracket – 17% Higher brackets from 18% > N$1.5mil 39%, > N$2.5mil 40%

Namibia Budget Review 2018/2019 7 March 2018 PwC 23 Proposed Tax Amendments – Revenue Expectancy N$500 million

05 06 Resident Dividend Tax Taxing of trusts – = 10% Abolish conduit principle 2018 07 Charitable/Religious/ 08 Taxation of foreign Educational with income commercial activities – compulsory registration

Namibia Budget Review 2018/2019 7 March 2018 PwC 24 Proposed Tax Amendments – Revenue Expectancy N$500 million

09 10 Betting and gaming VAT on income of listed activities – 37% asset managers

2018 11 Sale of shares/cc 12 membership in property Fuel levy increase – 25c company Vatable per litre

Namibia Budget Review 2018/2019 7 March 2018 PwC 25 Proposed Tax Amendments – Revenue Expectancy N$500 million

13 14 Export levy Additional expansion on National Sin Tax agricultural, on Alcohol and forestry, game and Tobacco products mining products 2018 – 5%

Namibia Budget Review 2018/2019 7 March 2018 PwC 26 SACU Excise Duty Increases Sin Taxes effective 21 February 2018

Rise in tobacco and alcohol excise duties: Increase

340 ml malt beer N$0.15

750 ml bottle of unfortified wine N$0.23

750 ml bottle of sparkling wine N$0.73

750 ml bottle of spirits (whiskey, brandy, vodka etc.) N$4.80

Pack of 20 cigarettes N$1.22

340 ml bottle ciders & alcoholic fruit beverages N$0.15

Namibia Budget Review 2018/2019 7 March 2018 PwC 27 Other Reforms NAMRA Inland 01 March Revenue 2019 Reforms Transfer Pricing

Post Tax Roll out ITAS Amnesty 11 July 2018 March 2018

Small Targeted Business Tax Recovery of Registration Tax

Namibia Budget Review 2018/2019 7 March 2018 PwC 28 Reimagine the possible

“Change is evident, and in tough times that we are facing we can be sure that new challenges will come forward. Our duty is to re-imagine the possible.

”Nangula Uaandja – Managing Partner – PwC Namibia

Namibia Budget Review 2018/2019 7 March 2018 PwC 29 www.pwc.com.na

Thank you

The Budget Speech and presentations are available on: www.pwc.com.na

The information contained in this publication by PwC Namibia is provided for discussion purposes only and is intended to provide the reader or his/her entity with general information of interest. The information is supplied on an “as is” basis and has not been compiled to meet the reader’s or his/her entity’s individual requirements. It is the reader’s responsibility to satisfy him or her that the content meets the individual or his / her entity’s requirements. The information should not be regarded as professional or legal advice or the official opinion of PwC. No action should be taken on the strength of the information without obtaining professional advice. Although PwC take all reasonable steps to ensure the quality and accuracy of the information, accuracy is not guaranteed. PwC, shall not be liable for any damage, loss or liability of any nature incurred directly or indirectly by whomever and resulting from any cause in connection with the information contained herein.

© 2018 PricewaterhouseCoopers (“PwC”), the Namibian firm. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers in Namibia, which is a member firm of PricewaterhouseCoopers International Limited (PwCIL), each member firm of which is a separate legal entity and does not act as an agent of PwCIL.