Na mibia’s Ministry of Finance and Public Enterprises, in conjunction with the Ministry of Industrialisation and Trade, is working to introduce a Special Economic Zones (SEZ) regime as an anchor to its ambition to curate competitive industrial zones.Finance Minister Ipumbu Shiimi has announced that the participants in the SEZ will be subject to a corporate income tax rate of 20%. The minister said normal deductions in terms of capital allowances would apply in the SEZ regime while VAT will be zero-rated. Shiimi said the SEZ bill was expected to be tabled in the National Assembly during the 2024/25 financial year, before the Export Processing Zone (EPZ) regime expires in 2025.He said the corporate income tax rate of 20%, to be proclaimed under the proposed SEZ regime, would also apply to SMEs with annual turnover below a predefined threshold. The SME threshold is expected to be announced soon.The EPZ regime has been in place since 1996 and the government plans to phase them out because it says the regime has had little economic impact, including little tax gain for the state.The EPZ regime was meant to serve as a tax haven for export-oriented manufacturing enterprises in the country, in exchange for technology transfer, capital inf low, skills development and job creation, but the government has said these plans have not materialised, with the country seeing little benefit from the regime. On the other hand, Minister of Industrialisation and Trade, Lucia Iipumbu, believes that the SEZs have proven to be effective instruments for attracting investment, fostering industrialisation, and creating employment opportunities. “Through the SEZ Bill, we aim to provide a conducive environment for businesses to thrive by offering tax and non-tax incentives, infrastructure support, and streamlined regulations,” the trade minister stated. Iipumbu said the concept of SEZs had proven to be a catalyst for economic transformation in various parts of the world. “By creating designated areas with favourable business conditions and incentives, governments aim to attract both domestic and foreign investments, foster innovation, and generate employment opportunities,” she added. She said Namibia was embarking on a journey to tailor this concept to its unique needs and aspirations as the country strives to have it as a law to replace the EPZ which brought about various challenges.Iipumbu said the establishment of SEZs could significantly boost industrialisation, enhance export capabilities, and stimulate economic growth, especially as Namibia was readying itself to participate fully in the African Continental Free Trade Area (AfCFTA). Namibia would consider all social implications of SEZs, ensuring that the economic benefits are shared equitably among all segments of society, she said.Iipumbu stated that the SEZ Bill would be crafted with a forward-looking approach, incorporating measures to promote innovation, research and development, and the integration of new technologies. She believes that the forward-looking approach can help Namibia position itself as a hub for cutting-edge industries, attracting both domestic and foreign investments that will fuel its economic progress.
