Namibia to cut corporate tax to encourage investment

WINDHOEK (Reuters) - Namibia, one of the world's largest diamond producers, announced plans to cut its corporate tax rate to 32 percent over the next two years in its 2013/14 budget on Tuesday to encourage investment.

It also said it would cut income tax by adjusting tax bands and expects economic growth to accelerate slightly this year to 4.3 percent.

Corporation tax in Namibia, which is also a major producer of uranium, is now 34 percent, one of the highest in southern Africa and compares with 28 percent in South Africa.

The tax rate does not apply to mining companies, including Anglo American and Rio Tinto, which pay higher tax rates averaging 37.5 percent and as high as 55 percent for diamond miners, plus other levies on top.

Finance Minister Saara Kuugongelwa-Amadhila, presenting the budget to parliament, said corporate tax would be lowered to 33 percent in the financial year ending in March 2014, and to 32 percent in 2014/15.

Kuugongelwa-Amadhila also announced higher spending, mostly on health and education, for 2013/14. That will help push the budget deficit up to 6.4 percent of gross domestic product, from an estimated 2.8 percent in 2012/13, she said.

The minister said slowing economic growth and chronic income inequality had put pressure on public finances.

"Although our fiscal position is not as robust as it was four years ago, it nonetheless remains relatively strong," she said. "We, therefore, have limited room to pursue moderate fiscal expansion in a targeted matter."

She said a major financial markets reform bill was under consultation, while regulations to tighten capital outflows and increase domestic investment were about to be finalised.

A new Banking Institutions Bill that will limit foreign shareholding in Namibia's South African-owned banks, will be implemented this year.

Namibia's economy grew by an estimated 4 percent last year, slowing after a 4.8 percent expansion in 2011.

Foreign firms are also exploring the southern Africa country for gold, lead, zinc and iron ore.

Namibia expects government debt to grow to 27.8 percent of GDP next year, from 26.3 percent last year, the finance minister said.

Source: http://news.yahoo.com/namibia-cut-corporate-tax-encourage-investment-051026962--business.html

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