Value-Added Tax (VAT) is a consumption tax charged on most goods and services in Namibia at a rate of 15%. When it comes to buying or selling property, understanding when VAT applies can make a big difference to the final cost of your transaction.

Under the Value-Added Tax Act of 2000, VAT may be payable on the sale or transfer of immovable property - but not always. Two key questions determine whether VAT applies:

Is the property residential or commercial in nature?

Is the seller registered for VAT?

Residential property

If the property is used, or will be used, solely for residential purposes, VAT is charged at a rate of 0%. In other words, no VAT will effectively be payable by the purchaser, even if the seller is registered for VAT. This makes residential property transfers generally VAT-free.

Seller not registered for VAT

Where the seller is not registered for VAT, VAT does not apply, regardless of whether the property is commercial or residential. Buyers can verify this by requesting the seller’s VAT registration certificate.

Commercial property

VAT is most commonly payable on commercial property sales, however, there are exceptions. If a commercial property is leased to a third party and both the seller and purchaser are VAT registered, the sale may qualify for a zero-rated VAT transaction. In such cases, the legal representatives must notify the Namibia Revenue Agency (NamRA) of the zero-rated status to ensure that no VAT is payable by the purchaser.

Company or close corporation sales

If the property belongs to a company or close corporation, and the purchaser acquires the shares or members’ interests rather than the property itself, the transaction is exempt from VAT.

In summary

In conclusion, the above scenarios highlight the kinds of immovable property transactions where VAT may not be applicable. In most other cases, VAT is charged on the transfer of immovable property at the standard rate of 15%.

Abe Malherbe
BA / LLB (Director)