Transfer Pricing in Namibia

The legal framework

Namibia's transfer pricing regime fits inside a single section. Section 95A of the Income Tax Act 24 of 1981, inserted by Act 4 of 2005, amended by Act 13 of 2022 and amended again and more substantially by the Income Tax Amendment Act 4 of 2024, carries the whole of it; there is no separate transfer pricing statute and no regulations of current relevance. The brevity is deceptive. The 2024 amendments, gazetted on 16 September 2024 but effective for company years of assessment beginning on or after 1 January 2024, left the operative pricing rule untouched and instead bolted statutory definitions and a new interest limitation onto it, turning a short pricing rule into a considerably harder instrument.

Section 95A(2) is narrow in form and wide in reach, and it is unamended 2005 text. Where goods or services move under an international transaction between connected persons at a price above or below what independent parties would have set, the Minister may adjust the consideration to an arm's length price in determining either party's taxable income; since 6 April 2021 that power is exercised through the Namibia Revenue Agency. The rule is a discretionary adjustment power, not a self-assessment obligation — nothing on the face of section 95A obliges a taxpayer to price at arm's length, still less to say that it has. And it speaks of a single arm's length price, not a range. Scope is cross-border: the four statutory limbs reach residents dealing with non-residents, permanent establishments in either direction, and residents whose counterparty is shielded from Namibian tax by a treaty. Purely domestic related-party dealings sit outside. "Services" is defined to capture loans, advances, guarantees and security, so intra-group finance is squarely inside.

What Act 4 of 2024 did change matters. Section 5 of that Act inserted into subsection (1), for the first time, definitions of connected person and of control over another person, substituted subsections (3) to (5) and added subsections (6) and (7). The equity test is conventional — 20% of voting power, equity shares or beneficial interest — but the control tests are not: a loan equal to 70% of the borrower's book assets, a guarantee covering 70% of its indebtedness, supplying 80% of another's purchases or absorbing 80% of its sales, dependence on its know-how or trademarks, or the appointment of a single director each deems control to exist. Exclusive distributors, franchisees and dependent contract manufacturers with no shareholding link can be connected persons in Namibia. The substituted subsections replaced the 3:1 thin capitalisation ratio with a cap on net interest above 30% of tax EBITDA, subject to a N$3 million de minimis, superseding the subsections (4) and (5) that Act 13 of 2022 had briefly put in place.

Methods, comparables and benchmarking

No method is prescribed and no hierarchy imposed. The comparable uncontrolled price, resale price, cost plus, transactional net margin and profit split methods are all available, and Practice Note 2 of 2006 allows the authority to apply any of them; the most reliable is the one supported by the quality of the data, the assumptions required and the comparability achieved. Namibia is not an OECD member and section 95A does not incorporate the OECD Transfer Pricing Guidelines, but the 2005 legislation was modelled on them and they operate in practice as the interpretive framework. Their status is persuasive administrative practice, not binding law — a distinction that becomes real the moment an argument turns on a paragraph of the Guidelines rather than the words of the section.

Nothing domestic governs the mechanics: no local-comparables requirement, no NamRA database, no rule on interquartile ranges, no convention on tested-party selection. Given the size of the Namibian listed market, regional comparable sets defended under OECD comparability principles are the practical answer. The exposure lies in the drafting of subsection (2): a statute framed around a single price the goods "might have been expected to fetch" leaves an assessor room to argue for a point rather than accept a range. The counter is a functional analysis strong enough to make the range the only defensible reading of the facts. There are no safe harbours and no SME exemption.

Documentation: what NamRA expects

Namibia has no master file, no local file and no country-by-country report, because it has no tiered documentation regime at all. It does not follow that the regime is documentation-free. Practice Note 2 of 2006, paragraph 8, requires a taxpayer to hold transfer pricing documentation and to demonstrate a sound policy under which prices are set on arm's length principles. What must be shown is why the prices are defensible given the functions performed, which methods were used, and how the outcome is consistent with the arm's length principle. Note that the Practice Note's full text is not publicly retrievable and its current status cannot be confirmed against the primary document; the obligation is reported consistently, but second-hand.

There is no deadline to prepare documentation, none to submit it, and no fixed number of days to answer a request: section 64(1) lets the authority require production at a time and place set in the notice, and require a certified English translation at the taxpayer's cost. The practical anchor is the return. Companies and business taxpayers file by the last day of the seventh month after year end through the ITAS portal, with the 2026 season extended to 31 August 2026 after platform problems. The return carries no transfer pricing schedule, related-party disclosure or certification. Records must be kept five years from the last entry under section 65(1)(f). The 2025 Action 13 peer review found no Namibian CbC framework and recommended one be finalised, so treat that gap as temporary.

Audits, penalties and the enforcement climate

There is no transfer-pricing-specific penalty, which is worse than having one. An adjustment that disallows a deduction is deemed by section 66(5) to be an omission from the return, and section 66(1) then imposes additional tax of twice the difference in tax — an effective 200% loading — with section 79 interest at 20% a year, capped at the original tax. Documentation confers no statutory protection. The only relief is discretionary remission under section 66(2)(a), unavailable where evasion was intended absent extenuating circumstances, or an agreed quantum under section 66(2)(c), which cannot then be objected to. Nor does time help: section 69(1) permits assessment "at any time", so Namibian transfer pricing years never close. The onus sits with the taxpayer under section 72 and, where the general anti-avoidance rule is invoked, under the reversed onus in section 95(4).

The arithmetic is sharper than the 30% headline rate suggests: mining companies pay 37.5%, diamond miners 55%, petroleum companies 35%. Enforcement is no longer theoretical. NamRA has said that of roughly 400 multinationals in Namibia, 104 had declared losses since inception, attributing this partly to transfer pricing abuse, with over N$150 million collected from loss-declaring companies after audit. ATAF ran a transfer pricing mission in Windhoek in August 2025 across seven live cases. In March 2026 NamRA asserted taxing rights over offshore transfers of Namibian mineral and petroleum licences, citing roughly 5% reporting compliance. Capability, not law, has been the constraint, and capability is being bought.

Dispute resolution and advance certainty

Advance certainty is unavailable: no advance pricing agreement programme, no statutory basis for one, no published procedure. Mutual agreement procedure exists only through the treaty network — eleven double taxation agreements, each with a MAP article — and it is barely used: the OECD's 2024 statistics, the latest published, show a single Namibian transfer pricing case open for the whole year, with none started and none closed, after four consecutive nil years from 2020 to 2023. No competent authority guidance is published. Treaty relief is untested rather than unavailable, and that matters: domestic law contains no corresponding adjustment provision and no secondary adjustment mechanism, so an adjustment is economically doubled unless a treaty partner relieves it. The MLI was signed on 30 September 2021 and never ratified; the Convention on Mutual Administrative Assistance has applied since 1 April 2021 and is the practical basis for exchange of information in audits.

Domestically, an assessment must be objected to in writing within 90 days of issue with detailed grounds, and an appeal lodged within 30 days of the objection decision, confined to the grounds already stated. Disputes below N$100,000 go to the tax tribunal; above that, to the Special Court, which may increase the section 66 additional charge as well as reduce it. Two features shape practice. In Kruger the High Court declared sections 73(3), 73(5) and 73(9) unconstitutional; no correction followed, so they fell away on 27 March 2021, leaving a gap in the machinery for constituting the court. And section 73(11) closes its sittings while section 73(19) permits publication only anonymously and normally with consent. That, not an absence of disputes, is why no reported judgment on section 95A exists.

Pillar Two and what changes in 2026

Namibia has not enacted Pillar Two: no income inclusion rule, no undertaxed profits rule, no domestic minimum top-up tax, and no proposal in the 2025/26 or 2026/27 budgets. NamRA and the Ministry of Finance worked with ATAF during 2026 to model the revenue impact of the GloBE rules, reported in June 2026 as informing future policy rather than signalling adoption. Namibia does appear on the OECD's June 2024 list of covered jurisdictions for the Amount B political commitment, so other Inclusive Framework members undertake to respect Namibian outcomes under the simplified and streamlined approach — but Namibia has not adopted Amount B domestically, so there is as yet nothing to respect.

The live agenda is domestic. Paragraph 88 of the Budget of 26 February 2026 proposed mandatory disclosure rules for aggressive tax planning along BEPS Action 12 lines, group relief for tax-neutral intra-group restructuring, a review of capital allowances and SEZ incentives, and VAT e-invoicing. A dedicated tax court is a separate and older commitment, announced in the FY2025/26 budget with legislation expected to be tabled that year and not repeated in the 2026/27 statement; the Income Tax Amendment Bill that would shift administrative powers from the Minister to the Commissioner remained under legal review in mid-2026. The corporate rate stays at 30% and the 2026/27 budget proposes no cut. Most immediately, NamRA's arrears relief programme writes off all interest and penalties where the capital is settled by 31 October 2026, on the stated basis that it will not be extended again — and section 66 additional tax and section 79 interest fall within its scope.

How practitioners should respond

Four priorities follow. First, model the interest cap before anything else: for most Namibian subsidiaries of foreign groups the 30% tax EBITDA limitation, not subsection (2), is where the money is, and the N$3 million de minimis is low enough that few financed entities escape it. Second, re-map the group. The 2024 control definition reaches commercial dependence, so distribution, licensing, supply and guarantee relationships never treated as related-party dealings may now be inside the net; map against the statutory tests, not the consolidation perimeter.

Third, prepare documentation despite the absence of any filing obligation. With no penalty protection, no statute of limitations and a 200% exposure behind every disallowed deduction, documentation in Namibia is not a compliance formality but litigation preparation — the taxpayer's discharge of the section 72 onus. Fourth, treat the coming eighteen months as a window: the relief expiring on 31 October 2026 can extinguish penalties and interest on historic exposure; CbC legislation and mandatory disclosure rules are both flagged and will arrive with reporting obligations attached; and the dedicated tax court promised in the 2025/26 budget would, if it materialises, finally give Namibia what it has never had — decided transfer pricing law against which a position can be tested.