13 December 2012

Namibia: Employers to Be Hit By Levy

BY as early as June next year, Namibian employers will have to pay a levy of 1,5% of their annual payroll to the government.

A newly proposed Vocational Education and Training (VET) Levy is expected to be imposed on all employers with an annual payroll of more than N$350 000.

A well-placed source told The Namibian that originally the threshold was N$200 000 but the board decided to lift it to N$350 000.

The same source said that the initial percentage was 1% but it was raised to 1,5%.

It is not clear at this stage whether the levy will be paid monthly and what formula will be used to calculate the monthly contribution to the training levy fund.

Industry insiders say the 1,5% of a company’s annual payroll “may be a bit on the high side”. But, he said, he is “seriously in favour of the levy. It will assist tremendously with vocational training.”

A submission about the introduction of the levy was made to Cabinet on November 20.

In the submission, it is stated that Namibia has too few skilled workers. “The answer to this is increased investment in Vocational Education and Training. Vocational centres in the country face inadequate infrastructure, machinery, systems and processes to allow trainees to be trained and acquire VET skills.”

According to the submission, “This situation has resulted in a low or skills scarcity of necessary skills at various levels of our economic development. The scarcity of skills has resulted in limited job opportunities for school leavers and subsequent slowdown in economic growth.”

The imposition of the proposed levy is provided for in the Vocational, Education and Training Act.

It requires the minister of education to inform all affected employers of the details of the proposed levy, the reasons for imposing it and the proposed date of commencement.

Affected employers must also be invited to make representations to the minister within 30 days of publication of a notice in the Government Gazette.

After this, a notice of the imposition must also be published in the Government Gazette 30 days before its implementation starts.

The act further requires that the rate and manner of calculating or determining the levy must also be gazetted, as well as the description of the body to which the levy must be paid and the required manner of payment.

A description of the employers who must pay the levy and the category or class of employers exempted from paying the levy must also be published in the Government Gazette.

According to the Cabinet submission, a framework for the imposition of the levy was approved by the Namibia Training Authority Board.

According to the submission, State offices, ministries and agencies as well as regional councils are exempt from paying the levy. All religious, charitable and government educational institutions will also be exempted.

The levy will be collected by the Namibia Training Authority.

Various attempts to get comment from the Ministry of Education since last week proved futile.

Romeo Muyunda, the ministry’s spokesperson, said that Minister Abraham Iyambo would call a press conference this week about the levy.

The submission asked Cabinet to approve the levy and to allow the education minister to impose a higher levy on employers who employ non-Namibians.

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