Assessed Losses and Tax Laws - How Does It work?
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From 1 January 2024, the way assessed losses are handled under Namibia’s Income Tax Act has changed — and it’s important to understand how these changes could affect your clients' tax returns and long-term planning.
The Income Tax Amendment Act, 2024 (published in Government Gazette No. 8442 on 16 September 2024) introduced two key changes to Section 21 of the Income Tax Act, 1981. Let’s walk through what’s new, what it means in practice, and what to watch for on ITAS.
You can’t use all your assessed loss at once anymore
Businesses are now only allowed to offset assessed losses against taxable income up to the greater of:
NAD 1 million, or
80% of taxable income for the year
This means even if a business has large losses carried forward, it will still pay tax on at least 20% of its taxable income in any given year.
Time limit to use assessed losses
Previously, assessed losses could be carried forward indefinitely. That’s no longer the case:
Most taxpayers can now only carry forward assessed losses for 5 years
Certain industries (like mining, petroleum, and green hydrogen projects) get 10 years, but they’ll need to meet criteria set by the Minister.
Any assessed loss accumulated before 1 January 2024 can still be carried forward — but only for five years from that date, i.e., until 31 December 2028.
🔍 What It Means in Practice
Let’s bring this to life with some numbers:
🧾 Example 1: Taxable income below NAD 1 million
A Small rental company with taxable income of NAD 78,000 in the 2024 financial year. It also has assessed loss brought forward of NAD 130,643.
Applying the new rule only 80% of taxable income can be offset = 78,000 × 80% = NAD 62,400
So, even though there’s a large assessed loss, only NAD 62,400 can be used in 2024.
The rest (NAD 130,643 - 62,400 = NAD 68,243) may be carried forward (within the 5-year limit).
🧾 Example 2: High-income taxpayer
A medium-sized consultancy firm has taxable income of NAD 2,000,000 with assessed loss carried forward of NAD 1,500,000.
80% of income = 2,000,000 × 80% = NAD 1,600,000
Since the loss (1.5 million) is less than the cap, the full amount can be offset.
Remaining taxable income = 2,000,000 - 1,500,000 = NAD 500,000
The entire assessed loss is used up.
🛠️ How will this work on ITAS?
NamRA has not yet issued formal guidance on how the new rules will be reflected on ITAS. However, it is expected that the system will allow you to apply the 80% or NAD 1 million rule. Alternatively, you may need to manually limit the assessed loss applied in the return and track expiry dates of pre-2024 losses to ensure none are carried beyond the 5-year mark.
💡 Watch out for ITAS updates and NamRA guidance closer to the September 2025 filing deadline for FY2024 returns.
✅ What accountants should do now
Update your clients' loss schedules to include expiry dates for pre-2024 losses
Review tax estimates for the 2024 year to factor in the 80% rule
If you have clients in long-term sectors (like mining), check if they qualify for the 10-year rule
Educate clients that even if they’ve made big losses in the past, they’ll likely be paying tax sooner than expected.
