If you own a Namibian company, you can take money out as a salary, as dividends, or as a mix. The tax on each is very different, and the best answer surprises many owners.
Dividends are tax-free for residents
Section 16(1)(n) of the Income Tax Act exempts dividends a resident receives from a Namibian company. So once the company has paid its 30% tax, the rest can reach you as a dividend with no more tax. Non-residents pay non-resident shareholders' tax instead: 10% for a company holding at least 25%, and 20% otherwise.
A salary saves company tax
A salary is a cost to the company, so it reduces the profit taxed at 30%. You pay PAYE on it at your own rate, and you and the company each pay social security of 0.9% on pay up to N$12,500 a month.
So the question is simple: is your tax rate on the next dollar of salary lower than the company's 30%? The individual table starts with N$100,000 tax-free, then 18%, 25% and 28%, and reaches 30% at N$550,000 a year. Below that, salary is cheaper than profit plus a dividend.
An example
Take a company with N$1,000,000 of profit before paying its owner:
| Salary | What the owner keeps |
|---|---|
| None (all dividends) | N$700,000.00 |
| N$100,000 | N$728,470.00 |
| N$300,000 | N$741,205.00 |
| N$550,000 | N$747,705.00 |
| N$850,000 | N$747,705.00 |
| All salary | N$744,732.00 |
All dividends leaves N$700,000: the company pays N$300,000 of tax. A salary of N$550,000 leaves N$47,705 more. Between N$550,000 and N$850,000 your rate is exactly 30%, the same as the company's, so it makes no difference. Above N$850,000 your rate is 32% or 37%, so more salary costs you. Our salary or dividends calculator works this out for your own profit.
Other things to weigh
- A salary gives you a record of income for loans and a mortgage, and social security cover.
- A company can only pay dividends out of profits.
- Pension contributions from your salary are deductible too, up to N$150,000 a year.
- A 10% tax on residents' dividends has been proposed in past budgets. It isn't law, but if it's enacted, the balance shifts towards salary.
Talk to your accountant before changing how you pay yourself.
Sources
- Income Tax Act 24 of 1981, consolidated (NamRA)
- Income Tax Amendment Act 4 of 2024 (Government Gazette 8442)
- Government Notice 236 of 2026: social security ceiling (Government Gazette 8975)
This is general information, not tax, legal or financial advice.