A
tax haven is a country where taxes are lowered or left at zero for certain
industries such as manufacturing. The benefit of this is that industry is
promoted, as it does not need to abide by the taxing regulations. The
disadvantage is that it usually only benefits the extractive industry, while
the rest of the country is losing potential revenue from taxes. Namibia
recently announced that it would no longer provide this special treatment to
its manufacturing. Prior, manufacturing firms required to pay 18% tax instead
of 32% tax like the rest of the people in Namibia. Ever since January, Namibia
wished to even out the playing ground.
However,
this has several implications. For example, this discourages any sort of
start-ups or industries to develop in the region. On top of this, foreign nations
are discouraged from investing in firms abroad; that is, Namibia. To counter
this, Namibian government plans to introduce and develop support instruments
for SMEs and start-ups. It also plans on introducing special economic zones,
areas in which business and trade laws are different from the rest of the country,
to still have some incentive for business in some regions of the country.
Since
economic consequences may result in the industry sector specifically, it is expected
that these changes will yield overall benefits to the country, rendering a
larger amount of money to the government to spend on other necessities in the country.
References:
-Mark Buckup
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