Namibia in transition after EPZ lapse

Namibia has entered a transitional phase in its export promotion policy following the expiry of the Export Processing Zone (EPZ) regime on 31 December 2025, with the government still finalising legislation to introduce a new Special Economic Zone (SEZ) framework.

The executive director in the ministry of international relations and trade, Ndiitah Nghipondoka-Robiati, explained during a media briefing in Windhoek that the export promotion component of the EPZ system formally came to an end after a five-year grace period that began in 2020.

According to her, the decision to phase out the EPZ regime followed international pressure over concerns that Namibia's tax incentives could be classified as harmful tax practices.

"In 2019, the Organisation for Economic Co-operation and Development (OECD) and the European Union threatened to blacklist Namibia for being classified as a tax haven," Nghipondoka-Robiati said.

Under the EPZ framework, qualifying companies enjoyed significant tax exemptions aimed at promoting manufacturing and exports. However, she noted that concerns arose after several companies repeatedly declared losses whilst continuing to benefit from the incentives.

"As a result, Namibia faced considerable pressure from both the OECD and the European Union, which threatened to place the country on a blacklist. Blacklisting would have prevented us from accessing international funding involving any EU-related entities," she said.

To mitigate the risk of financial isolation, Namibia was granted a transition period between 2020 and 2025 to wind down the EPZ regime.

Enter Special Economic Zones

The government intended to replace the framework with Special Economic Zones (SEZ), which are expected to offer targeted incentives whilst aligning with international tax transparency standards. However, the legislation has not yet been finalised.

According to Nghipondoka-Robiati, the SEZ legal instrument is being developed by the ministry of industries, mines and energy and is currently at an advanced stage in the legislative process.

"We have been informed that it is quite advanced and is currently with the legal drafters before it can be tabled in Parliament to become law," she said.

The planned SEZ system is expected to introduce a more structured incentive regime, including lower corporate tax rates for qualifying investors. Proposed tax brackets are anticipated to range between 20 and 25%, compared with the standard corporate tax rate of 32%.

A recent budget overview by research firm Cliffe Dekker Hofmeyr (CDF) notes that the government is reviewing SEZ tax incentives to ensure they support investment, job creation and skills transfer whilst remaining consistent with international commitments.

Namibia's tax framework is increasingly aligning with global transparency standards, including the introduction of mandatory disclosure requirements for aggressive tax planning in line with the OECD's Base Erosion and Profit Shifting (BEPS) framework.

Regional trade expansion and market access

Trade minister Selma Ashipala-Musavyi indicated that Namibia is strengthening its economic diplomacy as part of a broader effort to expand export markets and attract investment.

Speaking at the same briefing, she explained that the ministry's mandate now focuses on integrating foreign policy with trade promotion to support Namibia's industrial development ambitions.

"Our responsibility at the ministry is to create market access. Think of us as the chief marketing agency of Namibia abroad," she said.

Ashipala-Musavyi highlighted regional trade corridors with neighbouring countries such as South Africa, Angola, Botswana and Zambia, as well as opportunities emerging through the African Continental Free Trade Area (AfCFTA).

She said the government is working to transition Namibia away from being primarily a raw material exporter towards a value-added production economy, supported by stronger trade agreements and improved investment frameworks.

philippus@nmh-hub.com.na