4 July 2009

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Section 18(1) of the Namibian Value-Added Tax Act 10 of 2000 (the Act) makes provision for the deduction of input tax paid by a registered person. However, in terms of s 19 such tax may not be deducted unless the registered person is in the business of providing entertainment and the taxable supply made relates to the provision of taxable supplies of entertainment made in the ordinary course of such business. In the Commissioner for Inland Revenue, Namibia v Namsov Fishing Enterprises (Pty) Ltd 2009 (2) SA 567 (NmSC) the respondent, Namsov Fishing, sought to deduct input tax paid for food and beverages supplied to its fishermen who went to sea to catch fish, treating the provision of food and beverages as entertainment.

The Tax Court granted the deduction, which order was reversed by the Special Tax Court of Appeal. In a further appeal to the Namibian Supreme Court the order of the Special Tax Court of Appeal was set aside with costs. Strydom AJA (Maritz JA and Mtambanengwe AJA concurring) said that just as little as the registered person who was the owner of a supermarket or the farmer, who were both providing food, could claim to be in the entertainment business, so little could the harvester of fish claim to be in the entertainment business when it caught and marketed fish.

The harvester of fish, the supermarket owner and the farmer could not deduct input tax for entertainment simply because the ordinary nature of their businesses was not that of entertaining. The ordinary business of the respondent, and therefore its taxable activity, was not entertainment but the catching and marketing of fish.




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