Botswana has a sourced-based taxation system.
A company is considered a resident of Botswana if:
- its registered office or place of incorporation is in Botswana; or
- if the company is managed and controlled in Botswana.
corporate tax rate
Resident companies are subject to corporate income tax at a rate of 22% and permanent establishments of foreign entities 30%.
Approved manufacturing and IFSC registered companies are taxed at 15%.
Mining profits, other than profits from diamond mining are taxed according to a specific formula, whereas diamond mining is usually taxed in terms of an agreement with the Government of Botswana.
|capital gains tax (“CGT”)|
Gains from the disposal of specified assets, including immovable property and marketable securities, are included in normal taxable income and taxed at the rate of 22% for resident companies and 30% for non-resident companies.
Where the gain arises from the sale of shares, only 75% of the amount realised is taxable and gains from shares listed on the Botswana Stock Exchange are exempt if the seller holds less than 49% of the shares.
withholding tax (“WHT”) rates
WHT rate (%)
|branch profits|| N/A||N/A |
|dividends|| 7.5%||7.5% |
|interest|| 10%||15% |
|royalties|| N/A||15% |
|management, consulting and technical service fees|| N/A||15% |
| || |
double tax agreements (“DTAs”)
DTAs are in force with Barbados, France, India, Ireland, Mauritius, Russia, Seychelles, South Africa, Sweden and the United Kingdom.
|losses||Ordinary losses are deductible and may be carried forward for five years. Special rules are applicable to mining and farming companies.|
There are no specific transfer pricing regulations, apart from the general anti-avoidance rules.
Where the Commissioner General is of the opinion that a transaction, operation or scheme, including a transaction for alienation of property, is fictitious or artificial or is entered into or carried out otherwise than as a transaction between independent persons dealing at arm’s length and the transaction has the effect of avoiding, reducing or postponing the liability of tax to any person for any tax year, then he/she may disregard the transaction and determine the liability for the tax chargeable as if the transaction had not been entered into or carried out.
|thin capitalisation||Thin capitalisation legislation applies in respect of only mining companies and IFSC registered companies.|
|employee taxes||The income tax rates applicable to resident individuals, effective 1 July 2011, are:|
|annual chargeable income (BWP)||tax rate |
|up to 36 000|| 0%|
|36 001-72 000|| 5%|
|72 001-108 000|| 12.5%|
|108 001-144 000|| 18.75%|
|above 144 000|| 25%|
|Botswana does not have national social security legislation that requires contributions by employers or employees.
Employers in the non-public sector are required to make provision for contributions to the appropriate privately established insurance and pension schemes for their employees.
These contributions are deductible up to a maximum of 15% of the employee’s income.
|payroll taxes||There is no payroll tax in Botswana.|
|stamp duty ||There are no stamp duties in Botswana, but the free transfer or disposal of tangible or intangible movable or immovable property is subject to capital transfer tax levied under the Capital Transfer Tax Act.|
|taxable supplies ||VAT is levied on the supply of goods and services by taxable persons in Botswana and on the import of goods and services into Botswana.|
|registration threshold||A company must register for VAT if at the beginning of any 12-month period there are reasonable grounds to believe that the total value of annual taxable supplies will exceed BWP1-million.|
|reverse VAT on imported services|
The recipient of services imported for use or consumption in Botswana for a purpose other than making taxable supplies are liable to declare output VAT on such services in terms of a reverse-charge mechanism.
Such VAT is not available as an input credit.