CAPITAL
Gaborone
POPULATION
2.4 Million
AREA
581,730 sq km
LEGAL SYSTEM
A mixed legal system of civil law was influenced by the Roman-Dutch model and also customary and common law.
TAX REGIME
Personal Income Tax | Local & Expatriate
| Summary | Tax Rate/s |
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Resident and non-resident persons subject to tax must file individual income tax returns by 30 September of each tax year except employees who earn less than P144 000 per annum who has no other source of income. A person is regarded to be resident if they spent at least 183days in Botswana in a tax year. There are no special tax laws applicable to expatriates. Remuneration from employment is taxed when it is from a Botswana or Botswana-deemed source. Employers must deduct PAYE and remit it to the tax authority by the 15th day of the month following that in which remuneration is paid to employees.
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See Annexure 1 |
Corporate Income Tax
| Summary | Tax Rate/s |
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Provisional tax is paid upfront in four quarterly instalments with any shortfall being due by the time of submitting corporate tax returns i.e. 4 months after the end of each company’s financial year end. Companies are, just like any other taxpayer, only taxed on income sourced from Botswana or from a deemed Botswana source.
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Withholding Tax
| Summary | Tax Rate/s |
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Withholding taxes are taxes that are deducted at source, i.e. before payment is made to the payee. The taxes are levied on incomes such as interest, payments under construction contracts, dividends, commercial royalties, rent, technical fees, and commission/brokerage fees. Some of the withholding taxes are only deducted on payments made to non-residents of Botswana such as technical fees, commercial royalties and entertainment fees. The other withholding taxes are deducted on payments made to both residents and non-residents such as interest, dividends, rent, construction contracts and commission. |
Tax rate differs for all withholding taxes and can also be reduced by tax treaties where the withholding tax is deducted from non-residents. |
Capital Gains Tax
| Summary | Tax Rate/s |
| There is no separate Capital Gains Tax Act but the tax is levied under the Income Tax Act on the disposal of specified assets such as immovable property, shares and businesses. The tax is levied at 22% or 30% on companies and individuals are taxed using sliding rates. | See Annexure 1 |
Environmental Levy
| Summary | Tax Rate/s |
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There is no environmental levy in Botswana. |
Inheritance Tax
| Summary | Tax Rate/s |
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This is a tax paid by a beneficiary on inheritances. Inherited property is only subject to tax on the amount in excess of the first P100 000 of the market value of the property. There are several exemptions from the tax such as inheritances by heirs and spouses.
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The tax is charged at 12.5% on both resident and non-resident companies and at a maximum rate of 5% on amounts in excess of P 500 000. See Annexure 1 for more details. |
Dividend Tax
7.5% or as reduced by the applicable tax treaty.
| Summary | Tax Rate/s |
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Companies paying dividends to shareholders are required to deduct a withholding tax of 7.5% or as reduced under an applicable tax treaty. The tax is a final tax for resident persons.
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7.5% or as reduced by the applicable tax treaty.
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VAT/GST
| Summary | Tax Rate/s |
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VAT is charged at 12% on all goods which are neither zero-rated or exempt. It is only charged by VAT registrants and the minimum turnover threshold for VAT registrations is P 500 000. Input tax is claimable on almost all expenditures save for a few which are prohibited such as on entertainment and passenger vehicles.
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12%, 0% or exempt. |
Bilateral Tax Treaties and DTAAs
| Summary | Tax Rate/s |
| The country has tax treaties with a number of countries and the treaties sometimes reduce the withholding taxes applicable on payments made from Botswana. | The rates of taxes imposed by tax treaties are varied and apply to withholding taxes on payments made to non-residents. The country has tax treaties with the following countries: Mauritius, United Kingdom & Northern Ireland, South Africa, Lesotho, Eswatini, Zimbabwe, Barbados, Seychelles, Russia, Namibia, Sweden and Zambia. This list changes as and when treaties are ratified. |
Tax Incentives
| Summary | Tax Rate/s |
| The country has a concessionary corporate tax rate of 5% for companies which invest in the SPEDU area, a region of villages surrounding a town known as Selebi Phikwe. The 5% applies in the 1st 5 years of trading whilst 10% applies thereafter. Manufacturing companies are also taxed at 15%. | As indicated in the last table.. |
VOIS (VAT on imported services)
| Summary | Tax Rate/s |
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This is a tax paid by all importers of services who use the services other than in the making of taxable supplies. Most common payers of the tax are banks and non-VAT registrants who import services rendered by a non-resident.
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12%
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Tax Rulings and Directives
| Summary | Tax Rate/s |
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The tax authority can issue tax directives upon requests by taxpayers. These are generally binding. However, practice notes are neither binding on the taxpayer nor the tax authority..
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N/A
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TOP INDUSTRIES
DIAMONDS
COPPER
NICKEL
SALT
SODA ASH
POTASH
IRON ORE
SILVER
BEEF PROCESSING
TEXTILES
ECONOMIC OVERVIEW
Through fiscal discipline and sound management, Botswana has transformed itself from one of the poorest countries in the world five decades ago into a middle-income country with a per capita GDP of approximately $18,100 in 2017.
Botswana also ranks as one of the least corrupt and best places to do business in Sub-Saharan Africa. Because of its heavy reliance on diamond exports, Botswana’s economy closely follows global price trends for that one commodity. Diamond mining fueled much of Botswana’s past economic expansion and currently accounts for one-quarter of GDP, approximately 85% of export earnings, and about one-third of the government’s revenues. In 2018, Diamond exports increased to the highest levels since 2013 at about 22 million carats of output, driving Botswana’s economic growth to about 4.5% and increasing foreign exchange reserves to about 45% of GDP.
Tourism is a secondary earner of foreign exchange and many Batswana engage in tourism-related services, subsistence farming, and cattle rearing. According to official government statistics, unemployment is around 20%, but unofficial estimates run much higher. The prevalence of HIV/AIDS is the second highest in the world and threatens the country’s impressive economic gains.