Low Tax Regime

A low taxation environment has been in place for some years to encourage inward investment and expansion by local business, and will be maintained for the foreseeable future. Corporate income tax is capped at 25 per cent, while a special 15 per cent rate is available for certain categories of manufacturing and all companies operating within the jurisdiction of the International Financial Services Centre (IFSC).

Botswana Financial Service Center (BIFSC)

The health of Botswana's macroeconomic environment and the introduction of an entirely liberalized foreign exchange regime are key factors in the thinking behind the government's establishment of the International Financial Services Centre (BIFSC).

Set up in 2000, its role is to stimulate the growth of cross border financial services from Botswana in currencies other than the Botswana pula (BWP).

Since 1999, the government has enacted legislation to provide the tax incentives, approval processes and regulatory structure necessary to create a genuinely international service centre. Legislation is in place to help prevent money laundering and associated white-collar crimes, as well as to ensure the integrity of international financial services operations. Provisions on the prevention of concealment and disposition of the proceeds of crime have been strengthened.

As a result, it is now mandatory for banks and all other commercial firms to report any suspicious business relationships and transactions involving the transfer of cash into and out of Botswana, subject to stringent penalties. The tax incentives include:

• A corporate tax rate of 15 per cent until 2020
• Exemption from withholding taxes in Botswana
• Credits for withholding taxes in other jurisdictions
• Access to double taxation treaties
• Tax exemptions for collective investment undertakings (for unit trusts and collective investment structures).

For more information on BIFSC, visit www.botswanaifsc.com.

Low Tax

Botswana has one of the simplest and comprehensive tax regimes in the world. Corporate tax rates in Botswana are the lowest in the SADC region at 15% for all manufacturing concerns and all companies operating within the jurisdiction if the BIFSC and 25% for other non-manufacturing. The 15% manufacturing tax comprises of 10% additional tax and 5% basic company tax. VAT is imposed comprehensively on an end-user basis and the rate of 10% on standard rated supplies and 0% on zero-rated supplies. The personal tax regime is based on taxable income brackets.

Corporate Tax

Source: World Bank, World Development Indicators, 2005

Personal Tax

Taxation allowances

• Capital allowances - the maximum allowance is 100% of the cost.
• Plant and machinery - an annual allowance ranging from 10% to 25% of the cost can be claimed.
• Buildings - an initial allowance of 25% applies to new buildings and improvements to existing buildings used in an industrial business.
• Training - an employer is allowed a deduction of 200% of the cost of training employees, for such training as is approved by the Commissioner.