Tax rates in Botswana

Company Tax

22%

Tax Rate For Foreign Companies

Botswana has a source-based taxation system. Non-resident companies are taxed on their Botswana-sourced income at a rate of 30%.
A company is resident in Botswana if it is incorporated or managed and controlled in the country.

Capital Gains Taxation

Capital gains are included in taxable income and imposed at the standard corporate tax rate. Where capital gains arise from the sale of shares, only 75% of the net aggregate gain is taxable. Gains from shares that are listed on the Botswana Stock Exchange (BSE) are tax-exempt if the seller holds at least 49% of the shares for at leasat one year prior to the disposal. Gains from the disposal of International Financial Services Centre (IFSC) shares are exempt from tax.

Main Allowable Deductions and Tax Credits

Expenditures incurred on machinery and equipment before 30 June 1982 can be claimed up to 100%. Deduction for expenditures incurred after this date is calculated on the cost by the straight-line method on the basis of the expected useful lives of the individual assets. An initial allowance of 25% is granted for the improvement of certain industrial buildings. A separate allowance of 2.5% is extended to all industrial and commercial buildings based on cost or, for industrial buildings on which an initial allowance had been claimed, the original cost less the initial allowance. Mining companies qualify for a standalone mining capital allowance calculated in accordance with 100% of the mining capital expenditure made in the year in which such expenditure was incurred. Amortisation of goodwill and start-up expenses are not tax-deductible.
Interests paid to a resident are deductible whereas those paid to a non-resident can be deducted in the year when the relevant withholding tax on interest has been remitted to the Botswana Unified Revenue Service. Bad debts that are written off are tax-deductible.
Charitable contributions are tax-deductible (capped at 20% of taxable income). Donations must be made to educational institutions recommended by the Ministry of Education or sports clubs or sports associations recommended by the Ministry of Youth, Sport and Culture and approved by the Commissioner-General.
Fines and penalties cannot be deducted for tax purposes.
Net operating losses can be carried forward up to five years. Mining companies can carry forward their losses indefinitely. Carryback of losses is not permitted.

Special tax allowances include:
- Training allowance – 200% of expenditure which is not funded by the Botswana Qualification Authority
- Construction of dwellings for employees of any business other than mining – BWP 25,000 per house
- Industrial buildings – 25% initial allowance and 2.5% annual allowance on the cost of construction or purchase of new buildings or on any improvements
- Mining capital allowances – 100% of mining capital expenditure allowed as a deduction in the year of expenditure
- Plant and machinery – heavy civil engineering plant used directly in construction and self-propelled portable plant or machinery used directly in manufacture or production, 25% per annum; other industrial plant or machinery used directly in manufacture or production, 15% per annum; other plant and machinery, 10% per annum
- Aircraft and motorised road vehicles – 25% per annum
- Computers – 25% per annum
- Farming – companies engaged in farming operations are entitled to special deductions in relation to the following items of capital expenditure: a farm development expenditure, deductible in the tax year in which it is incurred, for costs incurred in developing farming land for producing farming income; expenditure incurred on various activities, including the prevention of soil erosion, sinking of boreholes and wells, the construction of irrigation channels, fencing and the building of roads, bridges or airstrips used in connection with the farming operations; the cost of the establishing trees, plantations, orchards and vineyards; expenditure incurred on the construction of buildings (other than dwelling houses); farming assessed losses may be carried forward for five years.

Other Corporate Taxes

A Vocational Training Levy (VTL) is due by every taxpayer who is registered for VAT, with rates at 0.2% on annual turnover up to BWP 2 billion and 0.05% on the excess.
Capital transfer tax is levied on the beneficiary at a rate of 12.5% upon the transfer (through inheritance or gratuitous disposal of property) of tangible or intangible, movable or immovable, property.
Transfer duty is levied on the value of immovable freehold and leasehold property at a rate of 5%. The first BWP 1 million of the sale value is exempt from tax if the property is transferred to a citizen of Botswana. The rate for non-citizens is 30%.
There are no stamp duty, social security contributions or property taxes in Botswana.

Other Domestic Resources

Botswana Unified Revenue Service

Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.

Tax Rate

Allowable Deductions and Tax Credits

Business-related expenses are not deductible (except for those incurred as a condition of employment or for the purpose of producing the employee's income). When no gratuity is provided to the employee, deductions for contributions to an approved retirement benefits scheme are allowable up to a maximum of 15% of earned income.
There are no other standard tax deductions for individuals.
Individuals with business income are entitled to the same deductions as are granted to companies.

Special Expatriate Tax Regime

Botswana has a territorial system of taxation. An individual is deemed to be a resident if he/she has a permanent place of abode in Botswana and is physically present in the country for not less than 183 days in that tax year or the previous tax year.
The income of non-residents is subject to different tax brackets (see the individual taxation section). Non-residents pay withholding tax at the following rates for locally-sourced income: 15% for interest, commercial royalties, and management and consultancy fees, 7.5% for dividends, and 10% for entertainment fees.