Botswana: Business Environment

Accounting Rules

Tax Year

The tax year ends on 30 June; however, companies may set their own accounting year, ending on another date than 30 June. This accounting year is then used for the computation of the company’s taxable income.

Accounting Standards

International Financial Reporting Standards (IFRS) are required for both domestic and foreign companies whose securities trade in a public market. SMEs may opt to use IFRS for SMEs Standard if they meet all three of the following requirements:

Turnover less than BWP10 million (approximately US$ 950,000)
Assets less than BWP 5 million (approximately US$ 500,000)
Company is not a subsidiary of a holding company

Larger SMEs are required to fully meet IFRS Standards.

Accounting Regulation Bodies

BICA
BAOA

Accounting Reports

The presentation and preparation of financial statements should be performed in accordance with the Financial Report Act No.11. Financial statements must include:

Statement of Financial Position
Statement of Profit or Loss and Other Comprehensive Income
Statement of Distribution
Statement of Cash Flows
Statement of Changes in Shareholder’s Funds
Notes to Financial Statements

Publication Requirements

All companies incorporated in Botswana are required to prepare annual financial statements pursuant to the Companies Act. Group companies are required to prepare consolidated financial statements.

Professional Accountancy Bodies

BICA , Botswana Institute of Chartered Accountants

Certification and Auditing

Financial statements, except those of private limited companies meeting certain thresholds, are required to be audited annually.

Accounting News

Tax Rates

Consumption Taxes

Nature of the Tax: Value-added tax (VAT)
Tax Rate: 14% (from 31 March 2023; was 12% before that date)
Reduced Tax Rate: No reduced rates are available. Nevertheless, several items are exempt from VAT while others are zero-rated.
Exempt goods and services include medical services provided in a public medical facility; supply of prescription drugs; education; some agricultural farming implements; financial services (unless provided for a fee, charge or commission).
Zero-rated goods and services include exports of goods and services; international transport; cooking oil; petroleum gas; sale of a business as a going concern to a registered person; fuel for vehicles; illuminating paraffin; sorghum and maize meal for human consumption; bread flour, sugar, brown bread, fresh fruits, rice, milk and samp (coarsely ground corn); intellectual property rights for use outside Botswana; household consumption of water up to 5,000 litres or 25 drums of 200 litres.
Other Consumption Taxes: Customs and excise duties apply to the importation of goods (including currencies). Anti-dumping and countervailing duties may also apply in addition to customs and excise duties. Supplies traded within the Southern African Customs Union (Botswana and South Africa, Lesotho, Namibia, and Swaziland) are exempt from customs and excise duties.

Corporate Taxes

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.
The sale of any shares, units, or debentures of a resident company is exempt from tax if the resident company being sold is a public company; the shares, units, or debentures are traded on the Botswana Stock Exchange; and the company has made 49% or more of its equity available for trading on the Botswana Stock Exchange. Furthermore, the shares, units, or debentures have to be held by the taxpayer for a period of at least one year prior to the date of disposal.
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 minus 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. The carryback of losses is not permitted.
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.

Country Comparison For Corporate Taxation

	Botswana	Sub-Saharan Africa	United States	Germany
Number of Payments of Taxes per Year	34.0	36.6	10.6	9.0
Time Taken For Administrative Formalities (Hours)	120.0	284.8	175.0	218.0
Total Share of Taxes (% of Profit)	25.1	47.3	36.6	48.8

Source: Doing Business - Latest available data.

Individual Taxes

Tax Rate

Income Tax (for residents)	Progressive rates up to 25%
From BWP 0 to 48,000	0%
From BWP 48,001 to 84,000	5%
From BWP 84,001 to 120,000	12.5% + BWP 1,800
From BWP 120,001 to 156,000	18.75% + BWP 6,300
Above BWP 156,000	25% + BWP 13,050
Capital gains	Progressive rates up to 25%
From BWP 0 to 36,000	0%
From BWP 36,000 to 84,000	5%
From BWP 84,000 to 120,000	12.5% + BWP 2,400
From BWP 120,001 to 156,000	18.75% + BWP 6,900
Above BWP 156,000	25% + BWP 13,650
Income Tax (for non-residents)	Progressive rates up to 25%
From BWP 0 to 84,000	5%
From BWP 84,001 to 120,000	12.5% + BWP 4,200
From BWP 120,001 to 156,000	18.75% + BWP 8,700
Above BWP 156,000	25% + BWP 15,450

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, 10% for dividends, and 10% for entertainment fees.

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed: See the list of Double Taxation Avoidance Agreements signed by Botswana
Withholding Taxes: Dividends: 10% (residents and non-residents), Interest: 10% (residents)/15% (non-residents), Royalties: 0% (residents)/15% (non-residents)
Bilateral Agreement: Botswana and Mauritius concluded a Double Taxation Agreement.

Sources of Fiscal Information

Tax Authorities: Overview of Botswana's tax measures in response to Covid-19
Botswana Unified Revenue Service
Other Domestic Resources: Ministry of Finance

Intellectual Property

National Organisations: Companies and Intellectual Property Authority (CIPA), Ministry of Trade & Industry
Regional Organisations: Companies and Intellectual Property Authority (CIPA) is a member of World Intellectual Property Organisation (WIPO), African Regional Intellectual Property Organisation (ARIPO) and the Corporate Registers Forum.
International Membership: Membership to the TRIPS agreement - Trade-Related Aspects of Intellectual Property Rights (TRIPS)

Legal Framework

Independence of Justice

Botswana is considered as one of the most stable democracies in Africa and the judiciary is relatively independent. Nevertheless, the country has been under a single-party rule since its independence. Botswana's judicial independence score, according to the World Bank (World Economic Forum Index), has been on the decline over the last few years and stands now at 4.21, which is lower than Namibia and South Africa but higher than Mozambique and Zimbabwe. World Justice Project ranks Botswana 45th out of 113 countries in its latest Rule of Law ranking.

Equal Treatment of Nationals and Foreigners

The right to equal treatment is protected by the Section 3 of the Constitution. The article prohibits all forms of discrimination based on race, place of origin, political opinions, colour, creed or sex.

The Language of Justice

English and Setswana

Recourse to an Interpreter

Courts provide interpretation services in English and Setswana.

Sources of the Law and Legal Similarities

The origins of modern law in Botswana date back to the founding of Bechuanaland Protectorate. The common law that is enforced today was based on the Roman-Dutch law received from Holland and introduced into the Protectorate through the Cape Colony (modern day South Africa). The following are the main sources of law in Botswana:

The Constitution (as adopted upon the independence of the country in 1966)
Customary law (indigenous legal systems are recognised but are not incorporated into the general law)
Common law
Legislation
Judicial precedent

Checking National Laws Online

E-Laws Botswana

Standards

National Standards Organisations: BOBS, Botswana Bureau of Standards
Integration in the International Standards Network: BOBS is also a full member of the International Organisation for Standardisation (ISO) and the national contact point for all SADC programmes and Standardisation and Quality Assurance. BOBS is also a member of the World Trade Organisation (WTO).
Classification of Standards: Botswana's standards regime consists of compulsory and voluntary standards. Compulsory standards comprise human health, safety, environment and export and are enforced on seven products: petroleum gas, poultry feed, pre-packaged goods for consumers, cereals/sorghum grains for consumption, cattle feeds. Compulsory are divided into two categories: Prescribed and non-prescribed (standards that are not prescribed under the Standards Import Inspection Regulation (SIIR)). Voluntary standards are not legally binding.
Online Consultation of Standards: Online Catalogue of Published Standards
Certification Organisations: BOBS Botswana Bureau of Standards

Business Practices

General Information
Opening Hours and Days: 45 hours (a nine-hour five-day week) per week or alternatively an eight hour six day. Persons employed solely to watch over any property of the industry can work 10 hours a day or up to 60 hours a week. A rest day at least 24 consecutive hours, (typically Sunday), is given in every period of seven consecutive days. Local government/business hours are commonly from 7:30-12:45 and 13:45-16:30.

Public Holidays

New Year's Day	January 1
Good Friday	March 30 (Friday before Easter Sunday)
Easter Monday	April 2 (Monday after Easter Sunday)
Labour Day	May 1
Ascension	May 10 (40 days after Easter)
Sir Seretse Khama Day	July 1
President's Day	July 16 (Third Monday in July)
Botswana Day	September 30
Christmas Day	December 25
Boxing Day	December 26

Holiday Compensation: If a public holiday falls on a non-work day, Saturday or Sunday, the following Monday is substituted as a public holiday.

Periods When Companies Usually Close

Closure for Easter	End of March - Early April
Closure for Christmas	End of December

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