The Botswana tax system operates on a territorial basis, and income is taxable in Botswana if the source is within Botswana. Income for services performed outside Botswana is deemed to be from a Botswana source if the services are incidental to employment in Botswana.
A resident is taxable on all income from a Botswana source in accordance with the PIT rates.
A non-resident is taxable on earned income in accordance with the PIT rates but pays to withhold tax (WHT) only at the rate of 15% for interest, commercial royalties, and management and consultancy fees, 10% for dividends, and 10% for entertainment fees, where such income is of Botswana origin.
An individual is liable for taxation on their earnings and profits generated from a source or deemed source within Botswana. Profits include both income and capital gains realized by the individual. Income tax payable by individuals is calculated by applying a graduated rate schedule to taxable income. Currently, the top rate is 25 percent on income in excess of 144,000 Botswana Pula (BWP) per year.
The official currency of Botswana is the Botswana Pula (BWP).
Herein, the host country/jurisdiction refers to the country/jurisdiction to which the employee is assigned. The home country/jurisdiction refers to the country/jurisdiction where the assignee lives when they are not on assignment.
Income Tax
Tax returns and compliance
Tax rates
Residence rules
Termination of residence
Economic employer approach
Types of taxable compensation
Tax-exempt income
Expatriate concessions
Salary earned from working abroad
Taxation of investment income and capital gains
Additional capital gains tax (CGT) issues and exceptions
General deductions from income
Tax reimbursement methods
Calculation of estimates/prepayments/withholding
Relief for foreign taxes
General tax credits
Sample tax calculation
Tax returns and compliance
When are tax returns due? That is, what is the tax return due date?
30 September.
What is the tax year-end?
The tax year-end for individuals is 30 June of each year.
What are the compliance requirements for tax returns in Botswana?
Residents
Income tax payable by the individual employee on their annual gross income is generally recovered at the source under the PAYE salary deduction system and withholding taxes payable on certain categories of income. All individuals whose annual gross income exceeds BWP36,000 are required to register as taxpayers and submit annual tax returns no later than 30 September following the end of the tax year. Upon request, an extension is possible.
Progressive tax rates (5 percent to 25 percent) apply. The first BWP36,000 is tax free. The highest marginal tax rate of 25 percent is applied to taxable income in excess of BWP144,000.
Non-residents
Non-resident individuals are required to register as taxpayers and to comply with all tax return and compliance obligations in the same way as residents, in relation to income from a Botswana source. Non-residents are, however, taxed slightly differently from residents in that there is no exemption from tax on the first BWP36,000 per year which is taxed at the rate of 5 percent.
Tax rates
What are the current income tax rates for residents and non-residents in Botswana?
Residents
Income tax table for 2021
| Taxable income bracket | Total tax on income below bracket | Tax rate on income in bracket | |
| From BWP | To BWP | BWP | Percent |
| 0 | 72,000 | 0 | 5.00% over BWP36,000 |
| 72,001 | 108,000 | 1,800 | 12.50% over BWP72,000 |
| 108,001 | 144,000 | 6,300 | 18.75% over BWP108,000 |
| 144,001 | Over | 13,050 | 25.00% over BWP144,000 |
Non-residents
Income tax table for 2021
| Taxable income bracket | Total tax on income below bracket | Tax rate on income in bracket | |
| From BWP | To BWP | BWP | Percent |
| 0 | 72,000 | 0 | 5.00% over BWP0 |
| 72,001 | 108,000 | 3,600 | 12.50% over BWP72,000 |
| 108,001 | 144,000 | 8,100 | 18.75% over BWP108,000 |
| 144,001 | Over | 14,850 | 25.00% over BWP144,000 |
Are there capital gains tax exceptions in Botswana? If so, please discuss?
Exemption from tax is restricted to gains on disposal of specified assets/property including shares held in Botswana resident companies, held for at least one year and traded on the Botswana Stock Exchange, shares in a Botswana registered public company as defined in the Income Tax Act, bonds held for at least one year, and debentures issued by the government, Bank of Botswana or statutory bodies, shares in an International Financial Services Company, principal private residence.
When are estimates/prepayments/withholding of tax due in Botswana? For example: monthly, annually, both, and so on.
Withholding tax is due within 15 days of the end of the month of deduction.
Currently individuals are not required to make estimates or prepayments of tax. Assessed tax is due 30 days from issue of assessment.
Residence rules
For the purposes of taxation, how is an individual defined as a resident of Botswana?
An individual is regarded as a resident of Botswana, if:
- the individual’s permanent place of abode is in Botswana
- the individual is physically present in Botswana for a period exceeding 183 days during a tax year (a tax year covers 12 months from 1 July to 30 June)
- they maintain a place of abode in Botswana and is physically present in Botswana for at least 183 days during the tax year; or
- they are physically present in Botswana for a period and such period is continuous with a preceding or succeeding period of physical presence where they are treated as a resident.
Is there, a de minimus number of days rule when it comes to residency start and end date? For example, a taxpayer can’t come back to the host country/jurisdiction for more than 10 days after their assignment is over and they repatriate.
There is no such requirement. The test is based on the criteria stated above.
What if the assignee enters the country/jurisdiction before their assignment begins?
This counts towards the period of physical presence in Botswana in determining the residency status.
Termination of residence
Are there any tax compliance requirements when leaving Botswana?
If the individual was registered as a taxpayer they will be required to file the final tax return, settle any outstanding taxes, and apply for tax de-registration. There are no requirements where the individual is not registered for tax. However, where the Commissioner General deems it necessary, they may at any time require an individual to submit a tax return for a tax year specified if they feel that the individual may leave Botswana permanently.
What if the assignee comes back for a trip after residency has terminated?
There are no implications on residency should an assignee come back to Botswana for a trip after termination of tax residency.
Communication between immigration and taxation authorities
Do the immigration authorities in Botswana provide information to the local taxation authorities regarding when a person enters or leaves Botswana?
Currently, KPMG in Botswana is not aware of such communication. However, the Commissioner General is free to obtain such information from any source they consider appropriate.
Filing requirements
Will an assignee have a filing requirement in the host country/jurisdiction after they leave the country/jurisdiction and repatriate?
An assignee will have filing requirements only if Botswana-source income, which is not subject to final withholding tax, accrues to them.
Economic employer approach
Do the taxation authorities in Botswana adopt the economic employer approach to interpreting Article 15 of the Organisation for Economic Co-operation and Development (OECD) treaty? If no, are the taxation authorities in Botswana considering the adoption of this interpretation of economic employer in the future?
No. There is no indication that this approach will be adopted in Botswana in the near future.
De minimus number of days
Are there a de minimus number of days before the local taxation authorities will apply the economic employer approach? If yes, what is the de minimus number of days?
No – Not applicable.
Types of taxable compensation
What categories are subject to income tax in general situations?
As a rule, all types of compensation and remuneration received by an employee for services rendered in Botswana or deemed to be from a source within Botswana constitute taxable income. These include, but are not limited to, the following:
- basic salaries, wages, leave pay, and bonuses
- fees, commissions, and so on
- contractual gratuities
- cash allowances (which include travelling, entertainment, or any other allowances)
- non-cash benefits.
Intra-group statutory directors
Will a non-resident of Botswana who, as part of their employment within a group company, is also appointed as a statutory director (i.e. member of the Board of Directors in a group company situated in Botswana trigger a personal tax liability in Botswana, even though no separate director’s fee/remuneration is paid for their duties as a board member?
Yes, however a personal tax liability will be triggered by the rendering of services, including attending board meetings, in Botswana.
a) Will the taxation be triggered irrespective of whether or not the board member is physically present at the board meetings in Botswana?
No, the taxation will be triggered by physical presence in Botswana.
b) Will the answer be different if the cost directly or indirectly is charged to/allocated to the company situated in Botswana (i.e. as a general management fee where the duties rendered as a board member is included)?
No, the answer remains the same.
c) In the case that a tax liability is triggered, how will the taxable income be determined?
Taxable income is that portion of the remuneration that relates to services rendered in Botswana.
Tax-exempt income
Are there any areas of income that are exempt from taxation in Botswana? If so, please provide a general definition of these areas.
Within employment contracts, the following items are not taxed in the hands of the employee:
- medical costs/health insurance paid by the employer
- contributions by both the employer and employee to an approved retirement or pension fund
- provision of contractual free passage for the employee and immediate dependents between the place of employment and the place of recruitment
- one-third of gratuity paid after completion of a minimum of 2 years’ service
- one-third of a retrenchment package received by an employee from their previous employer.
As a general rule, there are limited instances where individuals are exempt from taxation in Botswana. Such instances would include employees of diplomatic missions and employees of companies providing technical assistance to the government of Botswana where the agreement provides for exemption.
Expatriate concessions
Are there any concessions made for expatriates in Botswana?
One third of contractual terminal gratuity is tax free.
Salary earned from working abroad
Is salary earned from working abroad taxed in Botswana? If so, how?
Foreign employment income is normally not taxable in Botswana. However employment income accruing in respect of work performed abroad during temporary absence from Botswana by a resident and for the employer in Botswana, is taxable in Botswana.
Taxation of investment income and capital gains
Are investment income and capital gains taxed in Botswana? If so, how?
Botswana bank and building society interest accruing to a resident individual in excess of BWP7,800 (exempt portion) is subject to 10 percent withholding tax which is a final tax. All other interest income of resident taxpayers is taxed at the normal resident individual tax rates.
Interest received by an individual from the following sources is, however, exempt from tax:
- interest received from the Botswana Savings Bank, including interest on Botswana Savings Bank Certificates
- interest received on national development bonds exempt under the National Development Bank Act
- interest on bonds exempt under the Development Loan Act
- interest on any subscription shares issued by any building society resident in Botswana
- interest not exceeding BWP7,800 per year received by an individual from any banking institution or building society in Botswana.
Foreign dividends are subject to income tax at a rate of 15 percent with relief for foreign tax paid. However foreign investment income (interest and capital gains) accruing to a non-citizen resident in Botswana is not subject to tax.
Botswana dividends are subject to withholding tax at the rate of 7.5 percent. The rate may be varied by an applicable double taxation agreement. This is a final tax.
Commercial royalties, entertainment fees, and management or consultancy fees accruing to a resident from a source within Botswana are taxed as business income on assessment.
Interest commercial royalties, and management or consultancy fees paid by a resident to a non- resident are subject to withholding tax of 15 percent on the gross amount paid.
Withholding tax rates may be varied by an applicable double taxation agreement. The tax so withheld is final.
Capital gains are taxed as per the rates shown in the following table.
| Taxable income | Cumulative | Percent | Tax payable | |
| 0 | 18,000 | 0 | ||
| 18,001 | 72,000 | 0 | + 5.00% | Over 18,000 |
| 72,001 | 108,000 | 2,700 | + 12.50% | Over 72,000 |
| 108,001 | 144,000 | 7,200 | + 18.75% | Over 108,000 |
| 144,001 | and over | 13,950 | + 25.00% | Over 144,000 |
Any capital gain realized by an individual with respect to the disposal of the following assets will be included in the calculation of the taxable income of the individual:
- any property including residential property
- ny shares or debentures held in a company.
The capital gains realized by an individual on the following assets are not subject to tax and therefore will not be included in the calculation of taxable income of an individual.
- Property, except land and buildings, which is owned by a business and on which capital allowances under the Income Tax Act of Botswana have been granted.
- The principal private residence of an individual where such property has been owned for at least 5 years. This applies only where no similar exemption was granted during the 5 years immediately preceding the date of disposal.
- Shares and debentures held, for at least 1 year, in a Botswana resident public company or traded on the Botswana stock exchange.
- Shares held in an International Financial Services Centre company.