A tax is a mandatory fee or financial charge levied by any government on an individual or an organization to collect revenue for public works providing the best facilities and infrastructure. The collected fund is then used to fund different public expenditure programs.
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 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 returns 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 the bracket | The tax rate on income in the 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 the bracket | The tax rate on income in the 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 the 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 are 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 the 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 not, 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 minimum number of days before the local taxation authorities will apply the economic employer approach? If yes, what is the de minimum 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 traveling, entertainment, or any other allowances)
- non-cash benefits.
How much is a tax in Botswana?
Residents
| Taxable income bracket | The tax rate on income in the bracket | |
|---|---|---|
| From BWP | To BWP | Percent |
| 0 | 72,000 | 5.00% over BWP36,000 |
| 72,001 | 108,000 | 12.50% over BWP72,000 |
| 108,001 | 144,000 | 18.75% over BWP108,000 |