An income tax is a tax imposed on individuals or entities in respect of the income or profits earned by them. Income tax generally is computed as the product of a tax rate times the taxable income. Taxation rates may vary by the type or characteristics of the taxpayer and the type of income.
An employer is obliged to deduct tax from remuneration paid to his employees in accordance with and in the manner specified in the Fifth Schedule of the Income Tax Act and shall carry out such other obligations as are imposed by that schedule (section 56). This form of withholding is what is commonly referred to as the PAYE system of withholding. Remuneration includes:
1. Salaries, wages, bonus, allowances;
2. Commission, pension, lump sum payments;
3. Commutation of amounts under a contract of employment; and
4. Non-cash benefits to an employee. Non-cash benefits include the following employer-incurred expenses on behalf of the employee:
- School fees
- Utilities
- Motor vehicles
- Housing
- Furniture and furnishings
- Interest-free and concessionary interest loans
- Shares at lower than market values and
- Any other benefit in kind.
- Valuation of such benefits is as prescribed in Part IIITax Tables and Guidance notes
Employer requirements
1. Registration
The registration process for PAYE is an extension of the registration for income tax. An employer who has an employee(s) must register for PAYE. The person must indicate the tax type for which he/she is registering. Notice will be sent to inform them of their new TIN for PAYE.
2. Submission of Monthly remittance
An employer with employees earning employment income above the taxable threshold (P2500 per month) must deduct tax and remit it to BURS. The rate of tax applied depends on the amount of the employee’s income, as outlined in Tax Tables and Guidance notes. The prescribed form used for tax deducted from an employee’s remuneration is the Monthly remittance return for PAYE (ITW 7A). It must be accompanied by a remittance slip(rem 2) which is available at BURS and a cheque. For payment procedures, see Payments
3. Submission of annual return
Every employer is required to submit an annual return within 31 days after the end of the tax year showing;
a) details of the employer and totals of tax deducted and paid to the Commissioner General in form ITW10(PAYE) – Annual Withholding tax return for PAYE
b) List of employees and all details pertaining to PAYE (ITW 10A), and
c) Copy of tax certificate (ITW8) indicating tax deducted in respect of each employee.
4. Issuance of Tax Certificate to an Employee
All employees whose tax was deducted must be issued with a tax certificate within 31 days after the end of the tax year. Any employee who has not received a certificate within the specified time must apply to the employer for a such certificate to be furnished to him/her and if it is not furnished within a further 15 days notification has to be sent to the Commissioner General for further action.
Application for a variation in employment income
Variation from tax rates specified in the Act may be done in respect of employment income. Application is made by an employee to increase or decrease tax in a particular tax year as a result of;
- change of employment – this will ensure that the correct tax is deducted on income from different employment. An employee must bring a tax certificate from the previous employer to ensure the correct tax is calculated;
- More than one source of income – Increase tax deducted from employee remuneration to reduce personal tax liability at the end of the year;
- Private contribution to an approved superannuation fund. Such contribution is tax deductible and it will reduce the tax liability of the employee; or
- Starting employment in the middle of the tax year.
The prescribed form used is Form ITW5. If approved, the Commissioner General will respond to such application by issuing a Withholding Tax Directive (ITW 4A), instructing the employer how much to deduct from that particular employee.
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Tax Calculator for Non-Residents
What is the formula to calculate taxable income?
For Corporate, it is represented as, Taxable Income Formula = Gross Sales – Cost of Goods Sold – Operating Expense – Interest Expense – Tax Deduction/ Credit.
What is the income tax rate 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 |
How do I calculate my tax manually?
Now, one pays tax on his/her net taxable income.
- For the first Rs. 2.5 lakh of your taxable income you pay zero tax.
- For the next Rs. 2.5 lakhs you pay 5% i.e. Rs 12,500.
- For the next 5 lakhs you pay 20% i.e. Rs 1,00,000.
- For your taxable income part which exceeds Rs. 10 lakhs you pay 30% on the entire amount.
How much tax is deducted from salary?
How to calculate TDS on Salary?
| Income Tax Slab | TDS Deductions | Tax Payable |
|---|---|---|
| Up to Rs.2.5 lakhs | NIL | NIL |
| Rs.2.5 lakhs to Rs.5 lakhs | 5% of (Rs.5,00,000-Rs.2,50,000) | Rs.12,500 |
| Rs.5 lakhs to Rs. 6.33 lakhs | 20% of (Rs.6,33,000-Rs.5,00,000) | Rs.26,600 |
What is withholding tax in Botswana?
All rent and commission or brokerage payments to residents or non-residents are subject to WHT at 5% and 10%, respectively, where the total payment is BWP 48,000 per annum or more. Botswana has tax agreements with the following countries, which provide for WHT at the rates shown.