Investment Climate - Ease of Doing Business

  • General and sector specific investment incentives
  • No foreign exchange controls
  • The United States-Africa Growth & Opportunity Act allows new opportunities for duty free and quota free access to U.S. markets
  • Corporate tax is only 15% for manufacturing companies and IFSC companies
  • Duty free and quota free access to EU market
  • Duty free access to South Africa, Namibia, Lesotho and Swaziland
  • Preferential access to markets of 14 Southern African countries
  • Botswana is the most transparent country in Africa, according to Transparency International. Botswana has an official policy of zero tolerance towards corruption
  • Low personal income tax, the highest bracket is 25%
  • Zero corporate tax under a Development Approval Order
  • Industrial relations are well established and amicable with trade unions
  • Sustainable low tax environment

Approved Incentives for the SPEDU Region

(SPEDU Region comprises of Selebi-Phikwe East, Selebi-Phikwe West, Bobonong, Mmadinare and Lerala-Maunatlala areas)

To be governed by the following principles:

  • Incentives should address specific industry bottlenecks and competitiveness requirements;
  • Incentives should be outcome-based aimed at stimulating private sector investment, technology development, market access and activities that create jobs;
  • Incentives should mainly be in-kind; and
  • Incentives should not create businesses that are dependent on Government.

Incentives for SPEDU Region

CATEGORY OF INCENTIVES PROPOSED INCENTIVES
Fiscal incentives
  • 5% corporate tax for the first five years; 10% corporate tax thereafter
Fiscal Incentives (provided in line with SACU provisions)
  • Zero customs duty on imported raw material
  • Provide rebate of Customs duties and Value Added Tax under Schedule 4 - Rebate Item 470.03, and VAT Act Third Schedule - Item 470.03 for manufacturing done exclusively for export outside Common Customs Area (CCA)
 
  • Provide rebate of Customs duties and Value Added Tax for importation of raw materials under Schedule 3 of the customs tariff and VAT act
Government off-take
  • Direct Government off-take on procurement of at least 30% (First preference in Government procurement provided the quantity, quality and price requirements are met), in line with Economic Diversification Drive (EDD)
Provision of Land
  • Minimum 50 years land leases
Input Costs
  • SPEDU Region will provide internet connectivity with bandwidth that promotes business competitiveness
  • Preferential ICT rates (telecommunications, data and voice rates) as already provided for IFSC companies
SPEDU Region Labour Laws
  • SPEDU Region Employer - Employee Relations
    (To provide work environment which promotes productivity and harmonious employer/ employee relations)
One Stop Service Centre
  • Dedicated and empowered One Stop Service Centre for the SPEDU Region
  • Delegate all authority and responsibility to the SPEDU Company to issue licenses and permits
  • Streamlined processes for issuance of Work and Residence Permits under the One Stop Service Centre; and
  • SPEDU Company to conduct Strategic Impact Analysis (SIA) and issue all-inclusive Environmental Impact Assessment (EIA) permit for all investors.


Incentives Outside SPEDU Region

CATEGORY OF INCENTIVES INCENTIVES
Fiscal incentives Botswana provides a low and competitive tax environment with:
  • 15 % Corporate tax rate for manufacturing, financial services companies & companies registered in the Innovation Hub;
  • 22% corporate tax for other sectors;
  • Low personal income tax, maximum 25%;
  • 12% Value Added Tax (VAT);
  • Possible tax holidays for 5 – 10 years under the Development Approval Order (DAO);
  • Duty-free importation of machinery and equipment for manufacturing purposes;
  • 200% Tax Allowance for Training costs.


BITC offers a sustainable low tax environment for financial services companies. BITC financial services companies receive a discounted corporate tax rate of 15% and are exempted from Withholding Tax on interest, dividends, management fees and royalties paid to a non-resident. They are further exempted from Value Added Tax. Capital Gains Tax and disposal of shares are also tax exempt for these companies, which also have access to Botswana’s 200% tax training rebate.

Corporate income tax rates – Resident company

Tax Definition

Basic

Manufacturing taxable income

15%

Capital gains

22%

Foreign dividends

15%

Mining taxable income (exclude diamonds)

22% - 55%

Other taxable income

22%

Accredited innovation hub business taxable income

15%

IFSC company – approved services income

15%

IFSC company – other taxable income

22%

Corporate income tax rate – Non-resident company

Tax Definition

Basic

Standard rate

30%

Access to an expanding Double Taxation Avoidance Treaty network

Double Tax Avoidance Treaties

Botswana has a growing network of Double Taxation Avoidance (DTA) treaties. 13 treaties are currently enforced, and a further 12 are at various stages of negotiation and ratification. Botswana will continue to grow its DTA treaty network with key African states, major investor nations and international financial centres.

In instances where DTA treaties are not already in place, legislative framework as set out in the Income Tax Act, allows accredited companies a unilateral credit of up to 15% for withholding taxes incurred in jurisdictions with which Botswana does not yet have a DTA. In the case of CIUs, this unilateral credit may not apply, as the CIU will have no tax liability.

Status of Botswana Double Taxation Avoidance Treaty (DTA) Network

Active

 

 

Barbados

Mozambique

Sweden

France

Namibia

UK

India

Seychelles

Zimbabwe

Mauritius

South Africa

Lesotho

Swaziland

 

 

     
Awaiting Ratification    
Belgium Russia Zambia
Malawi Tanzania Luxembourg
     
Under Negotiation    
Angola China Japan
Nigeria Kenya Uganda

Source: Ministry of Finance & Development Planning – Government of Botswana

Currency denomination

Botswana IFSC businesses are allowed to maintain their capital in any internationally recognized currencies, guarding against losses brought about by exchange rate risk and exchange rate movements.

Trade Agreements

Goods exported from Botswana to any other country will, where applicable, be charged customs duties and local taxes at the destination country unless there is a pre-existing Trade Agreement exempting imports from Botswana. Additionally, agreements exist for exports of specific goods under certain conditions.

See more under Trade Agreements.

Air Services

Botswana is well served by air, with a national airline, Air Botswana and private charter companies offering domestic and regional access. There are regular domestic services between Gaborone and Francistown and Maun and Kasane. Regional services operate between Gaborone and Johannesburg, Windhoek (Namibia) and Harare (Zimbabwe). South African Express Airways provides multiple daily flights between Gaborone and Johannesburg.

In addition, Air Botswana operates direct flights between Johannesburg and Maun (Okavango Delta) and between Johannesburg and Kasane (Chobe River and National Park) via Limpopo Valley Airfield (Tuli Block) for the tourist market.

Charter companies operate a variety of services in tourist areas by light aircraft to tourist lodges and camps in the Okavango and Chobe regions. Air Botswana carries limited cargo on scheduled flights and also operates dedicated cargo services between Gaborone and Johannesburg.

Dry Port Facilities

Botswana Railways operates Gabcon, Gaborone's container terminal, providing door-to-door delivery direct from suppliers to the recipient's warehouse or factory. The facility can securely store 3m, 6m and 12m containers. Delivery times are reduced by pre-arranged clearance before arrival at Gabcon. Other container terminals are Francon in Francistown, a dry port in Selebi-Phikwe and in Namibia at Walvis Bay.

Road Network

Botswana has a network of over 20 000km of roads and tracks, primarily along the eastern edge of the country. This network links Botswana with South Africa to the south, Zambia and Zimbabwe to the north. The Trans-Kalahari Highway links Gaborone and Windhoek (Namibia) and serves as the strategic link in the Maputo-Walvis Bay Economic Corridor.

Rail

Botswana is linked to South Africa and Zimbabwe via 641km of main railway line. Three branch lines cover 250km, one carrying coal from Morupule to Palapye, another carrying copper-nickel matte from Selebi-Phikwe to Serule and the third carrying salt and soda ash from Sua Pan to Francistown.

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