Prior to British colonial rule, there was no clear form of "taxation" in "Bechuanaland" (Botswana) as we know it today.
In 1899, the advent of British rule and authority saw the first introduction of taxation in Botswana in the form of a "hut tax" which was levied against huts occupied by "natives" (Africans). In 1909, the Colonial authorities issued a proclamation extending the tax to every "native" occupant of a hut. As the economy was largely rural and agricultural in nature, the tax was payable either in grain, livestock or pound sterling. The Chiefs were given authority to collect the tax.
Over the years, various taxes such as poll tax were introduced. These taxes resulted in serious inequity given that everyone, regard less of their economic position or level of productivity, paid the same amount of tax.
The first attempt to enact more equitable and adequate taxation legislation, came about by way of Proclamation No. 70 of 1922. For the first time, tax was income based and taxpayers were obliged to filed tax returns. This has been described as the "genesis" of tax law in Botswana. Over the subsequent years, the proclamation was amended on numerous occasions to keep in line with the continuously changing economy and social structure of the then Bechuanaland Protectorate.
After Bechuanaland gained independence from the British in 1966 to become "The Republic of Botswana", in light of the various past amendments to existing tax legislation, a consolidating enactment was required. The year 1973 saw the enactment of the "Income Tax Act of Botswana", which is the primary tax law of the country. This act was not only consolidatory in nature, but aimed to improve the tax structure and collection in Botswana and, being a newly born but extremely poor nation, to move the country away from dependency on foreign aid and custom duties and excise arising from the Customs Union Agreement of 1969 between Botswana's more prosperous neighbour, South Africa and the countries of Lesotho and Swaziland.
Over the years, Botswana rapidly changing economic climate has resulted in various tax regimes being put in place. The discovery of diamonds in the mid-seventies resulted in a dramatic boost state coffers resulting from mineral revenue, which is still the largest and most significant tax base in Botswana. Tax holidays were introduced in places like the Copper-Nickel mining town of Selebi-Phikwe, to try and encourage investment in the town.
More recently, in an effort to encourage investment and to move away from a diamond based economy, the Government has introduced taxation which effectively makes the taxes in Botswana amongst the lowest in the world:
a)Company taxation - 25%
b)Taxation on companies involved in manufacturing - 15%
However, with development and the increase of the population, the ever increasing government expenditure on things like social services (education, health, old age welfare etc.) and more recently, the military, has resulted in the Government moving to other forms of taxation - firstly, the introduction of taxation against luxury items such as cigarettes and alcohol. In more recent times, Sales Tax has been introduced - initially against a few selected items. However, over the years, the "web" of sales tax has expanded to cover more and more items and services.
Apart from income tax, various other forms of tax such as capital gains, transfer duty, estate duties etc. are in existence. However, the Income Tax Act remains the most important tax legislation in Botswana - from 1973 to date, it has been amended on numerous occasions, being an indication of it's importance to the economy and the people of Botswana.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Minchin & Kelly (Botswana) - Gaborone +267 312734
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The Tax Administration Act 28 of 2011 ("the TAA") which took effect on 1 October 2012 contained provisions regulating the issue of tax clearance certificates by the South African Revenue Service (‘SARS’).
The Venture Capital Company tax regime is regulated by section 12J of the Income Tax Act, 58 of 1962 which was first introduced 2009 in order to encourage investments into privately owned businesses.
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