Botswana levies tax annually on income which is derived or deemed to be derived from Botswana during the previous tax year. Taxes are assessed annually as at the 30 June but business income can be computed from a different date during the fiscal year.
For tax purposes, a company is considered resident in Botswana if
- it is incorporated; or
- has its registered office; or
- it is managed or controlled in Botswana.
The two tier system of company taxation taxes resident companies with a
- basic corporate tax rate of 15%; and
- an additional company tax rate of 10%
making for an effective rate of 25%. The special deduction for public companies listed on the Botswana Stock exchange is no longer allowed.
A 15% withholding tax is payable on all dividends paid by a company. This can be set-off against the 10% additional company tax. The withholding tax is not charged on
- dividends paid by subsidiaries of resident public companies (or subsidiaries of a resident company quoted on a recognised stock exchange) to their holding companies; or
- dividends paid by a resident company to an associated company holding more than 20% of the equity in the first company.
The 15% withholding tax on dividends is the total tax levied on dividends and the amount of the dividend is not included in the recipient's taxable income.
The content of this article is intended to provide general information on the subject matter. It is not therefor a substitute for specialist advice.
Minchin & Kelly (Botswana) - Gaborone +267 312734
