SIGNIFICANT DEVELOPMENTS
There have been no significant tax or regulatory developments regarding individual taxation in the past year.
TERRITORIALITY AND RESIDENCE
The Botswana tax system operates on a territorial basis, and income is taxable in Botswana if the source is within Botswana. Income for services performed outside Botswana is deemed to be from a Botswana source if the services are incidental to employment in Botswana.
To be a resident of Botswana for a tax year normally means the individual has a permanent place of abode in Botswana and is physically present in Botswana for not less than 183 days in that tax year or the previous tax year.A resident is taxable on all income from a Botswana source in accordance with the tax rates. A nonresident is taxable on earned income in accordance with the tax rates but pays withholding tax only at the rate
of 15% for interest, dividends, commercial royalties, and management and consultancy fees, and at the rate of 10% on entertainment fees, where such income is of Botswana origin.
GROSS INCOME
Employee gross income/ Expatriate employees are taxable on salary and on any overseas allowances, wherever payment is made. Living and housing allowances, tax reimbursements, and the value of benefits, such as free accommodation and the use of motor vehicles, are included in taxable income.
However, airfares and medical costs borne by the employer for the employee, spouse, and dependent children and provided in the terms of the employee’s contract are not taxable.
For individuals’ contracts of employment signed on or after July 1,1999, any gratuities paid are taxable to the extent of two-thirds of such gratuity. The balance one-third is tax free. The percentage parameters are still 25% of gross salary for the first contract, 27.5% for the second contract, and
30% for the third and subsequent contracts.Contracts are normally two to three years.The gross income of a resident citizen individual includes any interest or dividend income from an investment made outside Botswana. Interest income
in such cases is included in the individual’s gross income and is taxed accordingly. Dividend income from a foreign source is taxed at 15%.Capital gains and investment income/ Capital gains on the disposal of immovable property and marketable securities (including shares in private companies) are taxable in Botswana if the source is in Botswana. For capital gains purposes, the cost of immovable property is adjusted to take account of inflation. For other gains, no inflation allowances are granted, but the taxable gain is set at one-half of the total gain. Capital gains for individuals are considered to be from a separate source and are taxed on the basis of Table VI of the Act (shown as tax rate Table Ⅲ in this entry). Interest income receivable in Botswana from the Rand Monetary Area or arising from within Botswana is taxable at the time of accrual of the
income. It should be particularly noted that interest and dividends accruing from outside Botswana and the Rand Monetary Area are not taxable in Botswana.
Interest income for any resident individual, accruing from any banking institution or building society in Botswana, is exempt from tax up to a limit of P2,500.Interest, dividends, ommercial royalties, and management and consultancy fees payable by a Botswana resident to a nonresident are subject to
withholding taxes of 15%. Similarly, entertainment fees are subject to awithholding tax of 10%. However, the double taxation agreements with the United Kingdom and South Africa exempt management and consultancy fees from the requirement to withhold taxes.
DEDUCTIONS
Business deductions/ No business-related expenses are deductible, unless they are incurred as a condition of employment or for the purpose of producing the employee’s income, such as in circumstances in which the
expenditure can be shown to influence the level of the employee’s income. An employee who is employed on a commission basis could be in this position. There are no standard or blanket deductions.Nonbusiness expenses/ Contributions to an approved retirement benefit scheme are allowable up to a maximum of P9,000 or 15% of earned income.Personal allowances/There are no personal allowances granted. All
individual taxpayers are taxed under one of two tax tables (see “Tax rates” below).
TAX CREDITS
A tax credit is granted unilaterally where a mounts received by a Botswana
resident have been subject to taxation in a foreign country and in cases where a double taxation agreement has been concluded. Botswana has double taxation agreements with Mauritius, South Africa, Sweden, and the United Kingdom. A tax credit is also granted
[1] [2] [3] [4] 下一页
