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10. INCENTIVES AND SPECIAL REGIMES

To encourage investment in Botswana, tax incentives are granted in respect of specific business development projects, if same are beneficial to Botswana.

General Incentives

  • Development Approval Order - Companies that carry out an approved manufacturing business qualify for a reduced CIT of 15%. Any other project that benefits the economic development of Botswana or provides general employment also qualify, particularly projects in the mining industry.
  • CEDA provides low-interest loans to citizens

Special Tax Allowances

  • Training allowance – 200% of the expenditure
  • Construction of dwellings for employees of any business, other than mining – BWP 25,000 per house
  • Industrial buildings – 25% initial allowance and 2.5% annual allowance on the cost of construction or purchase of new buildings or on any improvements
  • Mining capital allowances – 100% of mining capital expenditure allowed as a deduction in the year of expenditure
  • Plant and machinery – Heavy civil engineering plant used directly in construction and self-propelled portable plant or machinery used directly in manufacture or production – 25% per annum
  • Other industrial plant or machinery used directly in manufacture or production – 15% per annum other plant and machinery – 10% per annum
  • Aircraft and motorized road vehicles – 25% per annum

Incentives for approved financial operations carried out by an IFSC Company:

  • Reduced Corporate tax rate of 15%
  • No VAT
  • No Capital Gains Tax
  • No Withholding Tax

IFSC companies may engage in commercial operations with non-residents and limited operations within the country, like operating BPO and call centers; asset management; bank and insurance activities. However, effective from 1 January 2019, the IFSC tax regime has been amended as a result of being found potentially harmful by the OECD Forum. The amended regime specifically excludes the exploitation of intellectual property and the development and supply of computer software from the list of permitted activities of IFSC companies

Selibe Phikwe Economic Development Unit (SPEDU) Incentive

The Income Tax Act was amended by the SPEDU Region Development Approval Order, 2018 introducing certain tax incentives for approved business operating in SPEDU region. Accordingly, companies operating in the SPEDU region in the tourism, agriculture, and manufacturing sectors are eligible for the following incentives:

  • Reduced corporate tax rate of 5% for five years and 10% thereafter;
  • No customs duty on certain imported raw material;
  • Rebate of custom duties and VAT for exclusive manufacture for export.

This incentive can be availed by existing and new companies in the SPEDU region. The government is also planning to implement the SPEDU Revitalization Programme in order to stimulate economic activity in the agri-business, manufacturing, infrastructure development, and communication technology sectors.