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5.1. Tax Base for Resident Entities

Botswana follows a source-based taxation system which refers to any income earned / accrued within the country is taxable in Botswana. Resident corporations are not taxed on a worldwide income basis. Any income from sources situated or deemed to be situated in Botswana is also taxable in Botswana.  

Dividend received from resident companies does not form part of corporate income tax, but is subject to WHT.

Foreign sourced dividends and interest are deemed to be Botswana sourced and taxed on an accrual basis, while foreign business profits are taxable only when remitted to Botswana.

Gains from disposal of specified capital assets, such as immovable property and marketable securities, including shares in private companies, are considered as part of taxable income of the corporate taxpayer.

Acquisition cost of immovable property is subject to inflation adjustment, which is calculated as below:

  • Adjustment of 10% per year in respect of inflation for the period from acquisition date up to 30 June 1982,
  • From 30 June 1982 up to the date of sale, inflation adjustment based on the increase in the consumer price index.

For other gains, no inflation adjustments are permissible, but the taxable gain is considered at 75% of the total gain.

Gains arising on sale of any shares, units, or debentures of a resident company are tax exempt, if:

  • the resident company whose shares are being sold is a public company and it has sold 49% or more of its equity on BSE,
  • the securities are traded on the BSE,
  • the securities are held by the taxpayer for at least 1 year before disposal.

Gains from sale of IFSC shares are exempt from tax in Botswana.