Botswana ushers in major tax reforms as BURS introduces new income tax, VAT and customs measures from July 1
BONGANI MALUNGA
The Botswana Unified Revenue Service (BURS) has announced sweeping changes to the country’s tax framework following the re-enactment and amendment of key legislation aimed at modernising tax administration, widening the tax base and improving compliance.
In a public notice issued on July 1, BURS confirmed that the new Income Tax Act, Value Added Tax (VAT) Act and Customs Act have officially come into force. A new Tax Administration Act has also been introduced to harmonise administrative and procedural rules governing income tax and VAT matters.
The reforms, which took effect last Wednesday, are expected to significantly reshape obligations for individuals, businesses, international investors and tax practitioners.
MAJOR CHANGES
Among the major changes under the Income Tax Act is the introduction of a new tax bracket for individuals earning P400 001 and above, who will now be taxed at 27.5 percent. Simplified income tax arrangements have also been introduced for qualifying small businesses with annual gross incomes below P1 million.
Corporations will also face notable adjustments. The corporate tax rate has increased from 22 percent to 24.5 percent, while new provisions covering permanent establishments, mutual associations and mining taxation have been introduced. BURS further abolished withholding tax on the sale of livestock for slaughter with immediate effect.
The reforms extend to international taxation, where comprehensive source taxation rules have been implemented. Repatriated profits for non-residents and withholding taxes on insurance premiums are among the areas targeted, while the tax rate for non-resident corporate entities has also been reduced to 24.5 percent.
FAR-REACHING AMENDMENTS
On the VAT front, BURS has re-enacted the VAT Act with several far-reaching amendments. Non-resident suppliers of remote services are now required to register, charge and remit VAT in Botswana. The input tax claim period has been extended from four months to 12 months, with excess credits eligible for refunds if not absorbed within that period.
BURS has also introduced reverse charging mechanisms, revised mandatory registration requirements for deputy sheriffs and removed prescription drugs from the VAT zero-rated list.
The newly established Tax Administration Act introduces binding tax rulings, registration of tax agents and the creation of a Tax Tribunal. Filing deadlines have been standardised, with most payments and submissions due on the 28th day following the relevant tax period.
Meanwhile, amendments to the Customs Act include mandatory pre-lodgement of declarations, stronger debt recovery provisions and streamlined procedures for Special Economic Zones. BURS has indicated that comprehensive guidance on the amendments will be issued in due course as taxpayers adjust to one of Botswana’s most significant tax overhauls in recent years.