20 Nov 2018

Botswana has an incentive structure in place for investors.

Responding to a question in Parliament, Minister of Investment, Trade and Industry says Ms Bogolo Kenewendo said companies that fit the definition of manufacturing were afforded 15 per cent corporate tax as opposed to the normal 22 per cent.

Ms Kenewendo said in addition, these companies enjoyed tax exemption on withholding tax when distributing dividends interest, royalties and management fees to non-resident directors and shareholders.

She said there was also an applicable exemption from capital gains tax when these IFSC companies dispose assets in a subsidiary where the IFSC company’s ownership exceeds 25 per cent.

“IFSC companies are afforded a tax credit of up to 15 per cent of taxes incurred in countries where Botswana does not have a double taxation avoidance treaty,” she continued.

Ms Kenewendo further said through SPEDU revitalization strategy, companies operating in the manufacturing, agriculture and tourism sectors enjoyed competitive incentives package.

She noted that the main incentive for the region was a corporate tax of five per cent for the first five years and 10 per cent thereafter as well as 30 per cent off take agreement.

She went on to inform Parliament that companies accredited to Botswana Innovation Hub (BIH) were also afforded a lower corporate tax rate of 15 per cent in addition to other enabling arrangements such as access to innovation fund and clustering in the BIH building.

Ms Kenewendo indicated thst government was currently finalising incentives for companies that would be established in the zones and that such would improve the attractiveness of Botswana as a globally renowned investment destination of choice.

She went on to say that in the 2017/18 financial year, her ministry through Botswana Investment and Trade Centre (BITC) facilitated P1 billion of foreign direct investment inflows into Botswana compared to P1.5  billion in 2016/17.

Ms Kenewendo further said in 2017/18 financial year P1.78 billion was generated from domestic investment and expansions compared to P1.58 billion in the previous period, underscoring the increasing confidence of local investors in the economy.

“The new investments made in 2017/18 resulted in creation of additional 3050 jobs compared to 3150 in the preceding year,” said Minister Kenewendo.

She further noted that if need arises, the incentives framework would be reviewed to take into consideration the new developments in the world as well as to keep pace with competitor economies.

“For these frameworks, government conducted an exhaustive global benchmarking surveys with advanced economies including Kenya, China, Rwanda, South Africa, Ireland, Mauritius, United Arab Emirates, Malaysia and Singapore,” she concluded.

Boteti East MP, Mr Sethomo Lelatisitswe had asked the minister if there were any incentive frameworks for investors and if they were still relevant. He also asked the minister to state the number of investors attracted to Botswana and the number of jobs created, if the ministry would review these frameworks as well as when and where government benchmarked these frameworks. ENDS