12 Jul 2022

Government has over the years introduced a number of tax incentives to attract foreign direct investment, promote growth of local industries and promote upcoming industries in specific sectors.

Minister of Finance Ms Peggy Serame said the first tax incentive was the manufacturing development approval order of 1995 which was intended to promote manufacturing in Botswana and reduce over reliance on imports.

She said manufacturing companies were taxed at a reduced corporate tax rate of 15 per cent for an unlimited period under the incentive instead of the normal tax rate of 22 per cent.

“New businesses across all the sectors may also be granted tax holidays under the Income Tax Act for limited periods of time,” said the minister.

Ms Serame said the second tax incentive was the Income Tax Botswana Innovation Hub Companies Development Approval Order of 2009. She said companies were subjected to a tax rate of only 15 per cent under the tax incentive. She said the incentive was intended to promote technology, entrepreneurship and commercialisation.

“The tax incentive is focused on the sectors of bio-technology, green technology, mining technologies, indigenous knowledge, information and communication technology and ICT enabled services. Botswana Innovation Hub supports both start ups and existing companies so both can benefit under this tax incentive,” said the minister.

She said the third incentive was the Income Tax SPEDU Region Approval Order of 2018. She said the incentive was part of the resuscitation of the economy of SPEDU region. She said government introduced a reduced corporation tax of five per cent for the first five years of operation, 10 per cent thereafter under the incentive.

She said the region includes Selebi Phikwe, Bobonong, Mmadinare, Sefhope, Lerala, Maunatlala and neighbouring villages.

“Emerging businesses in manufacturing, tourism and agriculture are encouraged to take advantage of this one,” said the minister.

Ms Serame said the fourth tax incentive was the Income Tax Special Economic Zones Development Approval Order of 2021. 

She said under the incentive tax payers licensed under the provisions of the Special Economic Zones Act were granted a reduced corporate tax rate of five per cent for the first five years of operation and 10 per cent thereafter.

She added that government was also in the process of amending the Transfer Duty Act to exempt from transfer duty all tax payers licensed under the provisions of the Special Economic Zones Act.

She further said other incentives under the income tax were the carrying forward of losses for five years by corporate tax payers in all sectors, accelerated depreciation for capital intensive sectors such as agriculture and mining and deduction of capital expenditure from chargeable income for farming purposes.

Kanye North MP, Mr Thapelo Letsholo had asked the minister to state initiatives by government aimed at creating friendly tax system that encouraged start-up businesses. Ends