29 Mar 2023

In an effort to cushion Batswana against challenging economic conditions government has expanded the list of basic items that will be exempted and zero rated from Value Added Tax (VAT) during the coming financial year.

Presenting the Value Added Tax (Amendment) Bill No. 6 of 2023 for the second reading in Parliament on Tuesday, Minister of Finance Ms Peggy Serame said additional items would include those commonly consumed by the poor and ordinary people to facilitate affordability and accessibility of basic needs.

 “In a nutshell, the Bill seeks to revise the current list of zero-rated and exempted items in the VAT Act. After careful rationalization of both exempted and zero-rated items, the proposal is to add to the list of zero-rated items as well as include private medical services to the list of exempted items,” she said.

Ms Serame said the move to amend the VAT Act was on the basis of the fact that the world over had seen an unusually high global inflation partly due to COVID-19 as well as the conflict between Russia and the Ukraine.

As part of the global village, Botswana and thus Batswana were not spared from these economic hardships that had seen the prices of commodities, especially food and fuel, skyrocketing hence government had found it worthwhile to cushion households against those unpleasant situations.

She said the expanded list would include fruits and vegetables and farming implements, while the zero-rated items would include sanitary pads or tampons, cooking oil, liquid petroleum gas, salt, infant formula, baby diapers, white bread, ginger, leguminous vegetables and trailers.

 “Further, tractors, all agricultural implements and condoms are being moved from the list of exempted items to the list of zero-rated items,” she said. 

Ms Serame said to simplify the processes on farm implements, there would therefore no longer be any need to prove that a tractor was being bought for agricultural purposes.

“This will also assist local companies which import tractors and are charged VAT because they are not in the business of farming, but because tractors are currently exempted. 

The companies cannot claim the VAT they paid when importing the tractors,” she explained.

Minister Serame said that the amendment would also cover a supply of prescription drugs and services rendered by private medical facilities.

“Currently, only supplies by public medical facilities are exempted. 

It is important to exempt all providers of medical services because by providing such services, private facilities continue to play a critical role in complementing government health facilities and such exemption would increase access to health services in general,” she said.  

It also aimed at encouraging local production of certain commodities such as condoms and farming implements by moving them from the exempted list to the zero rated, she added.

Ms Serame said it would also augment government’s efforts towards having sustainable food security to support local production while also creating employment in the sector. ENDS