14 May 2024

Companies and businesses have not taken advantage of current tax relief measures to donate to sports clubs, says Botswana Unified Revenue Service (BURS) acting commissioner, Ms Segametsi Radibe-Michael.

She said the Income Tax Act provides for deductions for persons or businesses that make donations to recognised sports clubs or sports associations registered with the registrar of societies.

Speaking in an interview on Monday, Ms Radibe-Michael said an allowable deduction was the contribution or donation made toward a sports club, and that it was treated as an expense for tax purposes and not factored into the donor’s chargeable income and taxed as part of their income for the year.

She clarified that a business was only allowed deductions for expenses related to production and that contributions to sports clubs only qualified as business expenses when donated as part of a marketing strategy of a company.

Ms Radibe-Michael said for athletes, income received by them was taxable if it exceeded the current tax free threshold of P48 000 per annum.

She explained that the country’s tax system was progressive and that those who earned less were taxed less and those earning taxed accordingly, including sports persons or athletes.

She noted that donations to educational institutions were given the same incentive in line with the Revised National Policy on Education of 1994, adding that the incentive was intended to encourage corporates and private sector businesses to participate in the development of sports and human resources.

She said contributions by club members and income such as gate takings or income generated by clubs was tax exempt if used exclusively for the purpose of the club or association. 

She noted that what they required from the clubs or associations was to only file their tax returns reporting their income and demonstrating that they used the funds exclusively for the benefit of the clubs or educational institutions.

She said the incentive was adequate to assist in the development of sports, as it allowed donors to donate up to 20 per cent of their chargeable income per year.

She noted that there was no limit on how many individuals or businesses could donate to a club or associations and that they could lure as many donors as they wished. 

Furthermore, she said it was up to clubs and associations to approach potential donors and seek assistance. She said clubs and associations should, however demonstrate credibility by affiliating to Botswana National Sports Council (BNSC), keeping proper books of accounts and demonstrating to how they intended to utilise the funds and what donors would benefit from the relationship.

“If the club or association is properly registered and managed, there is no reason why they cannot access the benefit. Applications for approval of clubs for these incentives are handled by BURS with recommendations from institutions such as the Ministry of Sports and BNSC,” she said. ENDS