Botswana has re-enacted the Income Tax Act and Value Added Tax (VAT) Act, amended the Customs Act, and introduced a new Tax Administration Act, bringing changes to tax administration, VAT, income tax and customs procedures, including new compliance requirements and revised filing deadlines.
Botswana has announced the re-enactment of the Income Tax Act and the Value Added Tax (VAT) Act, amendments to the Customs Act, and the introduction of a new Tax Administration Act aimed at harmonising administrative and procedural rules for both Income Tax and VAT.
According to a public notice, the new Tax Administration Act establishes a unified framework for tax administration across different tax types. The legislation introduces a system of Binding Tax Rulings, new registration requirements for Tax Agents, and the establishment of a Tax Tribunal. It also creates a Voluntary Disclosure programme allowing taxpayers to disclose tax omissions voluntarily.
The Act harmonises record-keeping requirements by requiring records for both VAT and Income Tax to be retained for eight years. It also standardises key compliance deadlines, with VAT filing and payment due on the 28th day of the month following the end of the tax period, Self-Assessment Tax (SAT) payable on the 28th day of the month following the end of each quarter, and Withholding Taxes due by the 14th day following the month of withholding.
Under the new rules, objections to tax decisions must be lodged within 60 days from the date of the tax decision notice, while annual withholding returns for PAYE/OWHT must be submitted within 28 days after the end of the tax year.
VAT changes
The re-enacted VAT Act introduces new obligations for non-resident suppliers of remote services, who must register, charge and remit VAT in Botswana.
The legislation also introduces reverse charging by registered persons and extends the input VAT claim period from four months to 12 months. VAT credits may now be carried forward for four months, after which excess amounts will be refunded.
Private medical services become taxable under the revised Act, while prescription drugs move from the exempt list to the zero-rated list.
The amendments also require Deputy Sheriffs to register for and charge VAT. Registration thresholds have been revised for construction, manufacturing, and mining and petroleum operations.
Medical providers meeting the registration threshold must register by 31 July 2026, with registered providers required to begin charging VAT from 1 August 2026.
Income tax reforms
The re-enacted Income Tax Act introduces changes affecting both individual taxpayers and corporations.
For individuals, a new 27.5% tax bracket applies to taxable income of P400,001 and above. A simplified regime is introduced for sole proprietors with gross income below P1,000,000 per year.
Employees of organisations that are not required to withhold tax, such as embassies, will be required to undertake self-withholding, while tax on Capital Gains must be paid within 28 days of asset disposal.
For companies, the corporate tax rate increases to 24.5% from 22%, while the non-resident corporate tax rate is reduced to 24.5%.
The legislation abolishes the 4% withholding tax on the sale of livestock for slaughter, effective 1 July 2026. It also introduces source taxation rules, a tax on repatriated profits for non-residents, a 3% withholding tax on insurance premiums, increased depreciation limits for motor vehicles, and a comprehensive Permanent Establishment concept.
The notice also states that all employers must use the new PAYE tax tables available on the BURS website. Employers unable to implement the changes immediately must regularise withholding by 30 September 2026.
Customs amendments
Amendments to the Customs Act introduce mandatory prelodgement of declarations for commercial traders and grant powers to recover debt through third-party garnishee orders.
The changes also establish specific processes for Special Economic Zones (SEZ) and provide that the Commissioner General will determine the criteria for classifying small, medium and micro traders.
