Value of supply
The general rule is that the value of a supply is the amount of the consideration for the supply. Consideration includes the total monetary amount or fair market value of goods or services given in kind, and also includes deposits on returnable containers, duties, levies and fees.
If the price includes VAT, the value is determined by deducting an amount equal to the tax fraction of the price: Value = VAT-inclusive price less (10/110 x VAT inclusive price).
Under some of the specific rules, the value of the supply is as follows:
related persons (if the supply is made for less than the fair market value) – fair market value, i.e. the value that the supply would generally fetch if freely offered and made between persons who are not related parties;
supply made for less than the fair market value of the supply to a charitable organisation, institution of religious worship, educational institution, old-age home, orphanage, children’s home, or institution of a similar nature – fair market value of the supply;
credit agreement – cash value of the supply;
repossession of goods under a credit agreement – an amount equal to the balance of the cash value of the supply of those goods to the debtor that has not been recovered at the time of the supply;
grant of a right to receive goods or services for a monetary value stated on a token, voucher or stamp – an amount equal to the amount by which the consideration exceeds the monetary value of the token, voucher or stamp;
token, voucher or stamp such as discount coupons – value of the supply of such goods or services by the supplier includes the monetary value stated on the token, voucher or stamp, less the tax fraction of the monetary value if the token, voucher or stamp is surrendered for a taxable supply;
mixed supplies (taxable and exempt) – value of the supply is the part of the consideration that is properly attributable to the taxable supply portion;
transfer of goods or services to a branch or main business outside Botswana – the lesser of the cost or fair market value of the supply;
supply made for no consideration – the value is nil;
bets – amount received in respect of the bet, reduced by an amount equal to the tax fraction multiplied by the amount received in respect of the bet;
goods removed from a VAT manufacturing warehouse – the fair market value of the supply; and
consideration paid or payable in kind – the fair market value of the consideration.
Businesses that have an annual turnover of less than 12 million Botswana Pula will be required to submit a return every second month. Businesses with a higher turnover must submit monthly returns.
Returns and payment of VAT
The VAT return must be filed within 25 days after the end of the tax period. A period of less or more than a calendar month may be applied with prior approval from the Commissioner General (such as where accounts end on the last Friday of the month).
The VAT payable, as calculated in the VAT return, must be paid when the VAT return must be submitted. In certain circumstances arrangements can be made to make the payment later so as to avoid penalties for the late submission of the VAT return.
Interest and penalties
Interest at 2% per month or part of month, compounded, is levied on late payment.
Accounting basis and tax period
A penalty of the higher of 50 Botswana Pula per day or 10% per month or part of a month outstanding of the VAT payable may be imposed for late submission and/or late payment. In practice, only the penalty for late submission is imposed at present.
Botswana’s VAT operates on an invoice basis. This means that output tax must be declared and is payable on the basis of invoices issued, not on the basis of payments received. Liability for output tax occurs when an invoice is issued or when payment is received, whichever is the earlier.
Where input tax exceeds output tax, a refund may be claimed. This may occur in the case of an export business, or where large capital purchases have been made.