the goods must be acquired from a person resident in Botswana;
the amount of the claim may not exceed the tax fraction of the lower of the amount to be paid or the fair market value including tax; and
records of the transaction as required by the Director must be kept, e.g. the full names and address of the supplier, taxpayer identification number, the date on which the goods were acquired by the registered person, the quantity/ volume and description of the goods, etc.
Specific VAT rules
VAT paid in respect of a supply, which eventually has to be written off as a bad debt, can effectively be reclaimed by a VAT-registered person. The debt has to be written off in the enterprise’s books and the relief cannot be claimed until at least 12 months after the VAT was originally paid.
If VAT relief was allowed and the bad debt is subsequently recovered, VAT must again be accounted for by the registered person.
Where such a package includes services to be provided both within and outside Botswana, only the domestic component of the services will be taxed.
For VAT purposes the invoice in foreign currency is converted to Botswana Pula at the exchange rate applicable on the date of the invoice. Subsequent differences in exchange on date of payment are not subject to VAT.
Transfer of a business
Land and buildings
An exemption from transfer duty applies if VAT is paid on a transaction involving the sale or transfer of land and buildings. Transfer of residential property is not subject to VAT. Transfer duty paid can be claimed as input tax (subject to normal input tax rules).
Lease or hire purchase capital repayments are not subject to VAT. Interest is exempt from VAT.
Basically all promotional gifts can be taken at fair market value to impute an output VAT. Cash donations to an association not for gain are not subject to VAT.
Where a registered person supplies secondhand goods that are taxable, VAT has to be charged on such supplies.
The input tax credit allowed cannot exceed the amount of tax charged on the subsequent sale of the goods.
In respect of secondhand goods purchased from a registered person, the recipient would normally be charged VAT and be entitled to an input tax deduction under the normal rules.
Where a notional input tax credit has been claimed in respect of secondhand goods purchased from a nonregistered person and these goods are subsequently exported at the zero rate, the amount so claimed must be declared as output tax due and shown in the return for the relevant period as an output tax adjustment.
A basic rule of VAT in Botswana is that VAT is applied on consumption in Botswana.
Where a nonresident sells a tourism package which includes services to be rendered to a tourist in Botswana, the domestic goods and services component will be subject to VAT.
The sale of a business as a going concern is treated as a zero-rated supply. The sale of part of a business can also qualify for zero-rating.
For the zero-rating to apply, all goods and services necessary for the business operation must be transferred, the activity must be ongoing at the time of transfer, both parties to the transaction must be registered for VAT and details of the transaction must be reported in writing to the Commissioner General within 21 days.
Where goods or services are supplied by a VAT-registered person in Botswana in terms of a guarantee provided by a person who is not VAT- registered and is a non-resident, and the non-resident meets or reimburses the costs of the goods or services provided by the VAT-registered person, the supply may be treated as zero- rated.
Input tax is claimable on secondhand goods acquired from a nonregistered person, provided the following conditions are satisfied:
If a Botswana travel agent supplies a domestic tour package to a person, whether resident or nonresident, the full package will be taxable at 10%.
Where goods or services are supplied by a VAT-registered person in Botswana in terms of a maintenance plan or agreement with a person who is not VAT-registered and is a non-