Value added tax (VAT) was introduced in Botswana with effect from 1 July 2002 to replace sales tax. Botswana’s VAT legislation is contained in the Value added tax Act, 2000.
The VAT system is administered by the Commissioner General of the Botswana Unified Revenue Service (BURS). BURS is an amalgamation including Inland Revenue, under whose purview VAT and the Department of Customs and Excise fall.
Rates and scope
The standard VAT rate of 10% applies to all supplies that do not qualify for an exemption or that are zero-rated. There is no other higher or lower VAT rate that applies.
VAT is imposed on taxable supplies and the importation of goods into Botswana. Any supply that is not listed as an exempt supply is a taxable supply, other than the following:
a supply of services by an employee to an employer by way of employment;
the payment by the state of a subsidy under a subsidy scheme to defray expenses, or the payment of a bursary;
the provision of goods on consignment and the transfer of goods to a person in a representative capacity; and
the supply of goods where the input VAT claim was originally denied, e.g. passenger vehicles.
A taxable supply includes a supply between related parties for no consideration, or a supply of goods for use only as trade samples, or supplies involving change of use.
The same rules of registration apply to nonresidents if they are deemed to conduct a taxable activity in Botswana that is, or is expected to be, in excess of an annual value of 250,000 Pula.
An enterprise (including a sole proprietorship, partnership or joint venture) that makes taxable supplies of 250,000 Botswana Pula or more per annum, or expects that this limit will be exceeded during the following 12 months, is required to register for VAT purposes. Auctioneers are also required to register, irrespective of the extent of their annual taxable turnover.
There is no specific VAT requirement that a nonresident applying for VAT registration in Botswana must appoint a fiscal representative in Botswana. However, for income tax purposes every company carrying on business in Botswana must be represented by a public officer residing in Botswana.
The VAT registration application forms request particulars and confirmation of a bank account with a bank in Botswana.
The Commissioner General of BURS has the discretion to register a person with a turnover below 250,000 Botswana Pula, if an application is made. A person who has been so allowed to register voluntarily may not exercise the option to deregister until two years after the date of registration.
An enterprise whose taxable turnover falls below 250,000 Botswana Pula and is expected to remain below this level may apply for deregistration.
Group or branch registration
A taxable activity is an activity that is carried on continuously or regularly in Botswana or partly in Botswana (whether or not for a pecuniary profit) that involves in whole or in part the supply of goods or services (other than an exempt supply) to another person for a consideration.
Application for registration
Failure to apply for registration when required is an offence and attracts high penalties, which may include fines and/ or imprisonment. Any entity that should register will be deemed to have been registered and will then be liable for the VAT. The registration number format is based on the income tax file reference of the entity.
There is no group registration in Botswana.
Divisions or branches of a company may register separately, subject to certain conditions, e.g. maintenance of separate accounting systems and if transactions can be distinguished between the different locations.
Advertising and prices
Prices quoted or advertised must always be VAT-inclusive. A pre-tax price may be quoted, but the amount of VAT due and the VAT-inclusive cost must then be shown equally prominently.