Thursday, September 24, 2020

IFSC praised as best holding model in the region

The Botswana IFSC has been described as competitive compared to its rivals in Mauritius and South Africa regimes, but the country was warned to ratify more treaties in an effort to attract large investments.

Two well-known companies, Wilderness Safaris and Ernst & Young, praised the country’s Intermediary Holding Structure (IHS) model, especially that exchange controls are not a big issue.

A Director at Ernst & Young, Rendani Neluvhalani, said Botswana and Mauritius focus on holding and trading, which is more attractive than South Africa.

“So if you consider South Africa, possibly you will be paying more tax for trading,” she said.

Normal tax rate in Botswana is 22 percent, but if the company is accredited by the IFSC, the tax rate becomes 15 percent.

In South Africa IHQ, corporate tax rate is 28 percent and Mauritius GBL, the rate of taxation is 15 percent and the figure could be reduced to 3 percent or 0 percent by foreign credit mechanism.

Botswana and Mauritius have no exchange controls. South Africa has exchange controls, which were only relaxed recently.

However, South Africa beats Botswana in the number of treaties. It has over 70 treaties while Botswana is still struggling to ratify many of the treaties on the table.

Botswana has double taxation avoidance treaties in place with South Africa, Zimbabwe, Namibia, Mozambique, Mauritius, United Kingdom, Sweden, India and Russia.

Wilderness Safaris, a member of the IFSC, praised the Botswana regime saying it has given the conservation outfit ‘the stage to drive change in the world’.

The BSE/ JSE listed outfit, which operates in 9 countries with 62 destinations, said Botswana is a home to its biggest business where it employs 1, 000 people.

Chief Executive of the company, Andy Payne, said although they have not yet started benefiting tax wise from their holding in Botswana, his company is very proud to be in the IFSC, which is very sophisticated, but accommodative to companies like his.

“We are extremely comfortable to be there (at the IFSC),” Payne told the seminar. “The Botswana vehicle is appealing to Development Financial Institutions (DFIs) and other funding institutions.”

“Botswana’s legislation and monetary policies make it a logical and efficient destination to house an all African business,” he added.

Wilderness Holdings Limited is an investment holding company whose principal subsidiaries are invested in safari consulting (tour operating and destination management), transfer and touring (air and road), camp, lodge and safari exploration operations and finance and asset management.

The company was listed on the Botswana Stock Exchange (BSE), with a secondary inward listing on the Africa board of the JSE Limited, on 8 April 2010.

An additional 31 million shares were issued to the public at a price of P4.00 each. The net cash proceeds resulting from subscriptions and after restructuring and listing costs was just under P7 million.

During its listing, Wilderness attracted international investors, including Puma, which took a 20 percent stake in the tourism and conservation outfit.

Its premier camp is Mombo in The Okavango Delta, which hosts more than 250,000 guest bed nights per annumÔÇömost of them coming to Botswana.

The company also owns the Sefofane Air Charter (now Wilderness Air) which boasts of a fleet of 50 aircrafts located in Botswana, Zambia, Namibia, South Africa and Zimbabwe.

Wilderness is a party to a financial credit agreement with the IDC. The agreement provides for a USD28, 5 million facilities to the company for expansion, upgrade and refurbishment of tourism infrastructure in Botswana, Zambia, Tanzania and Seychelles.

The facility has a final drawdown date of 25 October 2012 and attracts interest at 2 percent above 6-month USD LIBOR and is repayable over a nine year period. The first drawdown occurred on 6 March 2008.

Guarantors to the loan include Wilderness Air Botswana (Pty) Limited, Okavango Wilderness Safaris (Pty) Limited, Wilderness Tours Limited and Wilderness Safaris Limited.

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