The Government of Botswana has, over the years, consistently reviewed tax laws to simplify their administration for ease of doing business the Minister of Finance Peggy Serame has told parliament.
Furthermore, she said, government introduced a number of tax incentives to attract foreign direct investment, to promote growth of local industries as well as to promote upcoming industries in some specific sectors.
She was answering a question by Member of Parliament (MP) for Kanye North Thapelo Letsholo.
The minister spelled out some sector-specific tax incentives. She said Manufacturing Development Approval Order of 1995 is an incentive intended to promote manufacturing in the country and reduce over-reliance on imports.
“Under this tax incentive, companies that are approved as “manufacturers” are taxed a reduced corporate tax rate of 15 percent for an unlimited period and not at the current tax rate of 22 percent. New businesses across all sectors may also be granted tax holidays under the Income Tax Act for limited periods of time” she said.
She said through the Income Tax (Botswana Innovation Hub Companies Development Approval), Order of 2009 – Government introduced a reduced corporate tax rate of 15% for companies operating under the Botswana Innovation Hub to promote technology, entrepreneurship and commercialization. This tax incentive is focused on the following sectors: bio-technology, clean technology, mining technologies, indigenous knowledge, information and communication technology (ICT) and ICT enabled services. Botswana Innovation Hub supports both start-ups and existing companies.
Furthermore, she said, the Income Tax (SPEDU Region Development Approval) Order of 2018 is part of the resuscitation of the economy of the SPEDU Region which offers a reduced corporate tax rate of 5 percent for the first five years of operation and 10 percent thereafter, indefinitely. Emerging businesses in manufacturing, tourism and agriculture are encouraged to take advantage of this opportunity and set up businesses in the SPEDU Region. Under the Order, SPEDU Region includes Selebi-Phikwe, Bobonong, Mmadinare-Sefhophe, Lerala-Maunatlala and neighbouring villages.
In relation to the Income Tax (Special Economic Zones Development Approval) Order of 2021, the Minister said under this incentive, taxpayers licensed under the provisions of the Special Economic Zones Act are granted a reduced corporate tax rate of 5% for the first 10 years of operation and 10 percent thereafter, indefinitely. In addition, Government is in the process of amending the Transfer Duty Act to exempt, from transfer duty, all taxpayers licensed under the provisions of the Special Economic Zones Act. The Bill will be tabled during the current sitting of Parliament.
Letsholo had asked the Minister of Finance to articulate on both on-going and future initiatives to manipulate the tax regime to create a tax system that creates a growth friendly tax system which includes incentives that encourage start-ups.