Botswana

Individual - Income determination

Last reviewed - 31 July 2020

Employment income

Expatriate employees are taxable on salary and on any overseas allowances, wherever payment is made. Living and housing allowances, tax reimbursements, and the value of benefits, such as free accommodation and the use of motor vehicles, are included in taxable income. All employment income is subject to pay-as-you-earn (PAYE). However, airfares and medical costs borne by the employer for the employee, spouse, and dependent children, and provided in the terms of the employee's contract, are not taxable.

For individuals' contracts of employment signed on or after 1 July 1999, any gratuities paid are taxable to the extent of two-thirds of such gratuity. The remaining one-third is tax free. The percentage parameters are still 25% of gross salary for the first contract, 27.5% for the second contract, and 30% for the third and subsequent contracts. Contracts normally run two to three years.

Capital gains

Capital gains for individuals are considered to be from a separate source and are taxed on the basis of a separate table (see Capital gains taxes in the Other taxes section).

Dividend income

The gross income of a resident citizen individual includes any dividend income from an investment made outside Botswana. Dividend income from a foreign source is taxed at 15%.

Dividends payable by a Botswana resident to a non-resident is subject to 7.5% WHT.

Interest income

The gross income of a resident citizen individual includes any interest income from an investment made outside Botswana. Interest income in such cases is included in the individuals' gross income and taxed accordingly.

Interest income for any resident individual accruing from any banking institution or building society in Botswana is exempt from tax up to a limit of BWP 7,800. Interest payments to residents are subject to 10% WHT. Where a resident individual has paid WHT on interest that accrued from a bank or building society, this shall be the final charge to tax, and the interest shall not form part of the assessable income of that resident individual.

Interest payable by a Botswana resident to a non-resident is subject to 15% WHT.

Royalty income

Commercial royalties payable by a Botswana resident to a non-resident are subject to 15% WHT.

Fee income

Management and consultancy fees payable by a Botswana resident to a non-resident are subject to 15% WHT. Similarly, entertainment fees are subject to 10% WHT.