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Client name - Event - Presentation title Page 1 BOTSWANA – GATEWAY TO AFRICA AND THE WORLD Peter O’Halloran Tax Partner BDO Gaborone.

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Presentation on theme: "Client name - Event - Presentation title Page 1 BOTSWANA – GATEWAY TO AFRICA AND THE WORLD Peter O’Halloran Tax Partner BDO Gaborone."— Presentation transcript:

1 Client name - Event - Presentation title Page 1 BOTSWANA – GATEWAY TO AFRICA AND THE WORLD Peter O’Halloran Tax Partner BDO Gaborone

2 DOING BUSINESS IN BOTSWANA The Switzerland of Africa Lowest tax rate in Africa No exchange controls Stable Political environment Low crime rate Roman Dutch Common Law Solid adherence to the ‘rule of law’ Predominantly English speaking Central in the region Good infrastructure Major International Banks Facing the Challenges of Doing Business in Africa Page 2

3 BOTSWANA BUSINESS ENTITIES Sole Proprietorships Partnerships Private Companies I.F.S.C. Companies Innovation Hub Companies Public Companies Trusts Business Trusts Partnerships and Trusts are subject to the same common law rules that the average South African would be used to Facing the Challenges of Doing Business in Africa Page 3

4 INCENTIVES OFFERED IN THE FINANCIAL SERVICES SECTOR OF BOTSWANA International Finances Services Centre of Botswana For Companies that will do business in the region No withholding taxes on dividends No withholding taxes on interest earned No withholding taxes on commercial royalties 15% flat rate company tax Work permits easily obtained Unilateral tax relief upon withholding or income taxes levied Facing the Challenges of Doing Business in Africa Page 4

5 BOTSWANA INNOVATION HUB Generous telecommunications subsidies Training subsidies Low tax rate of 15% Work permit exemptions For mining innovation Agricultural innovation Business support innovation Scientific Possible Government assistance with research Facing the Challenges of Doing Business in Africa Page 5

6 THE BOTSWANA COMPANY REGIME 100% foreign shareholding allowed One Resident Director is required No special rules regarding capitalisation Tax Consequences for mining concerns which may be undercapitalised For SA Taxpayers, dividends may be tax free Companies may be trust owned The Botswana International Trust Regime is World Class Manufacture – 15% tax Local Company 22% tax Beware - Withholding tax Facing the Challenges of Doing Business in Africa Page 6

7 TAX RATES IN BOTSWANA Individual – sliding scale top rate25% Company- Manufacturing15% Company- Innovation Hub15% Company –IFSC15% Company22% Trust- Beneficiary Rate- Max 25%/0% Withholding tax on Dividends7,5% Dividends0% CGT at Death0% CGT – Land and Fixed Property Indexed Base Cost25% CGT – Companiesabatement Death Duty (Capital Transfer or Donation)5% Facing the Challenges of Doing Business in Africa Page 7

8 DANGERS IN THE REGION Botswana is a safe haven Violent Crime statistics are low in Botswana Residents have security of tenure Rule of law The Botswana International Trust regime Provides the ideal vehicle to safeguard assets Admin done in Botswana, financial assets offshore High level of anonymity can be attained Facing the Challenges of Doing Business in Africa Page 8

9 GABORONE 10% of the total population International Airport One of the fastest growing cities Home to SADC Close to SA border 380 Km from Johannesburg Diamond Hub Stock Exchange New High Court Facing the Challenges of Doing Business in Africa Page 9

10 OPPORTUNITIES IN BOTSWANA

11 THE DIAMOND INDUSTRY Diamonds are the mainstay of the Botswana economy and the Diamond Mining Sector Accounts for 1/3 to ½ GDP Per capita income of almost $ 6000 per annum The dominant force is the De Beers Mining Company and Debswana. (Provides price stability and actively supports Botswana development) Worlds largest Gem Diamond Mine is the Jwaneng mine, about 140 Km South west of Gaborone Diamond Hub in Gaborone Estimated 20 odd lifespan left in the Jwaneng mine Other minerals are to be found and can be exploited in future Facing the Challenges of Doing Business in Africa Page 11

12 TOURISM IN BOTSWANA Accounts for over jobs Has not yet reached full potential Botswana has some of the largest game parks in Africa Much of the land surface is still pristine Revenues over $ 300 Million Second Largest Industry Facing the Challenges of Doing Business in Africa Page 12

13 AGRICULTURE Serious Government Support for Farmers Farm equipment VAT exempt Resident Cattle Farmers, up to 300 head herd – tax free income Resident dry land farmers, up to 100 ha dry lands, - tax free income A portion of the farming losses of an individual can be utilized to offset taxes Botswana has various trade agreements with the EU Southern and South Western Botswana is Beef Country with Ghanzi noted as one of the best beef areas In the North, intensive agriculture is practiced, with spill points etc Growth area in the economy Facing the Challenges of Doing Business in Africa Page 13

14 LEGAL MATRIX Roman Dutch Law is the common Law By virtue of Section 2 of the Botswana Independence Act 1966 High Courts at Lobatse, Francistown and soon in Gaborone Appeal Court in Lobatse Close connection to the South African legal fraternity Many of the Appeal Court Judges are Senior SA Counsel Companies Act, Insolvency Act very similar to that of South Africa The VAT Act contains principles that are almost identical to that of South Africa Likewise the Income Tax Act is similar South African authorities are extensively used by Counsel and High Court Judges Death penalty is extant The Constitution is less voluminous than that of SA, but private ownership is guaranteed Facing the Challenges of Doing Business in Africa Page 14

15 COMMUNICATIONS Soon to be connected to the Fibre Optic undersea cable for speed of internet access Well developed landline and cellular telephone systems Reliable Courier and Postal Services Inexpensive Rail services for transport of goods Air links to various African Countries, daily flights to South Africa Facing the Challenges of Doing Business in Africa Page 15

16 THE BOTSWANA INTERNATIONAL TRUST REGIME No Exchange Controls - the trust investment is made anywhere in the world Non Residents are able to be listed as trustees of their Botswana International Trust At present trusts are regulated under the Common Law Total Anonymity of beneficiaries Full protection of assets Very low or no tax for non Citizen Beneficiaries in Botswana The trust may be utilized in International tax and estate planning Gaborone is close. Meetings can be held ‘in country’ Facing the Challenges of Doing Business in Africa Page 16

17 Exchange Controls were abolished in Botswana in 1999 Any person who banks in Botswana can move funds and receive funds from anywhere in the world Resident Companies, Trusts and Individuals can hold offshore assets in any amount in any currency in any jurisdiction that they please The only limitations are those of the financial institutions It is easy for a Botswana Head Office to route money to any project and to receive money in Botswana Facing the Challenges of Doing Business in Africa Page 17 CURRENCY

18 BANKING SERVICES ABSA Life Bank ABC Bank Gaborone Barclays Bank Capital Bank FNB Stanbic Bank Standard Chartered Bank Wesbank Botswana is the ideal jurisdiction in the region for administration of individual or corporate financial affairs Because of the proximity of Gaborone to Johannesburg, decisions can be made in Botswana. This is highly tax efficient Facing the Challenges of Doing Business in Africa Page 18

19 BDO BOTSWANA 70 Staff Members Professional Staff include two South African lawyers, with rights of appearance Value Added Services includes international estate and tax planning and wealth services One of the largest Trust Services outlets in Botswana Full compliment of commercial services Gaborone (Tel) Facing the Challenges of Doing Business in Africa Page 19


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