Govt eyes more tax holiday deals
FRANCISTOWN: Government’s negotiations with other countries to sign Double Taxation Avoidance Agreements (DTAA) are underway to ensure investor benefits from tax holiday incentives continue, Boniface Mphetlhe of Ministry of Trade and Industry (MTI) has said.
The Deputy Permanent Secretary in MTI, Mphetlhe, was speaking on the topic of Botswana Investment Climate at the Francistown Investment Forum (FIF2014) that was held this week.
He said Botswana has already signed a number of DTAA with countries such as South Africa, the United Kingdom, Sweden, Mauritius, India and Russia.
“In this regard, the government remains fully committed to continuing to grow our DTAA network with all major trading partners,” he added. In instances where the DTAA treaties are not already in place, legislative frameworks are set out in the Income Tax Act, Mphetlhe said. These frameworks allow accredited companies a unilateral credit of up to 15 percent for withholding taxes suffered in jurisdictions with which Botswana does not have DTAA.
He added that International Financial Services (IFS) companies setting up in Botswana enjoy readily accessible incentives.
These include a competitive corporate tax incentive framework, exemption from capital gains tax and withholding tax, no foreign exchange controls, denomination of share capital in any major convertible currency and access to growing network of double taxation avoidance treaties. “These countries also have access to Botswana’s 200 percent tax training rebate,” said Mphetlhe.
He also said that a Botswana IFS business is allowed to dominate its capital in any of the internationally recognised currencies, the measure allowing the business to be cushioned from losses brought about by the exchange rate risk and exchange rate movements.
Though they do not have a special arrangement for Francistown given its strategic location and accessibility across the African continent and beyond, the town is well placed for investment, said Mphetlhe.
He said that Botswana provides tariff exemptions and concessions on imported inputs used for manufacturing or exporting goods.
According to Mphetlhe, other incentives are that they have no exchange controls, permit-free movement of capital and are flexible to companies bringing in key expatriate personnel who are needed to establish operations in Botswana.
He added that MTI, in collaboration with the Ministry of Labour and Home Affairs, though advocating for localisation of skills, is not oblivious to the fact that certain expertise can only be attained elsewhere.
“And that for some key roles even though we have such skills locally it is imperative for those positions to be filled by expatriates, particularly in private businesses,” Mphetlhe said.
