BOTSWANA – GATEWAY TO AFRICA AND THE WORLD

Peter O’HalloranTax Partner BDO Gaborone

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

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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

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INCENTIVES OFFERED IN THE FINANCIAL SERVICES SECTOR OF BOTSWANAInternational 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

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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

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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

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TAX RATES IN BOTSWANA

Individual – sliding scale top rate25%Company- Manufacturing 15%Company- Innovation Hub 15%Company –IFSC 15%Company 22%Trust- Beneficiary Rate- Max 25%/0%Withholding tax on Dividends 7,5%Dividends 0%CGT at Death 0%CGT – Land and Fixed PropertyIndexed Base Cost 25%CGT – Companies abatementDeath Duty (Capital Transfer or Donation) 5%

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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

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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

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OPPORTUNITIES IN BOTSWANA

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

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TOURISM IN BOTSWANA

• Accounts for over 20 000 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

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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

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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

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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

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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’

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• 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

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CURRENCY

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

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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 3902779 (Tel)

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