Botswana: Tax developments in response to COVID-19

The Minister of Finance and Economic Development on 31 March 2020 announced government’s plan for tax relief as part of broad measures to mitigate the impact of the coronavirus (COVID-19) pandemic. The following tax relief is being provided:

• Deferral of 75% of any two self-assessment tax (SAT) quarterly payments due between March and September 2020, with payment of the deferrals to begin from March 2021.
• Waiver of payment of the “training levy” (e.g., for youth employment), suspended for six months.
• Wage subsidies for businesses registered for tax, regardless of whether they owe tax (unless specifically exempted, COVID-19 wage subsidies are to be taxable).
• Expedited refunds of value added tax (VAT), with refunds to be made within 21 days from the date of filing the VAT return (instead of the 60 day period for a refund).
• VAT refund periods for businesses with annual turnover in excess of BWP250 million will be negotiated on a case-by-case basis.

Additional Information

• Returns and payment for the various types of taxes due in April 2020 will now be due as follows:
  • Payroll Tax (PAYE) – 14 days after the lapse of the lockdown; (originally due 15 April 2020).
  • Withholding Taxes – 14 days after the lapse of the lockdown;
  • The VAT returns and payments (originally due 25 April 2020) have now been extended to within 14 days after the end of the lockdown period.
  • The corporate income tax returns and payments due date (originally due 30 April 2020) has been extended to 30 days after the expiration of the lockdown period. The extended due date for corporate income tax returns also applies with regard to transfer pricing documentation (which is filed with the corporate income tax return).

Guidance for deferral of income tax payments

The Minister of Finance on 4 May 2020 published guidance—the Income Tax (COVID-19) (Deferment of Self-Assessment Tax) Order, 2020—that provides the mechanisms for deferring the payment of income tax as a relief measure in response to the coronavirus (COVID-19) pandemic.

The guidance in the order is effective retroactively from 1 March 2020 and is subject to ratification of legislation (Emergency Powers (COVID-19) (Amendment) (No. 4) Regulations, 2020) by the National Assembly.

The order stipulates that the rules for the deferral of tax payments apply to taxpayers with businesses that have been adversely affected by the pandemic and resulting lockdown. Taxpayers must satisfy certain requirements in order to qualify for the deferral relief (including, for example, a valid tax clearance certificate and approval by the Commissioner General). Payments that are eligible for this relief include quarterly installments of self-assessment tax and the final top-up payment and estimated annual tax that is payable by an individual or a person other than a company. For late payments of tax, compound interest of 1.5% per month will be imposed on deferred amounts that remain unpaid after 31 December 2021.

Applications need to be made in electronic format to the Commissioner General and clearly state the tax payment in respect of which deferment is being sought. The authorities are to respond to an application within 14 days of submission.