Tax In Botswana
Independent contracting in Botswana isn’t always straightforward. You’ve got immigration issues, tax difficulties, and mountains of complex admin work. Even worse, missteps can cost you serious money, or even land you in legal trouble.
Before you consider taking a contract in Botswana, you should be aware of what you’re getting into – and how you can make it simpler.
Difficulties of Contracting:
Generally, you need to have an employer sponsor in order to secure the appropriate work permit and work visa for Botswana.
If you’re working independently, it can be difficult to find clients willing to sponsor you. Moreover, even if your client can do this, you’ll need a new sponsor each time you decide to take on a new contract. Of course, every new sponsor will mean more paperwork.
Also, are you familiar with the intricacies of the tax system in Botswana, as well as your own country’s laws on overseas earnings? If so, good on you!
However, if you’re like the rest of us, figuring out (much less reducing) your tax liability in Botswana and your home country can seem like full-time work in itself.
How Umbrella Companies Work :
Most freelance workers aren’t superheroes who successfully tackle these issues all on their own. There are companies that specialize in helping workers make the most out of their contracts.
They’re called Umbrella Companies (or, contractor management companies).
Basically, an Umbrella Company acts as your full-time employer, even though you maintain your independence as a contractor. They collect and filter payments from your clients, filtering out the necessary social security and fees. You send them your timesheets, and they send you payments.
Because they act as your “employer,’ they can sponsor you and provide a single work permit for multiple contracts in Botswana. Even better, most are experts in Botswanan and expat tax law, meaning they’ll also help you optimize your earnings in Botswana.
Although the Umbrella Company is technically your “employer,” you’re essentially freeing yourself to work even more independently. You still dictate your contracts, your hours, your schedule. The Umbrella Company simply filters out the time-consuming admin and immigration issues, allowing you to focus on your new contract.
Why Use an Umbrella Company :
Most people want to do their work, earn their money and enjoy their spare time without taking on loads of admin in a new country. That is why an umbrella company can help.
When you’re working through an Umbrella Company, you’ll essentially be outsourcing the admin and tax issues to specialists.
While the umbrella company will charge a fee, you’ll likely end up saving more money in the long run: you’ll be able to focus on your work, expertly reduce your tax liability, and comply with all laws and regulations in Botswana (which means avoiding fees, fines, or even worse penalties).
How We Can Help You:
There’s a huge variety of Umbrella Companies with different specialties and advantages in Botswana. How do you find the right one for your circumstances?
We work closely with Umbrella Companies all throughout Botswana and match contractors with the right company for them. If you’ve already secured a contract in Botswana, we can help you find your best match (for free). Or, we can simply give you feedback on your situation (for free).
A Contractor’s Guide to Taxes :
One of the most consistently challenging aspects of contracting in Botswana is complying with the country’s tax system. As well as paying tax in Botswana, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.
How do I calculate my taxable income:
If you’re working in Botswana under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in Botswana for you and then send you a net wage. Your income tax, public health insurance, social security, and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in Botswana, but contractors may not be offered this service because of their short stay with each employer.
Anybody who can’t pay their tax in Botswana through PAYE is left with the prospect of doing everything themselves.
Do you know much about Botswanan Tax Law? Does Botswana have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in Botswana can range from 5 to 25 percent, and you need to be sure you are placed in the correct tax brackets.
If you are a contractor and want a calculation on your tax and net retention in Botswana, we can supply it to you free of charge.
Using an Umbrella Company for Income Tax :
Contractors in Botswana are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. A Botswanan umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).
The companies are experts in Botswanan taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Botswanan tax office or tax department directly including processing your tax refund if you are eligible.
How We Can Help You with Tax:
We work with numerous umbrella companies in Botswana, many of whom are experts in tax and immigration laws. If you have any questions about tax in Botswana, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax-efficient payments and sponsorship for their Botswanan work permits.
Our advice is 100 percent free and comes with no obligations. You will be paying taxes in Botswana but without the overhead of directly dealing with the Botswanan tax authorities. Get in touch with us today for some reliable advice on tax in Botswana!
When Do You Need to Lodge Your Tax Return?:
In Botswana, the tax year runs from 1 July to the following 30 June.
Step 1: Register
Individuals with taxable income in excess of BWP36,000 are required to register and file tax returns. To register, complete the BURS 1 form (Application for Registration as a Taxpayer) which can be found here(link is external). Employees are required to provide copies of an identity document, residence permit, and work permit. Once completed, mail the form to:
Plot 53976, Kudumatse Drive
Private Bag 0013
Step 2: File Taxes
You can file taxes online, or by mail.
Register for the Botswana Unified Revenue Service (BURS) e-services here(link is external). Sign in with your username and password to file your taxes online.
(ii) By Mail
Complete the tax return form for individuals which can be found here(link is external) (second on the list). Instructions can be found in the document itself.
If filing employment income taxes, you are required to attach Form ITW 8 which is provided to you by your employer. If you have incurred expenses in connection with your employment, which are not reimbursed to you by your employer, you may provide details of these expenses on a separate sheet of paper.
Once you have completed, signed and dated the form, mail the form to the following address:
Botswana Unified Revenue Service
Private Bag 0013
*Non-residents are subject to a 5% tax rate on the first BWP36,000 of their income.
Pension Fund Contributions: Employees are entitled to a deduction for pension fund contributions, capped at 15% of income.
Retrenchment Packages: The higher of the tax-free threshold, or one-third of the amount received in a retrenchment package, is exempt from tax.
Gratuities: One-third of a gratuity paid to a non-citizen employee is exempt from tax if (i) the employee has completed a 2-year contact of employment and (ii) the gratuity payment is provided for in the employment contract. The exemption is capped at 25% of the employee’s cumulative salary for the first 2 years, 27.5% for the next 2 years, and 30% for subsequent 2-year periods.
You become a tax resident in Botswana when:
- Your permanent place of abode is in Botswana;
- You are physically present in Botswana for 183 days or more during the tax year; or
- After staying in Botswana for 183 days or more in a tax year, you physically remain in Botswana into the next tax year.
Residents are taxed on their global income. Non-residents are taxed on their Botswana-source income only.