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VOLUME: XII
INCOME TAX
CHAPTER: 52:01
Part:XVII Miscellaneous ss 143145

143.   Free postage

            All correspondence relating to the assessment and collection of tax including tax returns addressed to the Commissioner General and posted within Botswana by any person may be sent free of postage in envelopes which are marked "Income Tax" and "On the Service of the Botswana Unified Revenue Service".

144.   Preservation of documents

            (1) Subject to this section, every person carrying on business in Botswana shall maintain and preserve in Botswana all books of account and other documents which are essential to the explanation of any entry in such books of account relating to that business for a period of eight years after the end of the tax year or accounting period to which such books of account or documents relate.

            (2) In the case of foreign business not registered in Botswana and whose presence in Botswana is in relation to specific contractual transactions, the business shall make available to the Commissioner General for examination and audit in Botswana, such books of account and documents as the Commissioner General may request for a period of eight years.

            (3) Where-

     (a)     a company has gone into liquidation; or

     (b)     a person has died,

the Commissioner General, on application by the liquidator or the executor prior to completion of the winding up of the company or administration of the estate, may approve of the disposal of any books of account or other documents within such lesser period than eight years as he or she thinks fit.

            (4) The Commissioner General may, subject to such conditions and in respect of such books of account or other documents as he or she may specify, authorize the retention of a microfilm copy or durable computer disc of any books of account or other documents in lieu of the original books or documents.

            (5) For the purposes of this section the books of account and other documents required to be preserved shall be deemed to include the record required to be kept under-

     (a)     paragraph 11 of the Fifth Schedule;

     (b)     paragraph 6 of the Sixth Schedule; and

     (c)     paragraph 5 of the Seventh Schedule.

145.   Regulations

            The Minister may make regulations for the better carrying out of the purposes of this Act and without prejudice to the generality of the foregoing such regulations-

     (a)     may prescribe all matters which are required or permitted to be prescribed;

     (b)     may provide for the imposition by the Commissioner General of penalties not exceeding P1,000 for any breach of the regulations; and

     (c)     may provide for the imposition by a court of fines not exceeding P4,000 for any breach of the regulations.

FIRST SCHEDULE

PARAGRAPH

 

PART I
Stock

                1.         Value of stock held to be included in tax return

                2.         Value of stock held at beginning of tax year

                3.         Value of stock held at end of tax year

                4.         Cost price of stock

                5.         Deemed cost of certain stock

 

PART II
Farming Livestock and Produce

                1.         Value of livestock and produce to be included in tax return

                2.         Value of stock held at beginning of tax year

                3.         Value of livestock held at end of tax year

                4.         Revaluation of livestock at beginning of tax year

                5.         Value of produce held at end of tax year

                6.         Livestock deemed to be held at end of tax year

                            Table of standard values

 

PART I
Stock (paragraphs 1-5)

(Sections 28 and 41)

1.       Value of stock held to be included in tax return

     Every person carrying on business, excluding a business of farming, shall include in his or her tax return for each tax year the value of all stock held and not disposed of by him or her (hereinafter referred to as "the value of stock held") at the beginning and end of each tax year.

2.       Value of stock held at beginning of tax year

     The value of stock held by any person at the beginning of any tax year shall be deemed to be-

     (a)      where he or she carried on his or her business on the last day of the previous tax year, the value of stock held on that date; and

     (b)      where he or she commenced business during the tax year, the cost to him or her of any stock acquired prior to the commencement of the business.

3.       Value of stock held at end of tax year

     The value of the stock held at the end of a tax year shall be deemed to be the cost to the person carrying on business less such amount, if any, as in the opinion of the Commissioner General, is reasonable as representing the amount by which the value of such stock has been diminished because of damage, deterioration, obsolescence or other cause.

4.       Cost price of stock

     For the purposes of this Part the cost of any stock in relation to any date shall be-

     (a)      the cost incurred in acquiring such stock; and

     (b)      any further costs incurred up to such date in getting such stock into its then existing condition or location.

5.       Deemed cost of certain stock

     Where any stock has been acquired by any person-

     (a)      for a consideration which cannot be valued; or

     (b)      otherwise than by way of a transaction at arm's length, such stock shall be deemed to have been acquired at a cost equal to the price which, in the opinion of the Commissioner General, was the current market price of such stock on the date of acquisition.

PART II
Farming Livestock and Produce (paragraphs 1-6)

(Sections 29 and 41)

1.       Value of livestock and produce to be included in tax return

     Every person shall include in his or her tax return for each tax year the value of all livestock or produce held and not disposed of by him or her (hereinafter referred to as "the value of stock held") at the beginning and end of each tax year:

     Provided that horses, donkeys and mules used as working animals or held for purposes other than for the business of farming shall not be included in the value of stock held.

2.       Value of stock held at beginning of tax year

     The value of stock held at the beginning of a tax year shall be deemed to be-

     (a)      where the person carried on farming operations on the last day of the previous year, the value of stock held on that day:

                      Provided that where a person, carrying on the business of farming, has used the relevant standard value in valuing any of his or her stock, such person may, in respect of any tax year, adopt the current standard value specified in paragraph 3 in valuing any such stock held by him or her at the beginning of the tax year; and

     (b)      where the person commenced farming during the tax year, the cost to him or her of any stock acquired prior to commencement of farming.

3.       Value of livestock held at end of tax year

     (1) Subject to subparagraph (2), the value of any livestock held by any person carrying on farming operations at the end of any tax year shall be ascertained in accordance with any of the following methods as the person may choose to adopt-

     (a)      where the livestock was acquired by the person by purchase, the value shall be-

            (i)       an amount equal to the purchase price of such livestock;

           (ii)       an amount equal to the current market price of such live stock; or

          (iii)       an amount equal to the relevant standard value of such livestock; or

     (b)      where the livestock was acquired by the person otherwise than by purchase, the value shall be either-

            (i)       an amount equal to the current market price of such livestock; or

           (ii)       an amount equal to the relevant standard value of such livestock.

     (2) The exercise of an option by a person under subparagraph (1) in respect of any class of livestock specified in the Table containing the amounts of standard value for livestock for any tax year shall be binding upon such person in that tax year and every subsequent tax year in respect of which that livestock is specified in the Table.

     (3) Where the Table containing the amounts of standard value for any particular class of livestock is amended in any tax year-

     (a)      by including any class of livestock not included in the previous year, any person having such livestock may, at the end of that tax year, exercise a further option in accordance with the provisions of subparagraph (1) and the exercise of such option shall be binding on him or her in accordance with the provisions of subparagraph (2); and

     (b)      by excluding any class of livestock included in the previous year, any option exercised by any person in respect of such livestock before its removal from the Table shall lapse and the value of such stock held by the person at the end of that tax year shall be ascertained-

            (i)       in the case of livestock acquired by purchase in accordance with either the provisions of subparagraph (1)(a)(i) or (ii), as the person may choose to adopt, and whichever method is adopted by him or her shall be binding on him or her in accordance with the provisions of subparagraph (2); and

           (ii)       in the case of livestock acquired otherwise than by purchase, in accordance with the provisions of subparagraph (1)(b)(i).

     (4) In this paragraph "the relevant standard value", in relation to any livestock, means-

     (a)      the amount of the standard value specified in the Table to this Schedule, or such amount as may be prescribed for the class of such livestock; or

     (b)      any amount not greater than 125 per cent of the amount of such standard value and not less than 75 per cent of the amount of such standard value.

4.       Revaluation of livestock at beginning of tax year

     Notwithstanding the provisions of paragraph 2(a), any person referred to in the said paragraph whose livestock is affected by any amendment made in any tax year to the Table, shall revalue the livestock held by him or her at the beginning of that tax year by adopting the same method which he or she used in valuing his or her stock at the end of that tax year.

5.       Value of produce held at end of tax year

     The value of any produce held by any person to whom this Schedule applies at the end of a tax year shall be such amount as, in the opinion of the Commissioner General, is reasonable.

6.       Livestock deemed to be held at end of tax year

     For the purposes of this Part any livestock which is the subject of any agreement between the owner and any other person whereby the owner retains the right of ownership of such livestock or of any progeny thereof shall be deemed to be livestock held and not disposed of by such owner.

TABLE OF STANDARD VALUES

(Para. 3)

Class of Livestock

Standard Value

CATTLE
Fully grown animals
Tollies and heifers
Calves


P430
P230
P90

SHEEP AND GOATS
Grown animals
Kids


P45
P10

 

SECOND SCHEDULE

(Sections 38, 41 and 51)

PART I
Persons Exempted

     The following persons shall be exempt from tax for any tax year-

       (i)     any local authority;

      (ii)     Bank of Botswana or any other bank or corporation wholly owned by Botswana Government, other than the Botswana Development Corporation, the Botswana Meat Commission or any other body corporate wholly owned by Botswana Government which is liable to tax under any other provision of the Act;

     (iii)     any organization in respect of which an order has been made under section 4 of the Diplomatic Immunities and Privileges Act;

     (iv)     ...

      (v)     any approved benefit fund, approved provident fund or approved superannuation fund;

     (vi)     any building society;

    (vii)     any institution which is, in the opinion of the Commissioner General, a mutual savings bank or a mutual loan association;

    (viii)     any trade union or employees' association registered under the Trade Unions and Employers' Organizations Act;

     (ix)     any association of employers established for a purpose approved by the Minister;

      (x)     ...

     (xi)     any political party listed in the Schedule to the Societies Act;

    (xii)     Motor Vehicle Insurance Fund;

    (xiii)     Southern African Centre for Ivory Marketing;

   (xiv)     Botswana Institute of Accountants or any other professional institution established by statute;

    (xv)    a stock exchange established in Botswana by statute and any ancillary organ thereof;

   (xvi)     any specified collective investment undertaking;

   (xvii)     any international financial organisation to which Botswana is a member under the International Financial Organisations Act;

  (xviii)     any special purpose vehicle formed by the government for securitization of public assets

PART II
Classes of Gross Income Exempted

     The following classes of amounts included in gross income shall be exempt from tax to the extent indicated-

       (i)     the official emoluments and allowances of the President;

      (ii)     the official salaries and emoluments payable in respect of their offices to-

            (a)      heads of diplomatic missions and consulates accredited to Botswana; and

            (b)      members of the staffs of such missions and consulates who are resident in Botswana solely for the purpose of carrying out duties as members of such missions;

     (iii)     the official salary and emoluments of an official of any organization in respect of whom an order has been made under section 4 of the Diplomatic Immunities and Privileges Act;

     (iv)     allowances exempted under the National Assembly (Salaries and Allowances) Act;

      (v)     allowances exempted under the Ntlo ya Dikgosi (Salaries and Allowances) Act;

     (vi)     allowances and gratuities exempted under the Judges (Miscellaneous Provisions) Act;

    (vii)     any amount accrued to a public servant, teacher or consultant to the government as director of any company other than his or her principal employer, where such amount is paid to his or her principal employer or to the Government;

    (viii)     any amount accrued to a public servant or teacher as a foreign service allowance while serving outside Botswana in a diplomatic mission of Botswana;

     (ix)     war pensions or gratuities;

      (x)     interest payable by the Botswana Savings Bank, including interest on Botswana Savings Bank Certificates;

     (xi)     interest on national development bonds exempted under the National Development Bank Act;

    (xii)     interest on bonds exempted under the Development Loan (Botswana Registered Bonds) Act;

    (xiii)     any amount accrued to the government of any other country, or to any non-resident institution or company by way of interest on any loan, to the extent to which the Minister is satisfied that the exemption of such amount is in the public interest;

   (xiv)     any amount payable as interest on any subscription share issued by any building society resident in Botswana;

    (xv)     payments to members by any co-operative thrift and loan society;

   (xvi)     payments by way of sickness or accident benefits to any person or to his or her dependants or heirs, by any approved benefit fund, a trade union, or under a policy of insurance covering sickness or accident;

   (xvii)     amounts received by way of periodical payments in the nature of maintenance or alimony by a woman from her husband or former husband:

                      Provided that no exemption shall apply under this item where, for the purpose of making such payments, the husband or former husband has divested himself of any assets which produce gross income, or divested from himself or herself amounts which would otherwise have been taken into account in ascertaining his or her taxable income;

  (xviii)     any amount payable to an employee, not being a citizen of Botswana whose contract of employment commenced before the 1st July, 1999, upon the bona fide termination of his or her employment where such payment is made by the employer-

            (a)      pursuant to the terms of a written contract of employment; or

            (b)      by reasons of any law in force in Botswana, by way of bonus or gratuity to the extent to which, in the opinion of the Commissioner General the payment is reasonable in amount having regard to-

                      (i)       the period of the employment;

                      (ii)      the nature of the employment;

                      (iii)     the salary payable to the employee; and

                      (iv)     the measure of retirement benefits generally prevailing at that time;

   (xix)     any amounts accrued from a business or employment carried on in Botswana by a citizen of any other country or by a company registered under any law in force in any other country, where such business or employment is carried on in Botswana under an agreement with the Government for the provision of technical assistance to the Government to the extent to which the Minister may, by notice in writing to the Commissioner General, declare such amounts to be exempted from tax;

    (xx)     any amount payable by way of interest-

            (a)      by Bamangwato Concessions Limited or BCL (Sales) Limited; or

            (b)      by Botswana RST Limited, to the extent that such interest is in respect of moneys borrowed by the company and made available to Bamangwato Concessions Limited for the purposes of its mining operations or exploration in Botswana, to any non-resident who does not carry on business in Botswana through a permanent establishment situated therein where such interest is interest to which Clause 112(C) or 11(F) of the Schedule to the Selibe-Phikwe Tax Agreement Ratification Act applies;

   (xxi)     any amount accrued from an employment carried on by a non-resident aboard an aircraft or road or rail vehicle in the course of the operation of an international transport service by a non-resident;

   (xxii)     any amount payable as a pension under the Overseas Officers' Pensions Agreement (Implementation) Act, 1976;

  (xxiii)     any amount received by way of a scholarship or bursary for the purposes of education and maintenance during such education;

  (xxiv)     any amount exempted under an agreement entered into under section 53 or 54;

  (xxv)     any amount paid to the Commissioner General out of the Productive Employment Development Fund as tax payable by any person for any tax year;

  (xxvi)     terminal, sitting, ward, subsistence and meal allowances payable to a councillor of a local authority, or to a member of a land board or a subordinate land board;

(xxvii)     where under any law in force in Botswana an employee is permitted to commute a portion of his or her pension, an amount not exceeding one third of the pension entitlement at the time of retirement;

(xxviii)     in the case of any person other than a person subject to paragraph (xxvii), who, being entitled to a pension or annuity on retirement, elects to receive a part of such pension or annuity as a commuted lump sum, an actuarially calculated sum representing a commutation of not more than one third of his or her full entitlement at the date of his or her retirement;

  (xxix)     in the case of any person other than a person referred to in paragraphs (xxvii) and (xxviii) who is entitled bona fide to an annual pension or annuity of not more than five hundred Pula, an actuarially calculated sum representing the commutation of that pension or annuity;

  (xxx)     the investment income, as defined in section 51(3) of a statutory life insurance fund;

(xxxi) any amount payable as interest accrued in any year to any resident individual from any banking institution or building society in Botswana, up to a limit of P7,800;

(xxxii) the salary and other emoluments of an employee of the Commonwealth of Virginia Trade Office who is not a citizen of Botswana;

(xxxiii)     any amount paid as a subsidy or a grant to any person from the Productive Employment Development Fund under the Financial Assistance Scheme;

(xxxiv)     former President's pension and benefits under the Presidents (Pension and Benefits) Act, 1998;

(xxxv)     pensions and gratuities payable to a Minister and Member of Parliament under the Ministers and National Assembly Gratuities and Pension Act, 1998; and

(xxxvi)     salaries, emoluments, obligations, securities, dividends or any other cash or non-cash benefits received by the employees of any international financial organisation to which Botswana is a member;

(xxxvii)    any dividends received by an international financial services centre company in respect of a qualifying foreign participation as defined under section 2;

(xxxviii)   ...

(xxxix)     any income of a charitable, religious or educational institution or a trust established for public purposes:

                      Provided that where a person to whom this paragraph applies, carries on any business or derives any gains from disposal of any property chargeable to taxunder section 35, exemption under this paragraph shall not be granted to such person unless it is proved to the satisfaction of the Commissioner General that the income of that person has been applied exclusively for public purposes within that tax year or such extended period as may be allowed by the Commissioner General;

     (xl)     any income of an association formed for the purpose of promoting social or sports amenities and not involving the acquisition of gain or the possibility of future gains to the extent that such income is applied exclusively for the purposes of such association within that tax year or such extended period as may be permitted by the Commissioner General;

    (xli)     any amounts received by non-resident telecommunication companies on settlement of international telephone traffic under international telecommunication regulations;

    (xlii)     any amount of dividend distributed by a special purpose vehicle formed by the government for the securitization of public assets; and

(xliii) any investment income of a mine rehabilitation fund referred to in section 43 (1) (e).

THIRD SCHEDULE
CAPITAL ALLOWANCES

(Sections 41 and 49)

ARRANGEMENT OF PARAGRAPHS

PART I
Initial Allowances

PARAGRAPH

 

                1.         Initial allowance for industrial building

                2.         Computation of initial allowance

 

PART II
Annual Allowances

                1.         Limitation on annual allowance

                2.         Industrial building, capital expenditure

                3.         Annual allowances, industrial buildings

                4.         Plant or machinery, capital expenditure

                5.         Annual allowances, plant or machinery

                6.         Deductions in relation to commercial building

                7.         Computation of allowances deductible

 

PART III
Residential Accommodation for Employees

                1.         Deductions in relation to commercial building

                2.         Computation of allowances deductable

 

PART IV
Farmers

                1.         Computation of allowances deductable

 

PART V
Disposal of Property

                1.         Charge or allowance on disposal

                2.         Balancing allowance

                3.         Balancing charge

                4.         Replacement property

                5.         Annual allowance on replacement property

                6.         Effect of election

 

PART VI
Definitions

                1.         Definitions

 

PART I
Initial Allowances (paragraphs 1-2)

1.       Initial allowance for industrial building

     In ascertaining the chargeable income of any person for any tax year derived from an approved industrial business, there shall be deducted from his or her business assessable income an allowance (in this Part referred to as "an initial allowance") in respect of expenditure incurred by that person on-

     (a)      the erection or purchase of any new industrial building; or

     (b)      any improvements, other than repairs, to any industrial building, if that building was used solely for the purposes of such business carried on by that person.

2.       Computation of initial allowance

     The initial allowance deductible under paragraph 1 shall be an amount equal to 25 per cent of the expenditure incurred by him or her on the building or improvements and such allowance shall be deducted in the tax year during which-

     (a)      in the case of a building, it was first used; or

     (b)      in the case of improvements, they were completed.

PART II
Annual Allowances (paragraphs 1-7)

1.       Limitation on annual allowance

     (1) When the aggregate of the allowances granted to any person in respect of any property to which this Part applies equals the annual expenditure incurred by him or her on such property, no further annual allowance shall be granted in respect of that property.

     (2) Where any item of property to which this Part applies is used partly for purposes of a business and partly for other purposes, the annual allowance in respect thereof which would otherwise be granted shall be reduced by such amount as the Commissioner General considers to be fair and reasonable having regard to the extent of use for such other purposes.

2.       Industrial building, capital expenditure

     In ascertaining the business chargeable income of any person for any tax year derived from the letting or use of an industrial building, there shall be deducted from his or her business assessable income an annual allowance in respect of the expenditure incurred by him or her on any industrial building or improvements thereto, if that building was used in that tax year for the purposes of such business carried on by that person.

3.       Annual allowances, industrial buildings

     (1) Subject to the provisions of subparagraph (2), the annual allowance deductible under paragraph 2 shall, in respect of expenditure incurred on or after 1st July 1982, be made in respect of the tax year during which the building was first used or the improvements were completed and of the next 39 succeeding tax years and such allowance shall be of an amount equal to two and one half per cent of the expenditure incurred:

     Provided that where an expenditure was incurred on a building before 1st July, 1982, but the building was not first used in that business before that date, then such expenditure shall be deemed to have been incurred on the date the building was first brought into use.

     (2) Where the aggregate amount of any initial and annual allowances deductible in respect of any industrial building in accordance with the provisions of Part I and the preceding provisions of this paragraph equals the expenditure incurred in respect of such building, no further allowance shall be deductible in respect of such building.

4.       Plant or machinery, capital expenditure

     In ascertaining the business chargeable income of any person for any tax year there shall be deducted from his or her business assessable income an annual allowance in respect of expenditure incurred by him or her on any plant or machinery used by him or her in that tax year for the purposes of his or her business.

5.       Annual allowances, plant or machinery

     (1) Subject to the provisions of this paragraph, the annual allowance deductible under paragraph 4 shall be such amount, not being less than 10 per cent nor more than 25 per cent, of the expenditure incurred by him or her on such plant or machinery as the Commissioner General may consider to be fair and reasonable having regard to the expected life of the plant or machinery:

     Provided that in respect of a motor car (which expression may include a station wagon but not a commercial vehicle) owned by a person or held by him under a lease, leaseback or similar arrangement and used for the purpose of his business, by a person other than a person whose principal business is that of hiring or leasing of motor vehicles, any annual allowance shall only be claimable in respect of expenditure up to a maximum of P175,000.

     (2) Where the aggregate amount of annual allowances given in respect of any plant or machinery in accordance with the provisions of paragraph 4 equals the expenditure incurred in respect of such plant or machinery, no further annual allowance shall be given in respect of the plant or machinery.

     (3) Where any plant or machinery used by a non-resident is used in Botswana for a period of less than 12 months in any tax year, the annual allowance in respect of such plant or machinery shall be such amount as the Commissioner General may consider to be fair and reasonable having regard to the period of use of such plant or machinery in Botswana.

6.       Deductions in relation to commercial building

     In ascertaining the business chargeable income of any person for any tax year, there shall be deducted from his or her business assessable income an annual allowance in respect of the expenditure incurred by him or her on the construction or purchase of a commercial building or on any improvements, other than repairs, thereto, used in that tax year solely for commercial purposes.

7.       Computation of allowances deductible

     The annual allowance deductible under paragraph 6 shall be made in respect of the tax year during which the building was first used or improvements thereto were completed and of the next 39 succeeding tax years and such allowance shall be of an amount equal to two and a half per cent of the expenditure incurred on the building when it was first used or when the improvements thereto were completed.

PART III
Residential Accommodation for Employees (paragraphs 1-2)

1.       Deductions in relation to commercial building

     In ascertaining the business chargeable income of any person for any tax year from a business other than a business of mining there shall be deducted from his or her business assessable income the amount of any expenditure incurred by him or her during the tax year on the erection of dwelling houses for his or her employees:

     Provided that the deduction allowed shall not exceed P25 000 in relation to each dwelling house.

2.       Computation of allowances deductible

     Where, for any tax year within a period of nine years after the tax year in which a deduction has been allowed under paragraph 1 to any person, the dwelling house in respect of which such deduction has been allowed is used for any purpose other than the residential accommodation of an employee, there shall be included in the gross income of that tax year of the first-mentioned person an amount equal to 10 per cent of the deduction allowed:

     Provided that where a dwelling house was used for any purpose other than the residential accommodation of an employee for a period of less than 12 months in that tax year, the amount to be included in gross income shall be equal to that proportion of 10 per cent of the deduction as that period bears to 12 months.

PART IV
Farmers (paragraph 1)

1.       Computation of allowances deductible

     In ascertaining the business chargeable income of any person for any tax year from a business of farming, there shall be deducted from his or her business assessable income-

     (a)      any expenditure incurred by him or her during the tax year on-

            (i)       the eradication of noxious plants;

           (ii)       the prevention of soil erosion;

          (iii)       dipping tanks;

          (iv)       the sinking of boreholes and wells, the provision of piping and pumping plants or the construction of-

                      (aa)    structural improvements for the conservation of water including dams, tanks and reservoirs; or

                      (bb)    irrigation channels and water furrows;

           (v)       the erection of fences, yards and crushes;

          (vi)       the erection of buildings used in connection with farming operations, other than buildings designed to provide residential accommodation;

         (vii)       the establishment of trees, plantations, orchards and vineyards;

        (viii)       the building of roads, bridges or airstrips used in connection with farming operations;

          (ix)       the carrying of electric power from the main transmission lines to the farm apparatus and the erection of buildings or structures connected with the generation of power;

           (x)       the making of firebreaks; and

          (xi)       any other works of a capital nature which, in the opinion of the Commissioner General, are reasonably associated with the classes of expenditure enumerated in items (i) to (x); and

     (b)      such annual allowances in respect of any other property as is provided under Parts II and III.

PART V
Disposal of Property (paragraphs 1-6)

1.       Charge or allowance on disposal

     Where, in relation to any business carried on by any person, there have been allowances granted in respect of any property and that property is disposed of in any tax year, a balancing allowance or a balancing charge shall be made for that tax year as provided in this Part.

2.       Balancing allowance

     Where the expenditure incurred by any person on the property referred to in paragraph 1 disposed of in any tax year exceeds the aggregate of-

     (a)     the allowances granted in respect thereof; and

     (b)     the disposal value, the amount of such excess (referred to in this Act as "a balancing allowance") shall be deducted from the business assessable income of such person for that tax year.

     Provided that in the case of a motor car to which the proviso to subparagraph (1) of paragraph 5 of Part II of the Third Schedule applies, the expenditure incurred on the property for the purposes of this paragraph shall not exceed the amount of expenditure on which an annual allowance is grantable under that proviso in respect of that property.

3.       Balancing charge

     Subject to paragraph 2 hereof, where the disposal value of the property referred to in paragraph 1 disposed of in any tax year exceeds the difference between-

     (a)      the expenditure by that person on that property; and

     (b)      the allowances granted in respect thereof,

the amount of such excess (referred to in this Act as a "balancing charge") shall be included in the gross income of such person for that tax year:

     Provided that where the property disposed of is a property to which the Tenth Schedule applies, the balancing charge shall be limited to so much of the said difference as does not exceed the sum of the allowances granted in respect of the said property.

4.       Replacement property

     Where, but for this paragraph, the amount of any balancing charge arising from the disposal of any plant or machinery would be taken into account in ascertaining the gross income of any person for any tax year, that person may elect, by notice in writing given to the Commissioner General, when lodging his or her tax return for that year, that, in lieu of the balancing charge being so taken into account, it may be deducted, in accordance with paragraph 5 or 6, from the expenditure incurred on any plant or machinery (hereinafter referred to as "the replacement plant or machinery") acquired by him or her for the purposes of his or her business during the tax year, to replace the plant or machinery disposed of:

     Provided that the provisions of this paragraph shall not apply in respect of a car owned by a person or held by him or her under a lease or lease-back arrangement, for the purposes of a business other than the business of a car rental or taxi service.

5.       Annual allowance on replacement property

     For the purposes of determining annual allowances under Part II, the expenditure incurred on the replacement plant or machinery in respect of which an election is made under paragraph 4 shall be reduced by the amount of the balancing charge referred to therein.

6.       Effect of election

     Where an election is made by any person under paragraph 4 in respect of the amount of any balancing charge and that balancing charge exceeds the expenditure incurred on the replacement plant or machinery-

     (a)      no annual allowance shall be granted under Part II in respect of the replacement plant or machinery; and

     (b)      the amount of the excess shall be included in the gross income of that person for that tax year.

PART VI
Definitions (paragraph 1)

1.       Definitions

     In this Schedule-

     "allowances granted" means the aggregate of all allowances and deductions granted under-

     (a)      Parts I and II of this Schedule; and

     (b)      any amount by which any expenditure incurred on the replacement of any plant or machinery is reduced by the amount of a balancing charge under paragraph 5 of Part V;

     "annual allowance", in relation to any case to which paragraph 1(2) of Part II applies, means the annual allowance which would have been granted in respect of any item of property if no restriction had been imposed under that subparagraph;

     "approved industrial business" means-

     (a)      an hotel business;

     (b)      any business the predominant activity of which is a process of manufacture; or

     (c)      the letting of an industrial building or plant or machinery for use by the lessee thereof in any business of the kind referred to in item (a) or (b);

     "business assessable income" means that part of the assessable income of any person derived from a business carried on by him or her;

     "business chargeable income" means that part of the chargeable income of any person derived from a business carried on by him or her;

     "commercial building" means any building in use for the purposes of a business other than-

     (a)      a building in respect of which allowances or deductions relating to the expenditure incurred on such building are provided for under any other provisions of this Act; or

     (b)      any residential building;

     "disposal value" means, in relation to-

     (a)      the scrapping of property, the scrap value thereof;

     (b)      the disposal of property by way of-

            (i)       sale, the net proceeds of sale;

           (ii)       exchange, the market value of any asset acquired through such exchange adjusted to take into account any monetary consideration made;

          (iii)       compulsory acquisition, the amount for which it was compulsorily acquired; or

          (iv)       gift, the market value thereof;

     (c)      withdrawal of property from use in the business or removal from Botswana, the market value thereof; or

     (d)      the loss or destruction of property, any amount received for the remains of such property together with any amounts accrued by way of compensation or indemnity for such loss or destruction;

     "disposed of", in relation to a unit of property, means scrapped, sold, exchanged, compulsorily acquired, given away, withdrawn from use, removed from Botswana, lost or destroyed;

     "dwelling house" includes a unit of residential accommodation in a building constructed for the accommodation of more than one person;

     "expenditure" means expenditure of a capital nature but does not include any amount of value added tax allowable as an input tax credit under the Value Added Tax Act;

     "expenditure incurred", in relation to property acquired by any person, means the cost to that person of such property or, where such property was acquired by him or her-

     (a)      for a consideration which cannot be valued;

     (b)      otherwise than by way of a transaction at arm's length; or

     (c)      prior to being brought into use in his or her business, the amount which the Commissioner General considers to be equal to the market value of the property at the time it was acquired;

     "residential building" means any building or structure or part thereof which the Commissioner General is satisfied is in use as a dwelling house or for any purposes ancillary thereto.

FOURTH SCHEDULE
SPECIAL CLASSES OF COMPANIES AND BUSINESS

(Section 55)

PART I
Botswana Meat Commission (paragraphs 1-3)

1.       Gross income

     The gross income of the Botswana Meat Commission (hereinafter referred to as "the Commission") for any tax year shall comprise the aggregate of-

     (a)      the gross proceeds of sale by the Commission of-

            (i)       its products from the slaughtering of livestock; and

           (ii)       cattle sold on the hoof; and

     (b)      any amounts recovered by way of insurance against loss or damage to such livestock or products, during the tax year.

2.       Taxable income

     Subject to paragraph 3, the taxable income of the Commission for any tax year shall be ascertained by deducting from the gross income of that tax year all direct marketing expenses incurred during that tax year by the Commission in the marketing of its products by way of-

     (a)      bank exchange;

     (b)      charges incurred for the handling and storage of its products outside Botswana;

     (c)      cartage and railway and shipping freight charges;

     (d)      insurance premiums in respect of such cartage and freightage;

     (e)      sales commission;

     (f)       survey and inspection fees charged and government taxes imposed outside Botswana;

     (g)      advertising and sales promotion expenses; and

     (h)      royalties paid in respect of trade marks and labels, and shall be a proportion of the amount remaining after deducting such expenses (hereinafter referred to as "the remainder") calculated as follows-

            (i)       where the remainder does not exceed three million pula, one-tenth of the remainder;

           (ii)       where the remainder exceeds three million pula but does not exceed six million pula, the sum of one-fifth of such part of the remainder as exceeds three million and three hundred thousand pula;

          (iii)       where the remainder exceeds six million pula but does not exceed nine million pula, the sum of three-tenths of such part of the remainder as exceeds six million pula and nine hundred thousand pula; or

          (iv)       where the remainder exceeds nine million pula, the sum of one-third of such part of the remainder as exceeds nine million and one million eight hundred thousand.

3.       Special deductions

     From the amount calculated in paragraph 2 there shall be deducted in ascertaining the taxable income of the tax year therein referred to an allowance to the extent approved by the Minister in respect of expenditure incurred in connection with development projects approved by the Minister for the time being responsible for agriculture, with the concurrence of the Minister.

PART II
Members of the Botswana Development Corporation Limited
Group of Companies
 (paragraphs 1-3)

1.       Interest on loans made within group

     (1) In this Part "member of the Botswana Development Corporation Limited group of companies", as defined in section 2, is referred to as "member of the Development Corporation".

     (2) Where a member of the Development Corporation lends money to another member of the Development Corporation there shall be included in the gross income of the member lending the money in any tax year only such amount of interest on the loan which has been actually paid to such member by the borrowing member of the Development Corporation.

     (3) In ascertaining the chargeable income or the assessed loss for any tax year of a member of the Development Corporation to whom a loan has been granted under subparagraph (2) there shall be deducted any amount of interest paid on such loan.

2.       Interest on loans payable to persons outside group

     Where a person, other than a member of the Development Corporation, lends money to a member of the Development Corporation and such member (in this paragraph referred to as "the lending member of the Development Corporation") in turn lends such money to another member of the Development Corporation, then, in ascertaining the chargeable income or determining the assessed loss of the lending member of the Development Corporation for any tax year, there shall be deducted any expenditure incurred by way of interest on the loan made to the lending member of the Development Corporation, whether or not any interest has accrued on the loan made to the other member of the Development Corporation.

3.       Offsetting of losses incurred within group

     (1) Subject to subparagraph (2), where in any tax year a member of the Development Corporation has incurred any assessed loss, such member may, during the current tax year, by notice in writing to the Commissioner General, elect that the whole or any part of the assessed loss shall be deducted in ascertaining the chargeable income of one or more of the other members of the Development Corporation and such member shall be notified accordingly by the member making the election.

     (2) Any member, in relation to whom an assessed loss is to be deducted in ascertaining his or her chargeable income in accordance with the provisions of subparagraph (1), may by notice in writing to the Commissioner General make a claim within three months of the notification of the election that such assessed loss shall be deducted in ascertaining his or her chargeable income for that tax year and the Commissioner General may make any reduced assessment required to give effect to the provisions of this paragraph:

     Provided that the aggregate of deductions allowed under this paragraph for that year for the assessed loss shall not exceed the amount of such assessed loss.

     (3) For the purposes of section 46 any assessed loss referred to under subparagraph (1) shall be reduced by such amount of assessed loss deducted under subparagraph (2) and, in ascertaining the chargeable income for any subsequent tax year of the member of the Development Corporation incurring such assessed loss, no deduction shall be made in respect of any portion of the assessed loss deducted in accordance with the provisions of subparagraph (2).

     (4) For the purposes of subparagraphs (1) and (2) an assessed loss incurred in any tax year means an assessed loss incurred in the tax year for which the election is made and does not include-

     (a)      any assessed loss, or part thereof, incurred in any preceding tax year; or

     (b)      any assessed loss, or part thereof, which has been deducted under section 46 in ascertaining the chargeable income for any tax year.

PART III
Person Carrying on Business of Insurance
including Re-insurance
 (paragraphs 1-3)

1.       Insurance other than life insurance

     The chargeable income derived by any person from the carrying on in Botswana of an insurance business other than life insurance business shall be ascertained by deducting from the sum of all premiums (including premiums on re-insurance) accrued to such person during any tax year in respect of the insurance of any risk, and other amounts accrued from the carrying on of such business, the sum of-

     (a)      the total amount of the liability incurred in respect of premiums on re-insurance;

     (b)      the actual amount of the liability incurred in respect of any claims during the tax year in respect of that business of insurance, less the value of any claims recovered under any contract of insurance, guarantee, security or indemnity;

     (c)      the expenditure, not being expenditure falling under paragraph (a) or (b), incurred in respect of that business of insurance in accordance with sections 39 to 48;

     (d)      such deduction as may be allowed by the Commissioner General in respect of unexpired risks:

                      Provided that the deduction allowed under this paragraph in respect of any tax year shall be included in the assessable income of the following tax year;

     (e)      such deductions as may be allowed by the Commissioner General in respect of claims which have been intimated but not paid:

                      Provided that the deduction allowed under this paragraph in respect of any tax year shall be included in the assessable income of the following tax year; and

     (f)       such deduction as may be allowed by the Commissioner General in respect of claims which have not been intimated or paid:

                      Provided that the deduction allowed under this paragraph in respect of any tax year shall be included in the assessable income of the following tax year.

2.

     Payments into a Statutory Reserve Solvency Account established under the Insurance Industry Act, will be deductible in ascertaining chargeable income and payments out of such fund will be included in gross income.

3.

     The Commissioner General may recognize the establishment of a claims equalization account for tax purposes, transfers into the account being deductible in ascertaining chargeable income, and transfers out being included in gross income.

FIFTH SCHEDULE
DEDUCTION OF TAX BY EMPLOYERS

(Section 56)

ARRANGEMENT OF PARAGRAPHS

PARAGRAPH

 

                1.         Definitions

                2.         Registration of employers

                3.         Deduction of tax

                4.         Tax deduction tables

                5.         Variations from tax deduction tables

                6.         Liability to deduct tax not abated by other rights or obligations

                7.         Payment to or recovery by Commissioner General

                8.         Payment of remuneration free of tax

                9.         Certificate of remuneration and tax deducted

               10.         Personal liability of employer and employee

               11.         Employer to keep records

               12.         Tax remittance returns

               13.         Employer's annual return of deductions and remittances

               14.         Representative employers

 

1.       Definitions

     In this Schedule-

     "employee" means any person (other than a company) who, in respect of an employment receives remuneration from an employer, and includes any person to whom remuneration accrues-

     (a)      as a director of a company;

     (b)      from a former employer or from an approved superannuation fund; or

     (c)      as a dependant of a deceased person where such remuneration accrues to that dependant as a consequence of the former employment of that deceased person;

     "employer" means any person who pays remuneration to any employee and includes-

     (a)      a representative employer; and

     (b)      the trustee of an approved superannuation fund;

     "remuneration" means any amount accrued to an employee by way of-

     (a)      wages, salary, leave pay, fee, commission, bonus, gratuity or compensation;

     (b)      commutation of moneys due under any contract of employment or service; or

     (c)      pension, lump sum payment or other benefit but does not include any amount accrued to any resident individual in respect of services rendered where such amount does not exceed the annual rate of P600;

     (d)      any other cash and non cash employee benefits;

     "representative employer" means-

     (a)      in the case of a company, the public officer or, in the case of a company in liquidation or under judicial management, the liquidator or judicial manager, as the case may be;

     (b)      in the case of a partnership, the precedent partner or the agent of the partnership;

     (c)      where the employer is the Government, a local authority or other similar authority, or a body corporate or unincorporate (not being a company or a partnership), the person responsible for paying remuneration on behalf of such employer;

     (d)      in the case of an employer in respect of whose taxable income a representative taxpayer is chargeable to tax, the representative taxpayer; or

     (e)      in the case of a non-resident employer, the agent having authority to pay remuneration on behalf of such employer,

              but nothing in this definition shall be construed as relieving any employer from any duty or liability imposed upon him or her by this Schedule.

2.       Registration of employers

     (1) Every person who pays or becomes liable to pay remuneration to any employee shall register as an employer with the Commissioner General.

     (2) Every employer who has not registered as an employer before the commencement of this Act shall register with the Commissioner General in the prescribed form-

     (a)      within 30 days after the commencement of this Act; or

     (b)      in the case of a person who becomes an employer after the commencement of this Act, within 30 days after the end of the month in which he or she became an employer.

     (3) Every employer who changes his or her business address or ceases to be an employer shall notify the Commissioner accordingly within 30 days of such change of address or of his or her ceasing to be an employer, as the case may be.

3.       Deduction of tax

     (1) Every employer shall, unless the Commissioner General otherwise authorizes, deduct tax in accordance with this Schedule.

     (2) Subject to paragraph 5, the amount of tax to be deducted shall be determined in accordance with tax deduction tables prescribed by the Commissioner under paragraph 4.

     (3) Where an employer deducts from a resident employee's remuneration the employee's current contribution to an approved superannuation fund, the amount of tax to be deducted shall be calculated on the balance of remuneration remaining after deducting that contribution:

     Provided that the deduction for any such contribution shall be based on an annual rate not exceeding 15 per cent of the employee's remuneration.

4.       Tax deduction tables

     (1) The Commissioner General shall prescribe tax deduction tables (in this Schedule referred to as "the tables") which shall come into force on the date of commencement of this Act.

     (2) The tax to be deducted in accordance with the tables prescribed under this paragraph shall take into account the rates of tax payable under section 59.

     (3) In the case of a resident individual tax shall be deducted by a reference to Table I of the Eighth Schedule.

     (4) The tables shall specify the manner of calculations of the tax to be deducted from any payments or remuneration by way of-

     (a)      annual and other bonuses;

     (b)      overtime;

     (c)      leave pay; and

     (d)     other payments of an abnormal nature.

     (5) In the event of any variation of the rates of tax payable in relation to any tax year to which this Act applies, the Commissioner General shall prescribe new tables to take into account such variations and shall, by notice published in the Gazette, specify the date upon which such tables shall come into force.

     (6) Notwithstanding subparagraph (4)(d), where a payment of remuneration is to be made to an employee by way of-

     (a)      bonus, gratuity, compensation or other lump sum on termination of his or her employment; or

     (b)      lump sum payment by a superannuation fund on his or her retirement, the employer shall, not less than 15 days prior to the date such payment is to be made, apply to the Commissioner General for a direction as to the amount of tax, if any, which shall be deducted therefrom, and the employer shall comply with that direction.

5.       Variations from tax deduction tables

     (1) The employer shall, at the written request of an employee, deduct from his or her remuneration an amount of tax greater than that required to be deducted under the tables.

     (2) Where, in respect of any tax year, the Commissioner General is of the opinion that the amount of tax required to be deducted by an employer in accordance with the tables from the remuneration payable to any employee will be substantially less than the amount of tax which is likely to be charged for that tax year he or she may direct the employer by notice in writing to deduct such greater amount than is prescribed in the tables as appears to the Commissioner General to be appropriate to the circumstances of that employee, and the employer shall comply with that direction.

     (3) Where, in respect of any tax year, an employee is of the opinion that the amount of tax required to be deducted by his or her employer in accordance with the tax tables will be substantially greater than the amount of tax which is likely to be charged for that tax year, he or she may apply in the prescribed form to the Commissioner General for the issue of a direction under subparagraph (2) and if the Commissioner General is satisfied that it would be reasonable to do so he or she may direct the employer by notice in writing to deduct either no tax or such lesser amount than is prescribed in the tables as appears to the Commissioner General to be appropriate to the circumstances of that employee, and the employer shall comply with that direction.

     (4) A request by an employee to an employer under subparagraph (1) or a direction made by the Commissioner General to an employer under subparagraph (2) or (3) may be withdrawn at any time by notice in writing given to the employer and upon receipt of any such notice the employer shall deduct tax in accordance with the tables.

     (5) Nothing in subparagraph (3) shall be construed so as to authorize the repayment to an employee by the employer of any amount of tax which has been deducted.

     (6) Any request under subparagraph (1), direction under subparagraph (2) or (3), or notice of withdrawal under subparagraph (4) shall be complied with by the employer on and after the pay day next succeeding a period of seven days following the receipt by him or her of the request, direction or notice.

6.       Liability to deduct tax not abated by other rights or obligations

     The liability of any employer to deduct tax under this Schedule shall not be abated or extinguished by reason of-

     (a)      the fact that the employer has a right or is, otherwise than in terms of any law, under an obligation to deduct any other amount from the employee's remuneration and such right or obligation shall, notwithstanding anything to the contrary contained in any other law, be deemed to refer only to the balance of remuneration remaining after tax has been deducted; or

     (b)      the provisions of any law which may provide that the amount of remuneration shall not be reduced or be subject to attachment.

7.       Payment to or recovery by Commissioner General

     Any tax deducted under this Schedule shall-

     (a)      be due and payable within the time specified in section 98; and

     (b)      when it becomes due and payable, be a debt due to the Government and if unpaid shall bear interest at the rate specified in section 101 and may be recovered in the manner provided in section 102.

8.       Payment of remuneration free of tax

     (1) Any agreement between an employer and an employee whereby the employer agrees to pay, as remuneration to an employee,an amount expressed to be free of tax, shall be deemed to be an agreement providing for payment to the employee of such an amount of remuneration as, after deduction of tax in accordance with the table appropriate to that employee, would leave an amount equal to the remuneration paid.

     (2) In any case to which subparagraph (1) applies-

     (a)      the employer shall be liable to pay to the Commissioner General an amount equal to the difference between the remuneration deemed to be paid and the amount of the remuneration paid;

     (b)      such amount shall be deemed to be tax to be deducted under this Schedule; and

     (c)      the employee shall be deemed to have received as employment income the amount deemed to have been paid by the employer.

9.       Certificate of Remuneration and tax deducted

     (1) Every employer who has deducted any tax under this Schedule in any tax year shall, within the time and in relation to the period of employment specified in subparagraph (2), furnish to every employee or former employee to whom remuneration has been paid a certificate in the prescribed form the contents of which shall include-

     (a)      the total remuneration accrued to that employee or former employee; and

     (b)      the total of the amounts of tax deducted from such remuneration.

     (2) The certificate referred to in subparagraph (1) shall specify the period of employment to which it relates and shall be furnished to the employee or former employee-

     (a)      where the employer has not ceased to be an employer in relation to that employee at the end of the tax year, within 31 days after the end of the tax year;

     (b)      where the employer has ceased to be an employer in relation to that former employee but has continued to be an employer in relation to other employees, on the date of cessation of the employment of that person;

     (c)      where the employer has ceased to be an employer in relation to all employees, within 15 days after the date on which he or she ceased to be an employer; or

     (d)      notwithstanding sub-subparagraph (a), (b) or (c), as and when directed by the Commissioner General, and where an employee, other than a casual employee to whom subparagraph (3) applies, is employed by the same employer for more than one period in any tax year the employer shall furnish a certificate in respect of each such period.

     (3) Where the Commissioner General so directs for the purposes of subparagraph (2), an employer shall be deemed not to have ceased to be an employer in relation to any of his or her casual employees who are likely to be re-employed from time to time by such employer in a tax year.

     (4) Any employee or former employee who has not received a certificate within the time specified in subparagraph (2) shall apply to the employer forthwith for such certificate to be furnished and in the event of such certificate not being furnished within a further period of 15 days he or she shall notify the Commissioner General of such failure by the employer to furnish the certificate.

     (5) Every employee, when furnishing his or her tax return for any tax year, shall attach to such return the certificate furnished under this paragraph.

     (6) The certificate to be furnished under this paragraph by an employer to an employee or former employee may be delivered-

     (a)      by hand to such employee or his or her authorized agent;

     (b)      by registered letter addressed to that employee at his or her usual or last known postal address; or

     (c)      where the taxable income of that employee is not chargeable to tax in his or her name, by hand or registered letter addressed to the person so chargeable.

     (7) In the event of inability to deliver a certificate under subparagraph (6), the employer shall retain such certificate and forward it to the Commissioner General with the return required under paragraph 13.

     (8) At the request of an employee or former employee an employer may issue a duplicate certificate in the prescribed form.

     (9) The Commissioner General may control the issue to employers of stocks of unused certificates and may prescribe conditions in regard to the manner in which they shall be used or as to the surrender of unused stocks.

     (10) Every employer shall furnish to the Commissioner General, within 31 days after the end of the tax year, a return in the prescribed form giving details of all certificates used during the tax year.

     (11) Where an employer uses a mechanical accounting system the Commissioner General may, subject to such conditions as he or she may impose, authorize the use by that employer of certificates in a form other than that prescribed.

     (12) If any employer to whom subparagraph (11) applies fails to comply with any condition imposed by the Commissioner General, the Commissioner General may withdraw his or her authorization of the use of the certificates referred to therein and the employer shall forthwith or from any date specified by the Commissioner General cease to use such certificates.

     (13) Any certificate bearing the name or the trade name of any employer shall, unless the contrary is proved, be deemed to have been issued by such employer where such certificate-

     (a)      is in the form prescribed by the Commissioner General and was supplied by the Commissioner General to and for the use of such employer; or

     (b)      is in a form authorized by the Commissioner General under subparagraph (11) for use by such employer.

10.     Personal liability of employer and employee

     (1) Where in any tax year an employer fails to deduct any tax under paragraph 3, he or she shall, in addition to any penalty for which he or she may be liable, be personally liable to pay to the Commissioner General within the time specified in section 98, the amount which he or she has failed to deduct.

     (2) Where an employer pays to the Commissioner General the amount of tax which he failed to deduct, such amount shall be deemed to have been deducted under this Schedule.

     (3) The employer shall be entitled to recover from the employee any amount paid to the Commissioner General under subparagraph (2).

     (4) Where, in relation to any payment of remuneration, an employer has failed to deduct tax under paragraph 3 but the Commissioner General is satisfied-

     (a)      that such failure to deduct tax was not due to any intent to postpone payment or to avoid the employer's obligations under this Schedule and that there is reasonable probability of recovering the tax from the employee by means other than under this Schedule; or

     (b)      that tax deducted under this Schedule from earlier or later payments of remuneration is sufficient to meet the amount of tax which he or she has failed to deduct, the Commissioner General may absolve the employer from his or her liability under subparagraph (1).

     (5) Where an employer pays any amount to the Commissioner General under this paragraph, he or she shall not be required to include any such amount in a certificate under paragraph 9 unless he or she recovers that amount from that employee.

     (6) Where the Commissioner General is satisfied that any amount of tax which has been set off under section 61 pursuant to a certificate under paragraph 9 has not been deducted by the employer, the employer and the employee shall be jointly and severally liable to pay to the Commissioner General the amount which has been so set off and such amount shall be recoverable under section 102:

     Provided that where the Commissioner General is satisfied that the employee alone was responsible for the incorrect amount being shown on the employee's tax certificate, the employer shall be absolved from liability under this subparagraph.

     (7) Where it is proved to the satisfaction of the Commissioner General that any amount of tax has been deducted from the remuneration of an employee, notwithstanding that the employer has failed to pay such amount to the Commissioner General, no action shall be taken by the Commissioner General for the recovery thereof from the employee.

11.     Employer to keep records

     Every employer shall, in respect of each of his or her employees, maintain a record showing, in relation to each tax year-

     (a)      the amounts of remuneration accrued to that employee; and

     (b)      the amounts of tax deducted from such remuneration and such record shall be kept available for examination by the Commissioner General as and when required.

12.     Tax remittance returns

     Every employer shall, when making any payment under section 98, furnish a tax remittance return in the prescribed form:

     Provided that in respect of the final month of a tax year or the month in which he or she ceases to be an employer such return shall be lodged with the return required under paragraph 13.

13.     Employer's annual return of deductions and remittances

     (1) Every employer shall in respect of any tax year-

     (a)      within 31 days after the end of that tax year; or

     (b)      where he or she ceases to be an employer during that tax year, within 31 days after such cessation, or within such further time as the Commissioner General may allow, furnish to the Commissioner General a return, in the prescribed form, showing the total amount of tax deducted by him or her in respect of all his or her employees during that tax year and the total payments of such tax which have been made the Commissioner General.

     (2) The return referred to in subparagraph (1) shall be accompanied by the first carbon copy or such other copy as may be approved by the Commissioner General of all certificates issued under paragraph 9.

     (3) In the event of there being any difference between the total amount of tax deducted and the total payments of such tax made to the Commissioner General, the employer shall be required to account to the Commissioner General for such difference.

14.     Representative employers

     (1) Every representative employer, in relation to any remuneration paid by him or her in his or her representative capacity to any employee, shall be subject to the same duties and liabilities under this Schedule as if such remuneration had been paid by him or her in his or her personal capacity.

     (2) Any tax which should be deducted by a representative employer under this Schedule, any interest due by him or her under section 101 or fine imposed under section 124 or 125 on him or her shall be recoverable from him or her, but to the extent only of any assets of the person whom he or she represents which may be in his or her possession or may come to him or her while acting in his or her representative capacity.

     (3) The executor of the estate of any deceased employer or the trustee of the estate of any insolvent employer shall fulfil such obligations of that employer under this Schedule as were not fulfilled at the time of his or her death or insolvency.

SIXTH SCHEDULE
DEDUCTION OF TAX FROM PAYMENTS DUE UNDER CERTAIN CONTRACTS

(Section 57)

ARRANGEMENT OF PARAGRAPHS

PARAGRAPH

 

                1.         Notice to be given to Commissioner General

                2.         Direction for deduction

                3.         Amount to be deducted

                4.         Liability under this Act

                5.         Certificate of amount of tax deducted

                6.         Record to be kept of payments made and tax deducted

                7.         Tax remittance returns

                8.         Annual return of deductions and remittances

                9.         Personal liability where failure to deduct tax

 

1.       Notice to be given to Commissioner General

     Where any person enters into a contract under which payments will be made to which this Schedule applies, and where the total of such payments will exceed P5,000, that person shall notify the Commissioner General in writing within 30 days from the date of entering into the contract-

     (a)      the nature of the contract;

     (b)      its likely duration;

     (c)      the name, address and taxpayer identification number of the person to whom payments are to be made;

     (d)      the amount estimated to be payable under the contract,

and in this paragraph "a contract" means a single contract or a series of contracts.

2.       Direction for deduction

     Any person upon making any payment to which this Schedule applies, shall deduct tax in accordance with paragraph 3.

3.       Amount to be deducted

     (1) The amount of tax to be deducted by the person making any payments under a contract relating to construction operations shall be three per cent of the total amount payable under the contract.

     (2) Any person responsible for deducting tax from payments made to a subcontractor under this Schedule may apply to the Commissioner General in the prescribed form, specifying the amount payable to the subcontractor, and the Commissioner General may direct that the person responsible for making payments to the applicant under this Schedule, deduct tax on only so much of the amount as reduced by the payments to be made by the applicant to the subcontractor as furnished in the application made by him or her.

     (3) Upon an application by any person, affected by the provisions of this Schedule, the Commissioner General may, if satisfied that the person has complied with his or her obligations under the Act, issue a tax certificate to the taxpayer for purposes of tax to be deducted under this Schedule, and a copy of the certificate shall be issued to the person responsible for deducting tax from the payments to the applicant.

     (4) The tax certificate issued in terms of subparagraph (3) may either vary the amount of tax to be deducted under this Schedule or direct that no tax need be deducted from payments to which this Schedule applies and such certificate shall be valid only for the duration of the contract in respect of which it has been issued.

     (5) Any exclusion in terms of subparagraphs (2), (3) and (4) shall not relieve any person from any other obligation or tax payment imposed on him or her by this Act.

4.       Liability under this Act

            No deduction of tax under this Schedule from any payment made to any person shall relieve that person from the obligations to furnish any tax return under or from any other obligations imposed by this Act.

5.       Certificate of amount of tax deducted

     Every person who has deducted any tax under paragraph 2 shall, by the due date of payment of withholding tax under section 99, furnish to the person to whom payment was made a certificate in the prescribed form showing the amount of the payment made and the tax which has been deducted therefrom.

6.       Record to be kept of payments made and tax deducted

     Every person making any payment to which this Schedule applies shall maintain a record showing, in relation to each tax year the amounts of tax deducted from such payments, and such record shall be kept available for examination by the Commissioner General as and when required.

7.       Tax remittance returns

     Every person when making any payment under section 99 shall furnish a tax remittance return in the prescribed form.

8.       Annual return of deductions and remittances

     (1) Every person to whom this Schedule applies shall, in respect of each tax year, within 31 days after the end of that tax year or within such further time as the Commissioner General may allow, furnish to the Commissioner General a return in the prescribed form showing the total amount of tax deducted by him or her during the tax year and the total payments of such tax which has been made to the Commissioner General.

     (2) The return referred to in subparagraph (1) shall be accompanied by the first carbon copy of all certificates issued under paragraph 5.

     (3) In the event of there being any difference between-

     (a)      the total amount of tax deducted; and

     (b)      the total payments of such tax made to the Commissioner General,

that person shall be required to account to the Commissioner General for any such difference.

9.       Personal liability where failure to deduct tax

     (1) Where any person fails to deduct any tax under paragraph 2 he or she shall, in addition to any penalty for which he or she may be liable, be personally liable to pay to the Commissioner General within the time specified in section 99 the amount which he or she has failed to deduct.

     (2) Where any person pays to the Commissioner General the amount of tax which he failed to deduct, such amount shall be deemed to have been deducted under this Schedule.

     (3) The person making such payment to the Commissioner General under subparagraph (1) shall be entitled to recover such amount from the person to whom a payment was made under the contract.

     (4) Where, in relation to any payment to which this Schedule applies, any person has failed to deduct tax under paragraph 2 but the Commissioner General is satisfied that-

     (a)      the failure to deduct tax was not due to any intent to postpone or to avoid that person's obligations under this Schedule and that there is reasonable probability of recovering the tax from the payee by means other than under this Schedule; or

     (b)      that tax deducted under this Schedule from earlier or later payments is sufficient to meet the amount of tax which he or she has failed to deduct,

the Commissioner General may absolve the person who should have deducted tax from his or her liability under subparagraph (1).

SEVENTH SCHEDULE
DEDUCTION OF TAXON CERTAIN PAYMENTS

(Section 58)

ARRANGEMENT OF PARAGRAPHS

PARAGRAPH

 

                1.         Person making payment to deduct tax

                2.         Amount to be deducted

                3.         Liability of resident or non-resident

                4.         Certificate of amount of tax deducted

                5.         Record to be kept of payments made and tax deducted

                6.         Tax remittance returns

                7.         Annual return of deductions and remittances

                8.         Personal liability where failure to deduct tax

                9.         Deduction of withholding tax at lower rate

 

1.       Person making payment to deduct tax

     Every person who makes any payment to which this Schedule applies shall deduct tax in accordance with paragraph 2.

2.       Amount to be deducted

Except as provided in section 60 and subject to the provisions of section 58 (4), the amount of tax to be deducted shall be-

     (a)      15 per cent of each payment of dividend made to any person if the dividend is paid on or before 30th June, 2011 and seven and a half per cent of each payment of dividend made to any person if the dividend is paid after 30th June, 2011;

     (b)      15 per cent of each payment of interest, commercial royalty or management or consultancy fee made to a non-resident;

     (c)      10 per cent of each payment of entertainment fee made to a non-resident;

     (d)      10 per cent of interest to a resident in excess of P1 950 in a quarter of a year;

     (e)      five per cent of each payment of rent referred to in section 58 (1) (d);

     (f)       10 per cent of the amount of payment of any surplus money by amine rehabilitation fund referred to in section 43 (1) (e); or

     (g)      10 per cent of the amount of payment of commissionor brokerage referred to in section 58 (1) (f).

3.       Liability of resident

A deduction of tax under this Schedule from-

     (a)      any payment of dividend made to a resident; or

     (b)      income described in section 34 made to a resident or nonresident,

shall not relieve that person from the obligation to furnish any tax return under or from any other obligations imposed by this Act.

4.       Certificate of amount of tax deducted

     Every person who has deducted any tax under paragraph 1 shall furnish to the person to whom payment is made a certificate, in the prescribed form, showing the amount of the payment made and the tax which has been deducted therefrom within 15 days after the end of the month during which the tax was deducted.

5.       Record to be kept of payments made and tax deducted

     Every person making any payment to which this Schedule applies shall maintain a record showing, in relation to each tax year-

     (a)      the payments of dividends made to each resident and tax deducted from such payments; and

     (b)      the payments of dividends, interest, commercial royalties, entertainment fees, or management or consultancy fees made to each non-resident and tax deducted from such payments,

and such record shall be kept available for examination by the Commissioner General as and when required.

6.       Tax remittance returns

     Every person when making any payment under section 100 shall furnish a tax remittance return in the prescribed form.

7.       Annual return of deductions and remittances

     (1) Every person to whom this Schedule applies shall, in respect of each tax year, within 31 days after the end of that tax year or within such further time as the Commissioner General may allow, furnish to the Commissioner General a return in the prescribed form showing the total amount of tax deducted by him or her during the tax year and the total payments of such tax which have been made to the Commissioner General.

     (2) The return referred to in subparagraph (1) shall be accompanied by the first carbon copy of all certificates issued pursuant to paragraph 4.

     (3) In the event of there being any difference between-

     (a)      the total amount of tax deducted; and

     (b)      the total payments of such tax made to the Commissioner General,

that person shall be required to account to the Commissioner General for any such difference.

8.       Personal liability where failure to deduct tax

     (1) Where any person fails to deduct any tax under paragraph 1, he or she shall, in addition to any penalty for which he or she may be liable, be personally liable to pay to the Commissioner General within the time specified in section 100 the amount which he or she has failed to deduct.

     (2) Where any person pays to the Commissioner General the amount of tax which he or she failed to deduct, such amount shall be deemed to have been deducted under this Schedule.

     (3) The person making such payment to the Commissioner General under subparagraph (1) shall be entitled to recover such amount from the person to whom a payment to which this Schedule applies was made.

     (4) Where any person has failed to deduct tax as required under paragraph 1 but the Commissioner General is satisfied that-

     (a)      the failure to deduct such tax was not due to any intent to postpone payment or to avoid that person's obligations under this Schedule and that there is reasonable probability of recovering the tax from the payee by means other than under this Schedule; or

     (b)      that tax deducted under this Schedule from earlier or later payments is sufficient to meet the amount of tax which he or she has failed to deduct,

the Commissioner General may absolve the person who should have deducted tax from his or her liability under subparagraph (1).

9.       Deduction of withholding tax at lower rate

Where the Commissioner General is satisfied that the taxable income of any person in receipt of the rent referred to in section 58 (1) (d), for any tax year, justifies the deduction of withholding tax at a lower rate or no deduction of withholding tax, the Commissioner General may, on an application for a tax certificate for the deduction of withholding tax or no deduction of withholding tax, grant the applicant the tax certificate.

EIGHTH SCHEDULE
RATES OF TAX FOR 2011/2012 AND SUBSEQUENT TAX YEARS

(section 59)

TABLE I

Taxable Income

Tax

0 - 36,000

0

36,001 - 72,000

0 + 5% of excess over P36,000

72,001 - 108,000

1,800 + 12.5% of excess over P72,000

108,001 - 144,000

6,300 + 18.75% of excess over P108,000

144,001 and above

13,050 + 25% of excess over P144,000

Table I applies to resident individuals.

 

TABLE II

Taxable Income

Tax

0 - 72,000

5% of every Pula

72,001 - 108,000

3,600 + 12.5% of excess over P72,000

108,001 - 144,000

8,100 + 18.75% of excess over P108,000

144,001 and above

14,850 + 25% of excess over P144,000

Table II applies to non-resident individuals,trusts falling under section 14 (2) and estates of deceased persons.

 

TABLE III

1.  Resident company

Taxable income

22%

2.  Non-resident company

All taxable income

30%

3.  Botswana Meat Commission

All taxable income

15%

4.  Pension and Provident Fund not approved by the Commissioner General

Investment income defined under section 2

7.5%

5.  Dividends accruing outside Botswana

Gross income

15%

6.  Persons not included in paragraphs 1-5 above

Taxable income

25%

7. International Financial Services Centre company

     (a)      Income arising from approved financial transactions with nonresidents, International Financial Services Centre companies and Specified Collective Investment Undertakings

15%

 

     (b)      All other income

22%

 

TABLE IV

Taxable income

Tax

0 - 18 000

0

18 001 - 72 000

0 + 5% of excess over P18,000

72 001 - 108 000

2 700 + 12.5% of excess over P72,000

108 001 - 144 000

7 200 + 18.75% of excess over P108,000

144 000 and above

13 950 + 25%of excess over P144,000

Table IV applies to net aggregate gains of individuals.

 

NINTH SCHEDULE
BOARD OF ADJUDICATORS

(section 90)

1. (1) The Minister may by notice,establish a Board to be known as the Board of Adjudicators which shall have jurisdiction to hear and determine an appeal from any decisionmade by the CommissionerGeneral in relation to determining a tax assessment objection, refund application, matters relating to taxpayer registration or any other matter in the course of administering the provisions of this Act.

     (2) The jurisdiction of the Board of Adjudicators for purposes of this Act extends to every place within Botswana.

     (3) The Board shall consist of the following members appointed by the Minister-

     (a)      the Chairman;

     (b)      three members;

     (c)      two alternative members to the members in subparagraph (b); and

     (d)      a Secretary who shall have no voting rights.

     (4) The duties of the Secretary shall be to-

     (a)      receive appeal papers from appellants on behalf of the Board of Adjudicators;

     (b)      convene meetings of the Board of Adjudicators; and

     (c)      perform all administrative functions and may be assigned any other duties by the Chairman.

     (5) A person may be appointed to be a-

     (a)      Chairman,if he or she has worked as a magistrate in a court of law for a period of not less than eight years,or if he or she has worked as an attorney at law for a period of not less than eight years;

     (b)      member of the Board of Adjudicators,if he or she has-

            (i)       knowledge of taxation,

           (ii)       knowledge of commercial or financial practice; or

          (iii)       more than five years experience in taxation, commercial or financial practice,

              save for persons who are employed to assess, collect and account for government revenue provided that such persons have ceased to be such employees for the past five years; and

     (c)      Secretary, if he or she is a public officer discharging administrative or directive functions.

     (6) For purposes of subparagraph 5 (c), public officer has the same meaning as in the Constitution.

     (7) Where any appointment relates to a person from the Judiciary, the Minister shall consult the Chief Justice with regard to the appointment of that person to be a member of the Board.

     2. Members of the Board shall be appointed for a period of five years, but shall be eligible for reappointment.

3. (a) Vacancies in the Board, for any reason, may be filled by appointments made by the Minister in the same manner as in paragraph 1, and temporary vacancies may be filled by temporary appointments made in the same manner.

     (b) The Minister may temporarily appoint an employee from the ministry responsible for finance to assist the Board in the performance of its administrative duties.

     4. At any meeting of the Board, the Chairman and any other member shall form a quorum, and in the event of an equal division of opinion amongst those present, the Chairman shall have a casting vote.

5. The members of the Board shall receive such remuneration, in the form of a sitting allowance, travelling allowance and other allowances out of public funds as the Minister shall determine.

     6. The Board shall have the following powers-

     (a)      power to summon to attend at the hearing of an appeal any person who in its opinion is or might be able to give evidence relevant to the subject of the appeal;

     (b)      power to examine on oath or otherwise any person summoned or required to give evidence;

     (c)      power to require any person to produce any books or documents which are in his or her custody or under his or her control and which the Board considers necessary for the purposes of the appeal;

     (d)      power to grant reimbursement of any reasonable expenses incurred in connection with his or her attendance by any person summoned to attend;

     (e)      all the powers of a magistrate with regard to the enforcement of attendance of witnesses hearing evidence on oath and punishment for contempt of court;

     (f)       power to admit or reject evidence adduced, whether or not admissible under the provisions of any written law for the time being in force relating to the admissibility of evidence;

     (g)      power to postpone the hearing of an appeal where the Board is satisfied that, owing to sickness, accident or other reasonable cause the appellant has been prevented from attending on the date fixed for the hearing;

(gA) power to resolve any complaint or appeal by mediation, conciliation or arbitration;

     (gB)    power to dismiss any matter before it;

     (gC)    power to prepare and deliver judgments and decrees in relation to all appeals before the Board; and

     (h)      such other powers as the Minister may, by regulations, prescribe.

7.(a) Any judgment or decree of the Board shall be enforced in the same manner as a judgment or decree of a court of law within Botswana.

     (b)      Where the Board pronounces a judgment or decree in favour of the appellant or Commissioner General,and where the appellant or Commissioner General wishes to execute the judgment or decree, the appellant or Commissioner General shall make an application, to the Secretary, for a writ of execution in a form prescribed by the Minister.

8. The Board shall not be bound by the rules and procedures of the courts of law in conducting the hearing of an appeal before the Board.

9. Any person who files any document, regarding an appeal before the Board shall pay a fee prescribed by the Minister.

TENTH SCHEDULE

(section 35)

1. Any amount accruing to any person from the disposal of the following properties shall not be included in gross income under section 35 (1) and section 35 (2), and the provisions of this Schedule shall not apply to gains from the disposal of such property-

     (a)      any property of a business, other than land and buildings thereon, in respect of which an allowance has been granted under Part II of the Third Schedule in ascertaining chargeable income for any tax year;

     (b)      any property referred to in section 31;

     (c)      the principal private residence of an individual who has owned the residence for the last five years prior to the date of the disposal, provided that the exemption shall not be allowed for any subsequent disposals for a period of five years from the tax year on which the exemption was allowed;

     (d)      any shares,units or debentures of a resident company which have been held by the taxpayer for a period of at least one year prior to the date of disposal, if-

            (i)       the company is a public company under section 130,

           (ii)       the shares, units or debentures are actually traded on the Botswana Stock Exchange, or

          (iii)       the company has released for trading, 49 per cent or more of its equity shares on the Botswana Stock Exchange;

     (e)      immovable property owned by a company the shares of which are wholly owned by one or more of the following funds, where such property is disposed of within three months of the date of acquisition by such funds of all the shares of that company

            (i)       an approved provident fund,

           (ii)       an approved superannuation fund,

          (iii)       the Motor Vehicle Accident Fund, or a statutory life insurance fund;

     (f)       any property which represents a qualifying foreign participation as defined under section 2;

     (g)      any bonds and debentures issued by the Government of Botswana, Bank of Botswana,a statutory body and special purpose vehicles formed by the Government of Botswana for the securitization of public debt;or any shares in an International Financial Services Centre company.

     (h)      any shares in an International Financial Services Centre company.

1A. ...

     2. Where any class of property is disposed of in consequence of the re-structure or merger of two or more resident companies (including a subsidiary company of such companies), and where the Commissioner General is satisfied that the re-structure or merger is carried out in such manner that the beneficial ownership of the shares of the companies concerned in the re-structure or merger remains unchanged and that no shareholder benefits at the expense of another, the disposal of the property shall not be deemed to take place at market value but shall be deemed to take place at a value which is not greater than the cost of such property to the company disposing of it.

     3. Where any class of property is disposed of as a consequence of the re-organisation of a resident company, including a re-structure or merger as in paragraph 2, and the Commissioner General is satisfied that the sole object of the re-organisation, re-structure or merger is the offer of its shares for listing on the Botswana Stock Exchange, the disposal of the property shall not be deemed to take place at market value but shall be deemed to take place at a value which is not greater than the cost of such property to the person disposing of it:

     Provided that an application for listing of the shares is made to the Botswana Stock Exchange within a period of one month after the completion of the re-organisation, re-structure or merger, and the application is successful before the expiration of 12 months from the date of application.

     4. Subject to the provisions of paragraphs 5, 6, and 7, in ascertaining the gain of any person in any tax year on disposal of any property to which section 35(1) applies, there shall, upon due claim and subject to such evidence as the Commissioner General may require, be deducted from the amount included in the chargeable income of such person under section 40-

     (a)      the cost of acquiring the property disposed of including any expenditure wholly, exclusively and necessarily incurred for the purposes of the acquisition;

     (b)      the cost of any improvements to the property effected by the person disposing of it or if any improvements were effected or to be effected by any other person under an agreement, the amount in respect of such improvements which was included under section 34(1)(c) in the gross income of the person disposing of such property;

     (c)      any expenditure wholly, exclusively and necessarily incurred for the disposal;

     (d)      if a leasehold property is disposed of by a lessee, any expenditure, including any premium paid, incurred by the lessee in obtaining the leasehold, the cost of any improvements effected to the property by him or her or any amount paid by him or her of the required improvements under the terms of the lease and any expenditure wholly, exclusively and necessarily incurred by him or her in disposing of the property:

                       Provided that no allowance shall be made under this subparagraph in respect of-

            (i)       any expenditure or any proportion thereof if for the same or any other tax year an allowance is or can be made in respect of it under section 41(1)(g)(i) to the extent to which such amounts have not been included in the gross income of such person under section 28(2)(c)(iii) for the tax year; and

           (ii)       any premiums allowed as a deduction under section 41(1)(f);

     (e)      if the property disposed of is immovable property, the deduction ascertained in accordance with paragraph 8 hereof:

                      Provided that a sale of shares of a company owning immovable property as the dominant underlying asset of the company shall be deemed to be a sale of the immovable property; and

     (f)       in the case of any property other than property referred to in subparagraph (e), 25 per cent of the difference between the chargeable income accruing from such disposal under section 40 and the total of any other deduction allowable under this paragraph:

     Provided that the provisions of this paragraph shall not apply to any amount which would otherwise be deducted, in ascertaining the chargeable income of an international financial services centre company, under section 140(2) in respect of any specified foreign exchange loss.

     5.(1) Subject to subparagraph (2), where any property disposed of by any person was acquired by him or her by way of gift or inheritance, the cost of acquisition of the property shall be-

     (a)      where the property was acquired before 1st July, 1982, the market value as at 1st July, 1982; and

     (b)      where the property was acquired on or after 1st July, 1982, the market value as at the date of acquisition.

     (2) In the determination of market value for the purposes of subparagraph (1) account may be taken of any expenses incurred and taxes or duties paid in respect of any gift or inheritance, but excluding, in the case of inheritance succession duty and the proportion of estate duty (if any) attributable to the property disposed of.

     6. (1) Subject to the provisions of subparagraph (2) where an amount accruing to any person on the disposal of a property is in respect of immovable property acquired by such person before 1st July, 1982 there shall be added to the cost of acquisition and the cost of any improvements effected thereto before that date whether by the person making the disposal or any other person under agreement, an amount compounded at the rate of 10 per cent of such cost for every 12 months from the date on which the property was acquired or the improvements thereto were effected, as the case may be, up to 30th June, 1982.

     (2) Where a loss is incurred by a person on the disposal of a property by virtue of the application of the provisions of subparagraph (1), such loss shall be reduced by so much of the amount which has been added as a result of which a loss has been incurred.

     7. For the purposes of paragraph 8 herein, the cost to any person of immovable property disposed of by him or her shall-

     (a)      where the property is property acquired by him or her before 1st July, 1982, be the cost as ascertained under the provisions of paragraph 6 above as at 1st July, 1982;

     (b)      where the property was acquired by him or her after 1st July, 1982, be the actual cost of acquisition; and

     (c)      where property was acquired by way of gift or inheritance, be the cost as ascertained under paragraph 5.

     8.(1) The deduction referred to in paragraph 4(e) shall be ascertained by-

     (a)      applying the percentage difference between the cost of living index at the date of acquisition of the property or 1st July, 1982, whichever is later, and the cost of living index at the date of disposal to the cost of the property as ascertained under paragraph 7; and

     (b)      by applying the percentage difference between the cost of living index as at the date, after 1st July, 1982, when any improvements were completed to the property and the cost of living index at the date of disposal of the property to the cost of the said improvements.

     (2) The cost of living index for any day shall be the national cost of living index for the month in which it occurs.

     9. Where the property disposed of is a business sold as a going concern the person disposing of the business shall furnish the Commissioner General with a breakdown of the price at which the property was disposed of showing the value apportioned to each asset and the net aggregate gain or loss of such person shall be ascertained by ascertaining the gain or loss on each such asset.

     10. Where any property disposed of by any person in accordance with the provisions of paragraph 4 consists of bonus shares, debentures, securities or any other property falling to be treated as a dividend under this Act, the cost of acquisition of such property shall be the amount included in the assessable income of such person as dividend as defined in section 2.

     11. Where an amount accruing to any person on the disposal of property is in respect of farming property, there shall, in addition to such allowance as may be allowed under paragraph 4, be deducted from such amount so much of the aggregate of any assessed loss (other than deductions of expenditure of a capital nature allowed under Part IV of the Third Schedule which have been included in such loss) in the tax year in which the property was disposed of and the five preceding tax years in relation to his or her business of farming which has not been deducted or fully deducted under sections 46, 47 and 48 in ascertaining chargeable income under section 39(1).

     12. (1) The net aggregate gain of any person for any tax year shall be the amount by which the aggregate amount of gains exceeds the aggregate amount of any losses for that year:

     Provided that if the aggregate amount of losses incurred in any tax year exceeds the aggregate amount of gains in that year, such excess loss shall be deducted from the excess of aggregate gains over aggregate losses, if any, accruing in the next succeeding tax year.

     (2) For the purposes of this paragraph "loss" means the amount by which the total deductions under this Schedule exceeds the chargeable income under section 40.

     13. Where in ascertaining the gain accruing to or the loss incurred by any person the Commissioner General is not satisfied that the value of the property at the date of acquisition or the date of disposal as declared by that person is a true and accurate value, he or she may substitute the market value of the said property at the relevant time as ascertained by him or her for such declared value.

     14. (1) In respect of any tax year, where any person reinvests the whole of his or her original investment in and all or part of the gain from the disposal of any immovable property of a business, within a year of his or her disposal of that property, in another immovable property for his or her business he or she may, upon a claim made by him or her and subject to such evidence as the Commissioner General may require, be permitted to treat so much of the gain so reinvested as a gain accruing only upon the disposal of the property in which it was reinvested:

     Provided that so much of his or her original gain as was not reinvested shall be taken into account in ascertaining the net aggregate gain or loss of that person under paragraph 12 in respect of the tax year in which it accrued to him or her.

     (2) A claim under subparagraph (1) shall not be valid unless it is made within 12 months of the date of the disposal of the first-mentioned property.

ELEVENTH SCHEDULE
TRANSITIONAL PROVISIONS

(sections 113, 114 and 115)

PAYMENT OF ESTIMATED INCOME TAX BY DESIGNATED COMPANY DURING CURRENT TAX YEAR OF ASSESSMENT

     A company designated by the Commissioner General under section 113 shall calculate the amount of its estimated tax-

     (a)      for the first tax year, by 31st March in that year, and shall pay that tax in four instalments of 30 per cent of the estimated tax for each of the first three instalments and 10 per cent for the last instalment on or before 31st March, 30th June, in that tax year and 30th September and 31st December, in the following tax year;

     (b)      for the second tax year, by 31st December in that year, and shall pay that tax in four instalments of 20 per cent, 30 per cent, 30 per cent and 20 per cent of the estimated tax on or before 31st December, 31st March, 30th June, in that tax year and 30th September in the following tax year; and

     (c)      for the third tax year, by 30th September in that year, and shall pay that tax in four instalments of 10 per cent of the estimated tax for the first instalment and 30 per cent of the estimated tax for each of the remaining three instalments on or before 30th September, 31st December, 31st March and 30th June respectively in that tax year.

TWELFTH SCHEDULE (paragraphs 1-11)

(section 43)

1.       Mining capital allowance

     In ascertaining the business chargeable income of any person for any tax year from a business of mining, there shall be deducted from his or her business assessable income an allowance to be known as a mining capital allowance, computed in accordance with 100 per cent of the mining capital expenditure made in the year in which such expenditure was incurred with unlimited carry forward of losses.

2.       Separate calculations for different mines

     Where separate and distinct mining operations are carried on in mines which are not contiguous, the deduction to be allowed shall be calculated separately and shall not be transferable between such operations, except expenditure on a license or lease which has been relinquished by the mining company.

3.       Balancing allowance and balancing charge

     Where a mine to which this Part applies is disposed of or the mineral concession in respect thereof is terminated in any tax year, the provisions of paragraphs 2 and 3 of Part V of the Third Schedule shall apply; and the references therein to allowances shall be deemed to relate to the mining capital allowances granted in respect of the mining capital expenditure in relation to that mine.

4.       Mining profits

     Mining profits, other than profits from diamond mining, shall be taxed according to the following formula-

Annual tax rate = 70 - 1500
                               
X

where X is the profitability ratio, given by taxable income as a percentage of gross income:

Provided that the tax rate shall not be less than the company rate.

5.       Head office expenses

     Head office expenses allowed as a deduction in ascertaining gross revenue from mineral licence shall be limited to 1.5 per cent of gross income for the year of assessment and an excess of such expense above the limit shall be treated and taxed as a dividend.

6.       Foreign controlled company

     Where a foreign controlled resident company has a foreign debt-to-equity ratio in excess of 3 to 1 at any time during the year of assessment, the amount of interest paid by the resident company during that year on that part of the debt that exceeds the ratio shall be disallowed as a deduction and an amount so disallowed shall be treated and taxed as a dividend.

7.       Foreign based company

     Where a foreign based company grants a loan to an affiliated company resident in Botswana, at an interest rate which the Commissioner General considers to be in excess of the market rate which a borrower dealing at arm's length with a lender would pay for that type and currency of loan, that part of interest payment which exceed the market rate shall be disallowed as a deduction and the amount of interest so disallowed shall be treated and taxed as a dividend.

8.       Royalty payments

     Royalty payments made by the mining company under the provisions of the Mines and Minerals Act during any year of assessment shall be allowed as a deduction in the computation of the company's chargeable income in the year of assessment.

9.       Withholding taxes

     The rate of withholding taxes shall be-

     (a)      15 per cent on each payment of dividend made to a resident;

     (b)      15 per cent on each payment of dividend, interest, commercial royalty, management or consultancy fee made to a non resident; and

     (c)      10 per cent on each payment of entertainment fee made to a non resident.

10.     Request of documents

     (1) The Commissioner General may request the company to furnish such documents as he or she may require to show that all minerals sold or disposed by the company in any year of assessment have been valued at a fair market price for the purpose of determining the company's income tax liability for the year.

     (2) Where the Commissioner General is not satisfied that the minerals were sold at a fair market price, he or she may make a determination as to the appropriate valuation of the minerals for income tax purposes.

11.     Application

     (1) The provisions of this Schedule, with exception to diamond mining, shall not be subject to negotiations under section 54 or any other section of the Act.

     (2) Any mining company which is subject to the existing mining tax agreement may continue to operate under the terms of such agreement or make a once only election to come under the provisions of this Schedule by written notice to the Commissioner General, not later than 30th June, 1999.

     (3) Where a company makes an election to be taxed under this Schedule, the provisions of the mining tax agreement shall not be applicable.