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Botswana: Country and Foreign Investment

Executive Summary

Botswana Is A Sub-Saharan Success . . .

Botswana, independent since 1966, has had high growth rates due to sound economic management and its diamond mining industry. With an area of 600,000 sq km and a population of over 2 million, Botswana is bordered by Namibia, South Africa and Zimbabwe. The capital Gaborone has air links to major African cities. With a stable democracy, GDP per head of USD16,100 in 2011, and reserves of more than USD8bn, Botswana is rated the least corrupt country in Africa by Transparency International.

. . . and Is Creating An IFSC To Diversify The Economy

The Income Tax Amendment Act 1999 created an International Financial Services Centre, whose focus is on the provision of financial services to clients who are domiciled in other countries. Fiscal incentives are provided to financial and non-financial institutions to encourage them to establish in the IFSC to provide these services. The Bank of Botswana is responsible for supervision of IFSC companies.

The IFSC Includes Investment Funds and insurance legislation. . .

Undertakings for Collective Investment were brought under the IFSC regime by the Collective Investment Undertakings Act 1999. CIUs can be organised in the form of trusts or investment companies, including variable capital companies and unit trusts. Open and close ended funds are permitted. CIUs are also supervised by the Bank of Botswana.

The International Insurance Regulations were in enacted in March 2007 following the promulgation of the International Insurance Act 2005. The Act allows for the conduct of international insurance and related services through a regulatory authority with specific responsibilities and powers. The regulations now cater for the establishment of reinsurance and captive insurance companies.

. . . and Offers a Privileged Tax Regime To Its Members

Botswana has lowish tax rates applied on a territorial basis, but the IFSC allows generous deductions from income before taxation and exemption from withholding taxes on dividends. Capital gains are tax free in the IFSC. Companies in the IFSC are likely to escape anti-avoidance and CFC legislation in many OECD countries.

 

 

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