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Botswana: Country and Foreign Investment

Executive Summary

This page was last updated on 10 Apr 2019.

Botswana is a Sub-Saharan Success . . .

Botswana, independent since 1966, has had high growth rates due to its diamond mining industry coupled with sound economic management. Botswana has an area of 600,000 sq. km, a population of over 2.3 million and is bordered by Namibia, Zambia, Zimbabwe and South Africa. The capital Gaborone has air links to major African cities. The GDP per head was US$17,000 in 2017 and the government reserves amount to nearly US$7.2bn. Botswana has a stable democracy and 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. It will focus on providing financial services to clients domiciled in other countries. Financial 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 (CIUs) 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 closed funds are permitted. CIUs are also supervised by the Bank of Botswana.

The International Insurance Regulations were 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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