Botswana Regulation and Taxes - Foreign Real Estate Buyers
Check these regulations and taxes which may have impact on Foreign real estate buyers
NEW PROPERTY TRANSFER DUTY ACT BOTSWANA AMEDMENTS EFFECTIVE MARCH, 2023
*30% transfer duty to be reduced to 10% and 15%:
The Minister of Finance and Economic Development, Hon P Serame recently announced that the 30% transfer duty on non-citizens shall soon be reduced as follows:
1. 10% on property values below P2m:
2. 15% on the property values above P2m.
3. A statutory instrument is expected next week to effect the said changes.
4. This means that if VAT is charged on a non-citizen, there will be no transfer duty on property worth P2m and less.
5. If the value is above P2m and VAT is charged, only 3% will be paid as transfer duty.
6. The above points 4 and 5 are on the assumption that only the rates will change.
6. It is yet to be established if the 10% and 15% apply mutually exclusive or otherwise.
This is a guide which mustn't be taken as tax advice.
Old PROPERTY TRANSFER DUTY ACT BOTSWANA EFFECTIVE 1st MARCH, 2020:
Firstly, and worthy of note, the definition of a citizen owned company has been amended to reflect that, all the shares have to be owned by a citizen for it to qualify as a citizen company. As such, the 51% shareholding qualification previously relied on falls away under the Bill.
Secondly, the Bill provides that where the effect of the issue of any shares in any company, or a change in the beneficial ownership of any of the issued shares in any company, is to pass the control of or entitlement to benefit from any immovable property from one person to another, such issue shall constitute a transaction chargeable of Transfer Duty (“Duty”).
Thirdly, any Company involved in such a sale shall duly inform the Commissioner General (“CG”) within a period of 30 days from the date of the transaction. Failure to pay the Duty within the prescribed period shall attract interest at the rate of 1.5 percent compounded monthly.
Fourthly, Duty will now be charged on land held under a customary land grant, in other words Tribal land. Registered grants, leases or concessions on tribal land, which are capable of running at the option of the lessee for 10 years or more, are now subject to Duty.
In addition to the abovementioned change, the rates of Duty charged for non-citizens shall be increased from five percent to 30%.
In the case of customary land grants, the Duty will be calculated on the aggregate rental payable or on the value of the immovable property leased, whichever is greater.
Fifthly, the Bill provides for instances in which citizens will be wholly exempt from paying Duty. It also increases the exemption amount due to citizens from P 200, 000 to P 500, 000 when computing the Duty payable.
A citizen shall be exempt from paying any Duty in the below mentioned scenarios: where a citizen of Botswana purchases or acquires a residential property for the first time to be used as his own home, such person shall be exempt from the payment of Duty; where an individual citizen of Botswana transfers immovable property to a company owned 100% by that individual or jointly with their spouse (married in community of property); where a company is 100% owned by an individual citizen of Botswana or jointly with their spouse (in community of property), transfers the immovable property to that individual or their spouse; where a transaction involves donations of immovable property to eligible beneficiaries as provided for under the Income Tax Act.
The above listed exemptions shall apply proactively, and for a citizen rely on these qualifications, he must apply to the CG for such an exemption. If accepted, the CG will issue a certificate of approval for exemption, which certificate would have to be presented to the Deeds Registry (“Deeds”) to enable it to affect the transfer.
A major change is the transfer of the responsibility to collect Duty from Deeds to the CG. The office of the CG will, from the commencement date of these amendments, be responsible for issuing payments certificates and sending them to Deeds as proof of Duty having been paid.
This involves significant changes in relation to Duty payable on the transfer of immovable property.
It is important to be aware of these changes prior to entering into any property transactions. The Bill has been passed and now being in inforcement effect from 1st March,2020
Q. What are the government requirements for a foreigner buying a property in Botswana?
In Botswana, there are very few restrictions on international real estate investors, buyers or sellers. Tribal area properties are restricted to Botswana citizens especially residential, however some restrictions for tribal property may be waived in certain instances where the Authority may consider such an acquisition by a foreigner may create employment to the locals.
As an international buyer/investor purchasing property in Botswana you may acquire, transfer, or be involved in a real estate transaction without the permission or approval from local government entity.
Q. What area(s) can international buyer/investor purchase a property in Botswana?
Foreigners can buy property in Gaborone, Phakalane, Lobatse, F/town and some other areas outside Tribal Territories.
Foreigners can also buy any freehold land or property.
In Botswana it is illegal to buy unimproved land or plot unless it is freehold property.
Q. What area(s) is restricted for International buyer/investor to purchase a property in Botswana?
Foreigners cannot buy in such areas like Tlokweng, Mogoditshane, Molepolole etc. as they are considered to be Tribal areas.
If you are looking for mortgage in Botswana or current exchange rates in the Botswana Pula Click Here