August 18, 2003
South Africa and Botswana sign tax treaty

SA and Botswana have signed a double taxation treaty big banks and insurance companies to Botswana.

Finance Minister Trevor Manuel was in Gaborone last week to sign the long awaited taxation treaty with his Botswana’s counterpart Balezi Gaolatlhe.

Botswana Confederation of Commerce Industry and Manpower CE Elias Dewah said: "this is what we have been clamoring for all these years. The move will enable South African companies to come and invest into the Country without any fear that they would be taxed again on profits which they will be repatriating back home.

Under the agreement big banks and insurance companies aiming at expanding into Africa can register with Botswana's fledgling International Financial Service Center and qualify for a concessionary tax of 15%, against the 30% they pay in SA.

The development comes ahead of Botswana’s Trade and Industry Minister Jacob Nkate's investment road show in SA next month. "We are looking at the kind of investors who would add value to the economy of this country, not simple traders. These are investors who have the knowledge of the local market and can compete with the international community" he said.

The center's CEO Alan Boshwaen hailed the agreement, saying SA was a key trading partner and the gesture would see an improvement in the profile of Botswana in the international financial services sector.

"This is a welcome development as it gives certainty and predictability on tax treatment, both to SA companies seeking to domicile themselves in Botswana and to Botswana companies operating in SA.

Our intention through the center initiative is to enable South African companies to have access to the relatively low tax and a stable environment on their doorstep as they expand north of the Limpopo, Boshwaen said.

The center which was established two-and-half years ago, has 18 registered companies of which 11 are already operational in Botswana. Most of the companies are from SA and Zimbabwe.

Meanwhile, Botswana continues to negotiate a separate double taxation treaty and preferential treatment accord under the Southern African Customs Union (SACU), with the US. The US-SACU free trade talks are expected to be concluded in December next year.

SACU member states include Botswana, Lesotho, Namibia ,SA and Swaziland. During her visit last week, the assistant US trade representative for Africa, Florizelle Liser, urged Botswana to take leadership role in the financial services sector in the region after the conclusion of the US-SACU free trade negotiations.

"We Botswana will take the leadership role in the financial services sector. The country should be pushing for that at the negotiations but we have not seen it happening yet", Liser said in Gaborone.

She said Botswana had done much in the financial services sector and it should now market itself internationally as a regional services center.

"There are a lot of reasons people should come to Botswana. It is the sort of regional hub that would attract big banks.

source - Prof Malema, Business Day