Value Added Tax

What is Value added tax?

 VAT is an indirect tax levied on the supply of goods and services consumed in Botswana.

 What is the scope of VAT?

 VAT is charged on imports and sale of goods and services in Botswana.

Who charges VAT?

  1. VAT is charged by a trader [TD1]who has registered for VAT. You have to register with Botswana Unified Revenue Service before you can start charging VAT.

 

 What are the requirements for registering for VAT?

  1. A trader who has an annual turnover or taxable supplies of P1 000 000 is required by law to register for VAT, however, a person may opt to register if the annual turnover or taxable supplies is in excess of P500 000 but less than 1 000 000. traders who makes taxable supplies of P500 000 or less are not required to register for VAT.

 

What are the applicable VAT rates in Botswana?

  1. The VAT rates applicable are the standard rate which is currently 14% and the zero rate which is charged on exports and certain specified goods and services. There are also specified goods and services that are exempted from VAT.

 

What is the difference between Exempt and Zero rated supplies?

  1. Zero rated supplies are taxable supplies charged at the rate of zero percent. Exempt goods and services do not attract VAT. A person trading in zero rated supplies may register for VAT and claim input tax while those trading in exempt supplies cannot register or claim input tax.

 

What are the examples of zero rated supplies?

  1. Maize meal, samp, sorghum meal, maize cobs, sugar, setswana beans, millet meal, millet grain, bread flour, potatoes, onions, tomatoes, cabbages, carrots, etc. for human consumption and in their natural state. These are listed under the First Schedule of the VAT Act.

 

What are the examples of exempt supplies?

  1. Tractor for farming, certain farming implements, domestic passenger service, educational service, first 5000 litres of water to a dwelling house per month supplied by Water Utilities Corporation. These are listed under the Second and Third Schedules of the VAT Act.

 

When did the new VAT rate of 14 % take effect?

  1. The new VAT rate of 14% took effect on 1 April 2021 and every trader is required to charge and collect VAT at the rate of 14%.

 

On what price do I charge VAT as a registered person?

  1. VAT is charged on the consideration[TD2]the price (monetary or in kind) that is given in return to the supplier as payment for the supply. It includes any deposit that is made for any returnable container. In the case of import, the amount will include any duty, fee, charge paid or payable for the import.

 

How do I calculate VAT?

  1. VAT charged to a registered person is referred to as input tax. VAT charged/levied by a registered person is referred to as output tax. To calculate VAT, the registered person deduct total input tax from the total output tax for tax period. If input tax is more than output tax (negative), VAT is refundable to the registered person by BURS and if input tax is less than output tax (positive), VAT is payable by the registered person.

 

How much is the VAT allowance (exemption) on goods imported as accompanied passenger baggage?

  1. P1200 per person when importing goods into Botswana for personal purposes. The allowance is given once per Month and you should have been absent from Botswana for a period exceeding 48 hours.

 

Do I have to pay VAT when importing spare parts for a Tractor?

NB-You will need an exemption certificate from BURS for you not to pay VAT on a tractor imported for farming purposes.

 Who is liable to pay VAT on imported services?

  1. A non-registered trader and a trader making exempt supplies. A person making mixed supplies (i.e. both taxable and exempt supplies) is liable to pay VAT on imported services only on services relating to exempt supplies.

 

When is the due date of payment of VAT on imported services?

  1. VAT on imported services is due within 25 days after the date of importation.

 

What is the VAT penalty for late submission?

 

  1. VAT penalty is charged on late submission of return. The penalty charged is the greater of P50 per day for each day or part thereof that the tax remains outstanding, or an amount equal to 10% of the tax payable for the period of such return for each month or part thereof that the return remains outstanding. The penalty cannot exceed the tax payable.

 

Is there any penalty for late submission of nil return or refund return?

 

Yes. The penalty charged is the greater of P50 per day for each day or part thereof that the tax remains outstanding, or an amount equal to 10% of the tax payable for the period of such return for each month or part thereof that the return remains outstanding. The penalty should not exceed P5 000.

How much is interest on unpaid VAT?

 A person who fails to pay any tax or penalty by the due date for payment is liable to pay interest on the unpaid amount at the rate of 1.5% per month or part of the month compounded monthly.

 

Can a trader deregister from VAT?

 

  1. A registered person may apply in writing to the Commissioner General to have a person’s registration cancelled where;

 

(i) The person’s taxable supplies falls below the threshold of P1 000 000; or

 

(ii) The registered person ceases to operate.

 

Is there any VAT on second hand goods Imported into Botswana?

 Yes, VAT is payable on second hand goods imported into Botswana at the effective rate of 14%

 

What is a VAT deferral account?

 This is where a payment of VAT is deferred or postponed to a later date, normally 30 days after the date of importation.

 

What are the requirements of a VAT deferral account?

 Payment of a security amount is required to be paid by the person operating a deferral account. The security amount is 20% of the estimated value of the imports.

 

When should I expect a refund from BURS?

 (ii) For any other registered persons, the refund is due within 60 days.

 When is a VAT Return due for filing?

 A VAT return is due within 25 days after the end of the tax period. Different tax periods and categories exists for different VAT registered persons. Currently there are three registration categories, namely, A, B and C. A registered person shall fall within Categories A and B if the total value of their taxable supplies do not exceed P12,000,000 in any 12 month period. A registered person shall fall within Category C if the total value of their taxable supplies exceeds P12,000,000 in any 12 months period.

 

  • Category A Tax Period is a period of two months starting and ending on – Dec/Jan, Feb/Mar, Apr/May, Jun/Jul, Aug/Sep and Oct/Nov;
  • Category B Tax Period is a period of two months starting and ending on – Jan/Feb, Mar/Apr, May/Jun, Jul/Aug, Sep/Oct and Nov/Dec; and
  • Category C Tax Period is a period of one month starting and ending on Jan, Feb, Mar, Apr, May, Jun, Jul, Aug, Sep, Oct, Nov and Dec,  

 

Can I file my VAT return online?

Yes. You need to register as a user for e-services in order to be able to file your returns online. Register at

www.burs.org.bw 

 

 What records should I keep for VAT purposes?

 Original tax invoices, tax credit notes, and tax debit notes received by the person, a copy of all tax invoices, tax credit notes, and tax debit notes issued by the person, customs documentation relating to imports and exports by the person, accounting records and any other records as may be prescribed by the Commissioner General.

 

How long should I keep my records?

 Records must be maintained for at least seven years after the end of the tax period to which they relate.

 

Where can I get a copy of the 2021 VAT Transitional Rules?[IK4]

 Visit the BURS Website at to view or print the 2021 VAT Transitional Rules Guidance Note.

 

Go to the Downloads Tax Downloads VAT and download the rules.

 

What can I do if I am not satisfied with the Commissioner General’s decision?

 Any person aggrieved by the Commissioner General’s decision may lodge with the CG within 30 days after service of the notice of decision. The objection should be in Writing and specify in detail, the grounds upon which it is made. In case of an assessment, the person assessed should have paid the tax due under the assessment.

 

Where can I appeal if am not satisfied with the decision of the Commissioner General on an objection?

 A person dissatisfied with a decision of the Commissioner General on an objection may within 30 Days appeal to the Board of adjudicators. If not satisfied with the decision of the Board of Adjudicators, a further appeal may be lodged with the High Court. A further appeal may be lodged with the Court of Appeal if still not satisfied with the decision of the High Court.[TD5]

 


 

 


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