The World of Business

Botswana has a strong business infrastructure in place. It has invested in a world-class multi-service telecommunications system that allows for the provisions of services from remote locations. Moreover, it is easy to access Botswana by road from major African cities such as Johannesburg, Durban, and Cape Town as well as countries including Namibia, Zambia, Zimbabwe, and Mozambique. It is important to note that resources such as water and electricity are readily available for industrial use.

In addition to its well-developed infrastructure Botswana offers the following incentives for doing business:

• The Government will refund 80% percent of the wage bill of shop-floor workers in the manufacturing sector during the first two years, 60% in year three, 40% in year four and 20% in year five.

• The Government will refund 50% of training costs for citizen employees.

• The Government will provide a payment of approximately US$215 per citizen job created in the manufacturing sector, this payment varies between 40 to 85% of the investment involved depending on whether the factory is situated in rural or urban areas.

• The corporate tax for manufacturing enterprises is only 15 and profits, dividends and capital can be quickly repatriated. Botswana has foreign exchange reserves in the amount of US $6 billion, which represents 28 month\'s imports. In 2002, VAT was introduced and replaced the existing sales tax regime.

• Botswana is an Associate Member of the European Union, meaning products manufactured in the country can enter the EU markets free from quotas and duties. A

• With regards the United States, Botswana suffers no restrictions on exports of textile products and simultaneously, a large number of other manufactured products benefit from the GSP Scheme.

• It is possible to use major credit cards, including Visa, MasterCard, American Express and Diners Club in many places.

• Most hotels and lodges accept foreign currency as well as traveler’s checks.

• Exchange bureaus are located at major border posts.

• Credit card cash advances are available in major cities via Barclays Bank or Standard Chartered Bank.

• Barclays Bank of Botswana, Standard Chartered Bank, First National Bank, Stanbic Bank Botswana and Bank of Baroda all operate in many large towns and major villages.

Legal System

Botswana’s legal system is a conglomeration of Romano-Dutch and English common law principles. Local systems of tribal law and customs in rural districts are used to govern day-to-day disputes as well as property relations. Nevertheless, these laws are subordinate to statutory law.

Botswana’s civil legal code has been around since 1890; at that time the Laws of the Cape Colony were adopted by the colonial state. The Cape code was originally Romano-Dutch and was modified by English common law. Since its inception, the code has been modified cases, precedents, and legislation. Tswana customary law, which is represented by the laws and precedents of the eight recognized tribes in Botswana, is recognized in the areas of property, inheritance, and personal dispute arbitration in rural areas.

Offshore Legal and Tax Regimes

Please be aware that the following is simply a brief summary of some of the more important aspects of Botswana tax law and should be considered only general information. Please do not substitute it for professional tax advice.

Overview and Recent Developments

After the ratification of the Income Tax Amendment Act 1999 and the Bank of Botswana Act 1999, Botswana established an International Financial Services Centre (IFSC), whose focus is providing financial services to clients who are domiciled in other countries. The IFSC in Botswana is modeled on the highly successful Dublin IFSC, which has proven to be a powerful regional magnet for many types of financial services company. Both financial and non-financial institutions receive fiscal incentives in order to encourage them to establish in the IFSC to provide qualifying services.

In February 2006 the Botswana government declared that the IFSC regime would be extended to holding companies and companies in the BPO (Business Process Outsourcing) and call center sectors as well as to mutual funds. In addition, the disposal of shares in IFSC companies will be exempt from tax in future.

The supervision of IFSC falls under the provision of the Bank of Botswana is responsible. The Bank also supervises the Undertakings for Collective Investment, which has been under the IFSC regime since the ratification of the Collective Investment Undertakings Act in 1999.

In July, 2004, Botswana’s Finance and Development Planning Minister, Baledzi Gaolathe announced that the rules which only IFSC companies to conduct business with non-resident and other IFSC companies would be relaxed in the near future. Also, it was decided that income from certain approved transactions with resident companies would be subject to the same corporate tax rate as other non-IFSC companies. This decision was made in the hopes of avoiding transfer-pricing abuses.

A total of 38 companies from sectors including cross border banking, investment funds, financial advisory services, ICT services, group shared services, and administration were accredited to the IFSC by mid-2005. At that time, the companies employed over 200 qualified Botswana professionals in areas ranging from accounting, banking, funds administration, and financial analysis to IT and human resources and administration.