In his 2017-2018 budget speech presented to the National Assembly on 6 February 2017, the Minister of Finance and Economic Development announced that the government was considering proposals from the Taxation Review Committee that include the introduction of transfer pricing rules to address tax avoidance and to align Botswana’s tax system with international best practice. No further information was provided.
Tax professionals expect that the future measures would include the introduction of thin capitalisation rules and that the anticipated transfer pricing rules would follow the OECD guidelines.
Currently Botswana does not have a transfer pricing regime. The tax authority (Botswana Unified Revenue Service) conducts transfer pricing audits under the general anti-avoidance provisions of the Income Tax Act. It is expected that when introduced, a transfer pricing regime would bring some degree of certainty regarding the tax treatment of related-party transactions. Current thin capitalisation rules are specific to mining and International Financial Services Centre accredited entities. It is expected that future thin capitalisation rules would have a more general application.
For more information, contact a KPMG tax professional in Botswana:
Nigel Dixon-Warren | + 267 391 2400 | firstname.lastname@example.org
Olivia Muzvidziwa | + 267 391 2400 | email@example.com
Leonard Muza | + 267 391 2400 | firstname.lastname@example.org
Masa Selerio | + 267 391 2400 | email@example.com
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