The parliament on 12 December 2018 passed a bill that would amend the income tax law (Income Tax Act (Cap. 52:01)) to introduce transfer pricing and thin capitalisation measures in Botswana’s tax law.
The bill would:
The bill was gazetted on 7 December 2018, and following approval by the parliament yesterday, the next step in the legislative process would be presidential assent. Following this, the measures would be expected to be effective from the date when notified by a ministerial notice published in the government gazette.
Until now, the Botswana Unified Revenue Service (BURS) has been conducting transfer pricing audits under the general anti-avoidance provisions of the income tax law. The proposed legislative amendments reflect a more formalised focus on transfer pricing. Therefore, tax professionals anticipate an intensified focus on transfer pricing audits and an increase in taxpayer disclosure and transfer pricing documentation requirements.
Also, in light of these developments, taxpayers need to consider evaluating their funding structures in anticipation of the implementation of thin capitalisation rules.
Taxpayers that are accredited with the IFSC need to be aware of the fact that operations involving the exploitation of intellectual property and/or the development and supply of computer software for use in the provision of approved operations may no longer constitute approved financial services.
For more information, contact a KPMG tax professional in Botswana:
Olivia Muzvidziwa | +267 3912 400 | email@example.com
© 2019 KPMG International Cooperative (“KPMG International”), a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.
Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.