Transfer pricing legislation and regulations in Botswana were effective 1 July 2019. The regulations are based on the OECD Transfer Pricing Guidelines (that are cited in the legislation as a relevant source of interpretation).
The transfer pricing rules require transactions between directly or indirectly connected persons to be consistent with the arm’s length principle. Transfer pricing applies to transactions with non-residents and transactions with Botswana resident IFSC accredited related companies. The terms “connected person” and “control” are defined in the income tax law.
A transaction with a connected party is considered to be consistent with the arm’s length principle if the conditions of the transaction do not differ from the conditions that would have applied between independent persons in a comparable transaction conducted in comparable circumstances.
Some of the transfer pricing documentation and information that taxpayers are required to submit within four months of the end of the financial year are:
The head of the tax agency is authorized to:
Failure to comply with transfer pricing legislation can give rise to penalties, as follows:
Note that a restatement of related-party transactions by the tax agency may give rise to additional value added tax (VAT), withholding tax, and other tax liabilities plus penalties and interest charges.
For more information, contact a KPMG tax professional in Botswana:
Leonard Muza | +26 777 19 9067 | firstname.lastname@example.org
Olivia Muzvidziwa | +26 777 19 9022 | email@example.com
Kenneth Sakonda | +26 777 19 9079 | firstname.lastname@example.org
Masa Selerio | +26 777 19 9069 | email@example.com
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