Botswana: Threshold for preparing and filing transfer pricing documentation

The ruling is effective retroactively from July 2019 (2020 tax year).

The ruling is effective retroactively from July 2019 (2020 tax year).

The Commissioner General on 1 September 2021 issued a blanket ruling setting a threshold for the preparation and filing of transfer pricing documentation. The ruling exempts taxpayers from the obligation to prepare and file transfer pricing documentation when the “cumulative arm’s length value” of connected party transactions in a tax year do not exceed BWP 5 million.

The ruling is effective retroactively from July 2019 (2020 tax year) and will continue in force until revised by the Commissioner General or amended via the transfer pricing regulations. 

Prior to this ruling taxpayers were required to prepare and file transfer pricing documentation irrespective of the value of the connected party transactions which was too onerous especially in cases where the value of connected party transactions were not significant enough to warrant the cost incurred in the preparation of the transfer pricing documentation.

The threshold is referenced to the “arm’s length value” of connected party transactions. The following two-step approach to determining whether the exemption applies in a given tax year to:

  • Determine the aggregate of arm’s length value of connected party transactions; and
  • If the aggregate value:
    • Is less than BWP 5 million, there is no obligation to prepare and TP documentation; or
    • Exceeds BWP 5 million, prepare and file TP documentation with the annual corporate tax return. 

KPMG observation

No guidance has been provided regarding how, administratively, taxpayers are expected to demonstrate that the aggregate of the arm’s length value of connected party transactions is less than BWP 5 million. This is likely to be through a declaration in the corporate tax return or in some prescribed format prescribed by the Commissioner General.


For more information, contact a KPMG tax professional in Botswana:

Olivia Muzvidziwa | +26 777 19 9022 | olivia.muzvidziwa@kpmg.bw

Leonard Muza | +26 777 19 9067 | leonard.muza@kpmg.bw

Masa Selerio | +26 777 19 9069 | masa.selerio@kpmg.bw

Kenneth Sakonda | +26 777 19 9079 | kenneth.sakonda@kpmg.bw