Value Added Tax

 Value Added Tax (VAT) was introduced in Botswana with effect from 1 July 2002.VAT is an indirect tax levied on the supply of goods and services consumed within Botswana. It is called a consumption tax as the amount you pay is directly related to purchases you make. It is not a business expense because it is borne by the consumer.

Taxable Activity

Liability of VAT arises only when a person carries on a taxable activity. Taxable activity is defined as an activity which is carried on continuously or regularly by any person in Botswana, whether or not for profit, that involves the supply of goods or services to another person for consideration.

Taxable supplies – These include both standard rated supplies and zero rated supplies.
Standard rated supplies – These are supplies that are charged VAT at the rate of 12%.
Zero rated supplies – These are supplies that are charged VAT at the rate of 0%.

Exempt Supplies – These are not subject to VAT and are not counted as part of a person’s taxable turnover.

Registration – Any person making taxable supplies with a value of more than P500, 000 per annum must register for VAT purposes.

Input Tax – This is VAT paid to local suppliers or on imported goods subject to VAT and, it is allowed as a credit to a VAT registered person.

Output Tax – This is VAT charged by a registered person on taxable supplies.

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