Botswana - Income Tax Amendment Act 2024
The Income Tax (Amendment) Act, 2024 was Gazetted and is effective 15 January 2024.
This Amendment Act increases the tax-exempt portion of specific lumpsums payable to an employee (according to sections 32(7), 32(10), 32(11), 32(12), 32(14) and the Second Schedule to the Income Tax Act), namely-
- approved service gratuity or severance pay gratuities paid to citizen employees,
- gratuities under a contract of employment paid to citizen employees (other than citizens employed in the service of Government),
- bonuses and gratuities under a contract of employment paid to a non-citizen,
- severance pay in accordance with section 27 of the Employment Act paid to employees, and
- retrenchment package paid/payable to employee, and
- certain pension lump sums.
Before 15 January 2024 :
- The whole amount of an approved service gratuity or severance pay paid to a citizen employees during the course of, or on termination of employment shall be exempt from tax if the gross amount is directly invested on the employee’s behalf in an approved pension fund or approved retirement annuity fund or scheme. Where is it not so invested, 1/3rd was exempt from tax and the remaining 2/3rds were taxable (subject to conditions).
- 1/3rd of gratuities under a contract of employment paid to a citizen employee (other than citizens employed in the service of Government), was exempt from tax and the remaining 2/3rds were taxable.
- 1/3rd of a bonus or gratuity under a contract of employee paid to a non-citizen employee was exempt from tax and the remaining 2/3rds were taxable (subject to conditions).
- 1/3rd of the severance pay in accordance with section 27 of the Employment Act was exempt from tax and the remaining amount was taxable.
- 1/3rd of a retrenchment package was exempt from tax limited to P48 000, and the remaining 2/3rds were taxable.
- Where under any law in Force in Botswana an employee is permitted to commute a portion of their pension, an amount not exceeding 1/3rd of the pension entitlement at the time of retirement was exempt.
- A person entitled to a pension or annuity on retirement and elects to receive a part of such pension or annuity as a commuted lump sum, an actuarially calculated sum representing a commutation of not more than 1/3rd of his or her full entitlement at the date of their retirement was exempt.
- A person entitled bona fide to an annual pension or annuity of not more than P500 (an actuarially calculated sum representing the commutation of that pension or annuity) was exempt.
From 15 January 2024:
- The whole amount of an approved service gratuity or severance pay paid to a citizen employees during the course of, or on termination of employment shall be exempt from tax if the gross amount is directly invested on the employee’s behalf in an approved pension fund or approved retirement annuity fund or scheme. Where is it not so invested, 50% shall be exempt from tax and the remaining 50% shall be taxable (subject to conditions).
- 50% of gratuities under a contract of employment paid to a citizen employee (other than citizens employed in the service of Government), shall be exempt from tax and the remaining 50% shall be taxable.
- 50% of a bonus or gratuity under a contract of employee paid to a non-citizen employee shall be exempt from tax and the remaining 50% shall be taxable (subject to conditions).
- 50% of the severance pay in accordance with section 27 of the Employment Act shall be exempt from tax and the remaining amount shall be taxable.
- 50% of a retrenchment package shall be exempt from tax limited to P48 000 per annum, and the remaining 50% shall be taxable.
- Where under any law in Force in Botswana an employee is permitted to commute a portion of their pension, an amount not exceeding 50% of the pension entitlement at the time of retirement shall be exempt from tax.
- A person entitled to a pension or annuity on retirement and elects to receive a part of such pension or annuity as a commuted lump sum, an actuarially calculated sum representing a commutation of not more than 50% of his or her full entitlement at the date of their retirement shall be exempt from tax.
- A person entitled bona fide to an annual pension or annuity of not more than P20 000 (an actuarially calculated sum representing the commutation of that pension or annuity) was exempt from tax.
- Any amount withdrawn by a deferred member under the Retirement Funds Act from the pension entitlement, for purposes of medical treatment shall be exempt from tax.
- 50% of any amount withdrawn by a deferred pension fund member from the pension entitlement for purposes of settling a loan shall be exempt from tax, and where, by reason of tax payable, the deferred amount is not enough to settle the loans payable, the whole amount shall be exempt from tax.
Employers are still required to apply for a tax directive at BURS when making a payment of remuneration to an employee in the form of gratuity or other lumpsums upon the employee's termination or when a lumpsum payment is made by a superannuation fund upon the employee’s termination. This is to determine the amount of PAYE to be withheld from the lumpsum by the employer (paragraph 4(6) of the Fifth Schedule to the Income Tax Act).
Related Articles
Zambia: Income Tax (Amendment) Act, 2022
The Income Tax (Amendment) Act, 2022 assented on 23 December 2022. This Act shall come into operation on the 1st of January, 2023. Changes included an Increase to the exemption threshold for Pay As You Earn (PAYE) to K4,800 per month from K4,500, ...
Namibia | Income Tax Amendment Act, 2024 Promulgated
The Income Tax Amendment Act, 2024 was approved by Parliament and published in Government Gazette 8442 on 16 September 2024. The updated tax rates, detailed in paragraph 1 of Schedule 4 to the Income Tax Act, 1981, will be effective starting 1 March ...
Eswatini – Income Tax Amendment Act 2023 Effective 1 July 2024
The Kingdom of Eswatini has introduced several changes to tax administration through the Income Tax (Amendment) Act 2023 which was gazetted on 20 October 2023. Key points regarding payroll for the 2024/2025 tax year: The individual income tax rates ...
Ghana: Income Tax (Amendment) Bill, 2022
The Income Tax (Amendment) Bill, 2022 proposes to amend the Income Tax Act, 2015 (Act 896) by revising the rates of income tax for individuals and introduce an additional income tax bracket as well as revise the upper limits for the quantification of ...
Eswatini | Income Tax Amendment Act 2023 Follow-up on changes Effective 1 July 2024
The Kingdom of Eswatini has introduced several changes through the Income Tax (Amendment) Act 2023. Key points affecting payroll for the 2024/2025 tax year: Increased Tax Deduction for Approved Pension Funds Contributions: The allowable tax deduction ...