Africa-Press – Botswana. Botswana’s plan to tax foreign digital services has been postponed until 2026, with critics warning it may push up consumer costs while government insists it will boost revenue and fairness.
The introduction of Value Added Tax (VAT) on digital services provided by foreign companies, initially scheduled for 1 September 2025, has been delayed until at least March 2026. The measure, approved by Parliament in August, awaits Presidential assent.
Reform Targets Foreign Firms
The VAT (Amendment) Bill 2025 requires international firms offering remote services — from streaming platforms to online marketplaces — to register for VAT if their annual turnover in Botswana exceeds P500,000 (about €32,000). They must appoint a local representative and file quarterly returns.
Deputy Secretary for Financial Policy at the Ministry of Finance, Boikanyo Mathipa, said the law will obligate foreign providers to comply with local tax rules. “We are providing for foreign companies to register for VAT in Botswana. Going forward there will be no excuses,” he said.
Government Justifies Move
Vice President Ndaba Gaolathe told residents in Mmopane that the reform is part of the Economic Transformation Programme. “Several foreign-based companies continue to provide services to Botswana digitally, generating substantial income. We need to start taxing these services to boost revenue for the country,” he said.
Critics Cite Consumer Impact
Some critics warn the policy may raise prices for consumers who rely on digital platforms. They argue that increased costs could discourage digital adoption and strain households already facing high living expenses. Supporters, however, believe the move will level the playing field for local businesses that already pay VAT.
Regional Context
At 14%, Botswana has the region’s lowest VAT rate on digital services. South Africa introduced such a tax in 2014, Mozambique in 2017, and Zimbabwe in 2020, leaving Botswana as one of the last to follow suit.
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