Africa-Press – Botswana. Government is set to modernise the 24-year-old tax framework with the introduction of the Value Added Tax Bill 2025 in efforts to shield low-income households from inflation while digitising the national economy.
By moving essential goods, including cooking gas, infant formula and farm implements, to a zero-rated status, the Bill seeks to lower the cost of living and boost food security, even as it introduce mandatory electronic invoicing and new taxes on remote digital services. Presenting the Value Added Tax Bill of 2025 on Tuesday, Vice President and Minister of Finance, Mr Ndaba Gaolathe told Parliament that the current VAT Act, enacted in 2001 and implemented in 2002, no longer reflected the modern world.
Minister Gaolathe said the tax landscape had evolved significantly over the last two decades, necessitating a holistic review to ensure that the system remained sustainable.
He said the objective of the new Bill was to repeal and re-enact the Act with amendments that broadened its scope and aligned it with a technology-driven global economy. He added that a key feature of the Bill was to formalise reforms regarding taxation of remote services and the introduction of mandatory electronic invoicing.
Minister Gaolathe stated that the Bill retained and built on such reforms, further expanding the VAT framework to ensure that it remained responsive to the realities of an increasing digital and technology-driven economy.
“The Bill maintains the standard VAT rate of 14 per cent on taxable supplies, imports and reverse-charged supplies, it introduces stricter compliance measures, including making it compulsory for any person making taxable supplies above the VAT threshold to apply for registration,” he said.
Importantly, he said the legislation refocused the list of zero-rated goods to protect essential items consumed by lower-income households. Also, he said the zero-rated list had been carefully revised to include staple foods such as maize meal, sorghum, bread, fresh vegetables, cooking oil and sugar and the list further covered household needs like cooking gas and basic water supply, as well as critical products like infant formula, sanitary products and prescription medicines which have been moved from exempt to zero-rated status.
He also informed Parliament that, beyond households, the Bill further provided meaningful support to the agricultural sector by zero-rating key inputs and implements such as ploughs and tractors to lower production costs and strengthen food security.
Minister Gaolathe noted that the shift toward zero-rating certain supplies used in production allowed manufacturers to claim input tax, which enhanced the competitiveness of local industry while supporting low-income households through more affordable local goods.
“This strategy is expected to strengthen local manufacturing and contribute to a more inclusive and resilient economy,” he said.
The minister acknowledged that despite such updates, several gaps and inconsistencies had persisted and prompted the need for a comprehensive and holistic act review.
“As part of government’s broader tax reforms programme, a comprehensive review of the value added tax was undertaken along with the development of the new Tax Administration Act. This process has now been completed and was informed by extensive engagement with relevant government departments and private sector which culminated in the National Tax Pitso,” he said.
He added that the new Bill, informed by extensive engagement during the National Tax Pitso and consultations with the private sector, established clearer rules for pricing, advertising and determination of when a supply occurred. Furthermore, he said, the Bill empowered government to recover VAT from recipients who misrepresented the nature of a supply and allowed the minister to enter into agreements with foreign governments on VAT-related matters.
Source: dailynews
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