The LLC must have a registered office in Botswana and must submit audited financial statements

Society Constitution
offshore in Botswana

Country analysis: legal structures

Everything you need to know to set up an operating company with a bank account.

1. Exchange of banking information

β€’ There are prison terms for sharing customer bank details with any third party (and possibly fines).

β€’ Banks are partially subject to strict customer due diligence regulations (old FATF recommendation 5 / new FATF recommendation 10).

β€’ Banks are largely required to maintain sufficient records of their customer and transaction data to enforce the law (old FATF recommendation 10 / new FATF recommendation 11).

β€’ Banks and / or other covered entities are required to report large transactions in currency or other monetary instruments to designated authorities.

β€’ The national administration has sufficient powers to obtain and provide bank information upon request without reservation.

β€’ There are undue notice and appeal rights against the exchange of bank information on demand without qualifications.

2. Legal forms

The Botswana Limited Liability Company (LLC)

β€’ This is the most common type of business entity for foreign entrepreneurs when entering Botswana. A Botswana LLC must appoint a director who must be a resident of Botswana and a shareholder of any nationality. No minimum paid-up capital is required and it takes approximately 48 days to complete the incorporation process.

β€’ The LLC must have a registered office in Botswana and must submit audited financial statements within five months of the end of the year and therefore must appoint a qualified company secretary. Foster Swiss Consultants will assist our clients if necessary.

The Botswana Joint Stock Company (PLC)

β€’ This entity must appoint at least two directors and seven shareholders of any nationality who must be natural persons for the constitution to be complete. One of the directors must be a resident of Botswana and, if necessary, Foster Swiss will offer these services to our Client. No minimum paid-up share capital is required and the incorporation process takes approximately 70 days to complete.

β€’ The PLC must have a registered office in Botswana and must submit audited financial statements within five months after the end of the year and therefore must appoint an auditor in addition to the required company legal secretary for all Botswana companies . Foster Swiss Consultants will offer these services to our clients if necessary.

The Botswana offshore company (IFSC company)

β€’ The incorporation of an offshore company in Botswana requires:

  1. i) Establish a business in Botswana and then:
  2. ii) Request an IFSC certificate from the International Financial Services Center Authority.

Said company may be constituted from now on with only

  1. i) 1 shareholder of any nationality.
  2. ii) 1 resident director.

However, the authority will request:

  1. i) A documented description of our client's current business.
  2. ii) A business plan for the IFSC company.
  3. iii) A sufficient amount of equity capital to finance the proposed business in Botswana.

β€’ The IFSC company may only carry out commercial operations with non-residents, but will be able to conduct limited productive operations in Botswana, including:

  1. i) BPO and call centers.
  2. ii) Asset management.
  3. iii) Banking and insurance activities.

You will benefit from incentives that include:

  1. i) A reduced corporate tax rate of 15%.
  2. ii) Without VAT.W
  3. iii) No capital gains tax.
  4. iv) No withholding tax

The Botswana Branch

β€’ The Botswana branch may be 100% foreign owned and authorized to conduct business related to the parent company in Botswana. Only one shareholder and one director are required for the formation of a branch in Botswana. However, the corporate tax rate for the branch is 30%, making it the least efficient tax option for business incorporation in Botswana.

The Botswana Representative Office

The Botswana representative office is established solely to conduct market research and promote the business of the parent company and is not authorized to engage in commercial or production-related activities.

REMEMBER

UA resident director is mandatory for all entities in Botswana. The resident director's fees are US $ 6.000. Holding companies are not available in Botswana.

OFFICES

Foster Swiss helps our Clients secure offices or we provide an office address. Most emerging markets require our Clients to have a 12-month office lease before company registration is approved.

We help our Clients overcome this challenge in the following ways:

Virtual office service

DDepending on the country and city, the rates range from US $ 900 to US $ 2000 and the annual active virtual office services range from US $ 1500 to US $ 4000).

Shared office space

LThe one-time fee is US $ 850. Thereafter, our Client pays the monthly rent directly to the owner).

Permanent office space

D Depending on the country and the city, the rates range from US $ 5.000 to US $ 8.000).

Legal accounting and taxes

LThe standard corporate tax rate that applies to all net earnings derived from Botswana is 22%. The fiscal year is from July 1 to June 30 and tax returns are filed quarterly. Failure to comply will carry a penalty of 1,5% monthly interest.

Branches pay a standard corporate tax rate of 30% and manufacturing companies pay 15%. There is no tax on branch remittances.

The standard VAT rate that applies to the supply of goods and services in Botswana is 12%. Filing and payment are made every month. The export tax is zero rate.

Capital gains tax applies at variable rates of up to 25%.

The withholding tax on interest, royalties, and technical service fees paid to non-residents is 15%. The withholding tax that is applied to dividends is 7,5%, while rent is taxed at a rate of 5% and brokerage fees and commissions are charged a withholding tax of 10%.

There are no payroll taxes or capital taxes in Botswana. Furthermore, the employer is not obliged to submit social security contributions for the salary income of the employees.

Losses can carry over for five years.

The tax on the transfer of real estate and all property sales is 5% and a capital transfer tax of 12,5% ​​is applied on the transfer of assets. Botswana has signed double tax treaties on withholding tax rates with 12 countries, including France, Federation of Russia, Seychelles, South Africa, Sweden, Barbados, India, Mauritius, Mozambique, Zimbabwe, Namibia, and the United Kingdom.

Country problems

Lhe business formation in Botswana is complex and time consuming. According to the World Bank, it takes 48 days on average to set up a business here.

A Botswana LLC is subject to a corporate tax rate of 22%, and may also be subject to VAT at a rate of 10%.

Many business sectors in Botswana remain closed to foreign investment and, in most cases, the land cannot be sold to foreign investors.

The situation relatively bandwidth slow and the energy of the Internet presents additional challenges for doing business in Botswana.

The main trade barriers are cross-border trade, building permits and obtaining electricity.

Botswana has a small population. It is a challenging task for companies to acquire an adequate supply of low-skilled labor in Botswana.

MORE CONFIGURATION SERVICES SOLUTIONS

  • Shareholders and Agents
  • Office permits
  • Protection of trademarks and copyrights. - Market study.
  • Legal support
  • Proportion of details of temporary unions or associations
  • Fusions and acquisitions.
  • Internal control.
  • Group restructuring.
  • Financial management consulting.
  • Buy a business.
  • Valuation of companies.
  • Credit recovery
  • Job solutions
  • Due diligence search on existing companies and individuals

3. Commercial register

β€’ The national business registry includes the identity information of the legal owner.

β€’ Information on legal owners is not always available online (up to 10 EUR / GBP / USD).

4. Transparency of society

β€’ All businesses require the registration of all legal owners.

β€’ All names plus countries of residence plus addresses or NITs or dates of birth, passport or personal identifications, or incorporation numbers are always registered.

β€’ Updating the information on the identity of the legal owners is not mandatory.

5. Shareholders publications

β€’ All companies require the registration of all individuals with participation / influence.

β€’ Updating of the information on the identity of the final beneficiaries is mandatory.

β€’ All names plus countries of residence plus addresses or NITs or dates of birth, passport or personal identifications are always recorded.

6. Publication of the company account

β€’ There is NO obligation to keep accounting data.

7. Country-by-country financial reports

β€’ No country-by-country public reporting at all.

8. Corporate tax return

β€’ There is NO requirement for local submission of a global country-by-country reporting file (in accordance with OECD BEPS Action 13) by large corporate groups (with a worldwide turnover of more than 750 million euros) and subsidiaries premises of foreign groups.

β€’ Unilateral cross-border tax rulings (eg advance tax rulings, advance tax rulings) are NOT available in laws or regulations, or administrative practice.

9. Identifier of legal entities

The use of an annually updated Legal Entity Identifier (LEI), developed under the guidance of the Financial Stability Board, FSB, is not mandatory.

The use of an annually updated Legal Entity Identifier (LEI), developed under the guidance of the Financial Stability Board, FSB, is not mandatory for some financial market operators.

The use of an annually updated LEI for the identification of reporting financial institutions (in accordance with the Common Reporting Standard (CRS) is not mandatory.

10. Measures to avoid tax evasion

<br>β€’ Dividend payments: Unilateral relief for double taxation through a tax credit system for a payment scenario (if the recipient is an independent or related legal person, or a natural person).

<br>β€’ Interest payments: Unilateral relief for double taxation through a tax credit system for both payment scenarios (recipients always receive a unilateral tax credit, regardless of whether it is a legal person or a natural person).

11. Tax matters judicial secrecy

β€’ None or restricted access to BOTH criminal and civil tax processes.

β€’ None or restricted access to BOTH criminal and civil tax judgments / verdicts.

12. Opaque structures

β€’ The jurisdiction does not issue or accept the circulation of large bills / cash notes of your own currency (value over 200 EUR / GBP / USD).

β€’ Bearer shares are not available / circulating.

β€’ Series LLC / Shielded Cell Companies are not available.

β€’ Trusts with escape clauses are not prohibited.

13. Anti-money laundering legislation

Botswana It is on the FATF List of countries that have been identified with strategic AML deficiencies.

The last Follow-up Mutual Evaluation Report related to the implementation of anti-money laundering and terrorist financing regulations in Botswana was carried out in 2020.

Based on that Assessment, Botswana was found to be in compliance with 6 and largely compliant with 16 of the 40 FATF recommendations. It was considered Highly Effective for 0 and Substantially Effective for 0 of the Effectiveness and Technical Compliance ratings.

Overall Non-Compliance Score for FATF Standards in Percentage: 59,5%.
(100% = all indicators rated as not met / low level of effectiveness; 0% = all indicators rated as completed or highly effective)

14. Automatic exchange of information

Automatic information exchange is extremely secretive in Botswana.

Tanzania It is not a signatory to the Multilateral Competent Authority Agreement (MCAA), which provides the multilateral legal framework to participate in the automatic exchange of information (AEOI) in accordance with the Common Reporting Standard (CRS) of the OECD.

What type of private banking exists in Botswana?

International Banking
Local banking

Central bank security ⭐⭐⭐

The international and digital banks They're available.

CRS: NO.

Real bank operations: 90%.

Type of visa: PULA, US $, €.

Joint accounts.

Remote management account: To consult.

Asset management Depending on the rating of the company.

Rates: It depends on the type of account.

Credit / debit cards in local currency

Crypto-friendly banks: It depends on the correspondent bank.

Portfolio availability: No or depends on the correspondent bank.

Ability to issue letters of credit: SI.

Why with Foster Swiss?

Foster Swiss is an international company registered in Switzerland aimed at providing financial and compliance advice on a variety of topics related to company formation
and commercial banking internationally. We are specialized in the implementation of businesses in different jurisdictions, which means that we offer value-added services helping our clients in their expansion abroad.

Some of these services include:
Advice and consultancy,
visas, offices, nominated director / shareholder / secretary,
accommodation if necessary… to name a few.
Check with your assigned consultant for more information.

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