Botswana Investment Income Guide 2026

Overview — Investment Income Taxation

Botswana's tax regime for investment income is designed to encourage savings and capital market development. The key principle is that most investment income earned by residents is either exempt from tax or subject to zero withholding tax. Non-residents face a 15% WHT on dividends, interest, and royalties, though rates may be reduced under double taxation treaties.

Dividend Taxation

Dividend taxation in Botswana is favourable:

• Residents: Dividends paid to resident individuals or companies are subject to 0% withholding tax (provided the shares are listed on the BSE or the dividend is paid by a Botswana-resident company)
• Non-residents: Dividends paid to non-residents are subject to WHT at 15%, unless reduced under a DTT
• Corporate recipients: Dividends received by a Botswana-resident company from another Botswana-resident company are exempt from CIT (participation exemption)
• No additional tax: Dividends received by individuals are not subject to further IIT (they are exempt income in the hands of the recipient)

Interest Taxation

Interest income is treated as follows:

• Residents: Interest paid to residents is subject to 0% withholding tax and is generally exempt from IIT up to specified thresholds (interest from bank deposits, bonds, and debentures)
• Non-residents: Interest paid to non-residents is subject to WHT at 15%, reduced under applicable DTTs
• Corporate interest: Interest earned by companies in the ordinary course of lending business is taxable at CIT rates

Capital Gains on Shares and Securities

As covered in the Capital Gains Guide, gains from the disposal of shares, bonds, debentures, unit trusts, and other financial instruments are exempt from CGT. This means:

• No tax on profits from share trading (for individuals not classified as traders)
• No CGT on bond or debenture disposals
• No CGT on collective investment scheme (unit trust) disposals
• Businesses trading in securities may be subject to CIT on trading profits

Collective Investment Schemes (Unit Trusts)

Unit trusts and collective investment schemes are popular investment vehicles in Botswana. Distributions from these schemes are generally treated as:

• Interest distributions: Taxed as interest (generally exempt for residents)
• Dividend distributions: Taxed as dividends (exempt for residents)
• Capital gains distributions: Exempt from CGT for residents

These schemes are regulated by the Non-Bank Financial Institutions Regulatory Authority (NBFIRA).

Botswana Stock Exchange (BSE) Investments

The BSE offers tax advantages to encourage investment:

• Dividends from BSE-listed companies: 0% WHT for residents
• Capital gains on BSE shares: Exempt from CGT
• Interest on BSE-listed bonds: 0% WHT for residents
• Foreign investors: BSE dividends subject to 15% WHT (may be reduced by DTT)

FAQs

Do I need to declare dividend income on my tax return?

Yes, even though dividends are exempt from tax for residents, they should be declared on the annual tax return for completeness. BURS may require proof of the exempt status.

Are offshore investment returns taxable?

Residents are taxed on worldwide income. Foreign dividends and interest may be taxable if not covered by an exemption. Foreign capital gains on shares may be subject to tax in the source country. Botswana does not impose CGT on shares, but other countries may.

What is the treatment of REIT distributions?

Real Estate Investment Trust (REIT) distributions are generally treated as rental income and subject to tax in the hands of the investor at IIT rates. However, certain REIT structures may qualify for passthrough treatment.

Disclaimer

This guide provides general information about investment income taxation in Botswana for 2026. Tax laws and rates may change. Always consult a qualified tax professional or BURS for advice specific to your circumstances. InvestmentKit does not provide tax advice.