Republic of Botswana

The Republic of Botswana uses a source-based income tax system, where individuals are taxed only on income earned or deemed to be earned within the country. The tax system is progressive, with rates starting at 0% for lower-income earners and rising to 27.5% for higher-income brackets. A tax-free threshold applies to qualifying income levels, ensuring lower earners are not subject to income tax. The Botswana Unified Revenue Service (BURS) is responsible for administering and collecting taxes. While residents benefit from a tax-free threshold, non-residents are taxed from the first pula earned, typically starting at a minimum rate of 5%. A range of exemptions and allowances is available to reduce taxable income, including relief on pension payouts, severance payments and certain medical withdrawals.

Payroll taxes in Botswana are relatively straightforward and primarily consist of statutory deductions that employers are legally required to withhold and remit on behalf of their employees. The main components include Pay As You Earn (PAYE), which is deducted from employee salaries based on progressive income tax rates. In addition, employers are required to contribute to the Skills Development Levy, a mandatory levy calculated as a small percentage (generally 0.2% of the employer’s turnover to support national skills development initiatives. Botswana does not currently have a formal national social security contribution system for employees or employers. However, employers should remain aware of potential future developments such as the proposed National Social Security Scheme, which has not yet been implemented as of 2026. Compliance with payroll obligations is overseen by the BURS.

Botswana’s tax year runs from 1 July to 30 June. Employers are required to submit monthly PAYE returns to the BURS by the 14th of the month following the payroll period. Any tax withheld from employees must be paid at the same time as the monthly return is filed. In addition, employers must file an annual PAYE return within 28 days after the end of the tax year, summarising total remuneration paid and PAYE withheld. Individual employees may be required to submit personal income tax returns by 30 September following the end of the tax year, depending on their income level and circumstances. Employees whose income is solely from employment and fully taxed through PAYE may not be required to file, provided they meet the relevant criteria. Employers are also required to provide employees with a statement of earnings (tax certificate) within 30 days of the tax year-end. If the employment contract is terminated before the end of the tax year, the employers must provide the employee with the statement of earnings upon termination.

Employers operating in Botswana are required to maintain accurate and complete employment records in accordance with the country’s labour laws and regulatory requirements. This includes documentation such as employment contracts, payroll and PAYE records, attendance registers, leave records, disciplinary actions and termination documents. Most employment-related records should be retained for a minimum of five years after the end of employment. Proper record-keeping is essential, not only for compliance with inspections by authorities such as the Department of Labour and the BURS, but also for managing disputes, supporting tax audits and demonstrating adherence to employment standards. Employers must also take steps to ensure that employee information is handled with confidentiality and care, in line with applicable data protection and privacy principles.