Botswana IFSC Attracts South African Firms With Tax Breaks

by Robert Lee, Tx-News.com, London

15 September 2003

Botswana has attracted many firms from neighbouring South Africa in recent months that have set up operations in the Botswana International Financial Services Centre (IFSC) to take advantage of tax breaks and the absence of exchange controls.

The IFSC was established in Gabarone two years ago and was created as an incentive for foreign firms to set up their regional operations in Botswana. To date, the IFSC has approved 18 licence applications, 11 of which are currently up and running and include the likes of Standard Bank's African Banking Group, Metcash Africa, Brait's African Alliance fund managers, plus Zimbabwe's Econet Wireless and Wilderness Safaris who have set up administrative operations in the IFSC.

"There have definitely been good benefits into moving our African division from Johannesburg to Gabarone 18 months ago. Besides the tax benefits and no exchange control, Gabarone's growing financial community could become a source of capital for expansion should Metcash Africa ever require it," Metcash Africa's Financial Director, Steven Levinson, said in an AllAfrica report last week.

Foreign investors locating to the IFSC are entitled to a 15% corporate tax rate that is guaranteed until 2020 in addition to exemption from withholding tax and credits for withholding taxes imposed in other countries. Firms are also permitted access to Botswana's double taxation treaty network (which now includes South Africa).

"The main aim is to bring in back office administration, treasury and captive insurance and reinsurance activities to the country," said IFSC CEO, Alan Boshwaen, who added that substantive business plans must be submitted for firms to take advantage of the Bank of Botswana's fast track approval process.

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