9 October 2025
The Botswana parliament published a VAT Amendment Bill on 8 August 2025 that includes measures that would introduce VAT on the provision of remote services, the use of electronic fiscal devices (EFDs) and reverse charge rules for recipients of remote services.
The proposed amendments are designed to modernise the VAT system, align it with international best practices, broaden the tax base, enhance revenue collection, curb VAT fraud and improve tax compliance through digital transformation.
This initiative comes amid fiscal constraints and pressures resulting from dwindling mineral revenue. Due to the decline in mineral revenue, the tax authorities are under pressure to collect more, which has resulted in the authorities adopting a policy of auditing VAT refunds before payments are processed.
The proposed changes to the VAT law include definitions of new terms, such as “remote services,” “electronic marketplaces,” “electronic fiscal devices,” etc. There also are rules for the application of the reverse charge mechanism, under which VAT liability is shifted to the recipient of the services when the recipient is a VAT-registered person, a government entity or a “large unregistered person.” We explore aspects of the VAT amendment bill below.
Remote services
The bill defines remote services as services supplied to residents of Botswana by nonresidents from a place outside Botswana via an electronic network. Remote services are those supplied where there is no necessary connection between the physical location of the supplier and the services recipient. The bill defines a resident of Botswana for purposes of remote services to mean a person whose billing address, IP address, mobile country code, banking details, fixed land line, etc. are in Botswana when consuming the services. Other relevant information would also be able to be used in the determination of whether a recipient is or was in Botswana when consuming the remote services.
Remote services suppliers that are not VAT-registered in Botswana would be required to register for VAT if their revenue from Botswana exceeds, or is expected to exceed, BWP 500,000 (about USD 35,000) at the beginning or end of any 12-month period.
A supplier of remote services would be required to charge 14% VAT on supplies to a non-VAT-registered resident of Botswana and remit VAT on a quarterly basis. A large unregistered entity is defined as a person that is not a VAT-registered person or a government entity and that supplies remote services with a total annual value exceeding BWP 1 million (i.e., the VAT registration threshold).
Suppliers of remote services would not be allowed to claim input VAT, but they would be able to make adjustments for any underpayment or overpayment of VAT in subsequent VAT returns.
Reverse charge supplies
The bill introduces the concept of the reverse charge into the definition of a taxable supply. A reverse charge supply occurs where a supply is made by a person who does not conduct business in Botswana to a VAT-registered person, government entity or large unregistered entity and the supply would be subject to VAT if made from a place of business in Botswana.
Government entities and large unregistered persons would be required to register for VAT for purposes of accounting for a reverse charge supply, which means that all suppliers of exempt goods and providers of services such as education and passenger transport services and whose revenue exceeds BWP 1 million would have to register for VAT.
All registered entities that receive remote services would be required to self-invoice and declare output VAT and where the remote services are incurred in the furtherance of a VATable supply, input VAT would be able to be reclaimed.
Electronic fiscal devices
The VAT amendment bill introduces the use of EFDs. An EFD is an electronic device for recording and transmitting sales and related data and the issuance of invoices and receipts, including a virtual fiscal device. A fiscal receipt is a receipt or tax invoice issued by an EFD, government electronic payment gateway system or other electronic system approved by the tax authorities.
Every person registered for VAT would be required to issue fiscal receipts using EFD, with penalties of BWP 10,000 or BWP 100,000 imposed for failure to use EFD, failure issue a fiscal receipt, or misuse or tampering with EFD.
BDO insights
The VAT Act Amendment Bill of 2025 is expected to be enacted before the end of 2025 and the minister is expected to issue related regulations. Although enactment is expected before the end of the year, the effective date is likely to be 1 March 2026.Taxpayers and businesses should monitor developments and seek professional advice, as needed, to navigate the new tax environment and understand their compliance obligations. As Botswana accelerates its investment in digital infrastructure, proactive adoption of the changes will be essential for maintaining compliance and unlocking efficiencies across the tax lifecycle.
Source: https://shorturl.at/NSQeC
