INCOME TAX: SUBSIDIARY LEGISLATION-II

WHEREAS in exercise of the powers conferred on him by section 53(1) of the Income Tax Act (Cap. 52:01) the Minister of Finance and Development Planning has, on behalf of Government, entered into an Agreement with the Government of the Republic of Zimbabwe for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital gains;

AND WHEREAS in accordance with the provisions of section 53(2) of the Income Tax Act the said Agreement shall be laid before the National Assembly, and shall not take effect unless approved by resolution of the National Assembly;

NOW THEREFORE the following Order is hereby made—

1. Citation

This Order may be cited as the Botswana-Zimbabwe Double Taxation Avoidance Agreement Order.

2. Approval and effective date of commencement

The Double Taxation Avoidance Agreement set out in the Schedule hereto between the Government of the Republic of Botswana and the Government of the Republic of Zimbabwe is presented to the National Assembly for approval and shall, upon approval, take effect from the date specified in the Agreement.

SCHEDULE

The Government of the Republic of Botswana and the Government of the Republic of Zimbabwe desiring to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains, have agreed as follows:

ARTICLE 1
Persons covered

This Agreement shall apply to persons who are residents of one or both of the Contracting States.

ARTICLE 2
Taxes covered

1. This Agreement shall apply to taxes on income and on capital gains imposed on behalf of a Contracting State, irrespective of the manner in which they are levied.

2. There shall be regarded as taxes on income and on capital gains all taxes imposed on total income, on total capital gains or elements of income or capital gains.

3. The existing taxes to which this Agreement shall apply are, in particular:

(a) in Botswana:

Income tax including taxation of capital gains (hereinafter referred to as “Botswana tax”).

(b) in Zimbabwe:

(i) The income tax;

(ii) Non-resident shareholders’ tax;

(iii) Non-residents’ tax on interest;

(iv) Non-residents’ tax on fees;

(v) Non-residents’ tax on royalties;

(vi) Residents’ tax on interest; and

(vii) The capital gains tax;

(hereinafter referred to as “Zimbabwean tax”);

4. Nothing in this Agreement shall limit the right of either Contracting State to charge tax on the profits of a mineral enterprise at an effective rate different from that charged on the profits of any other enterprise. The term “a mineral enterprise” means an enterprise carrying on the business of mining.

5. The Agreement shall apply also to any identical or substantially similar taxes which are imposed after the date of signature of the Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes which have been made in their respective taxation laws.

ARTICLE 3
General Definitions

1. For the purposes of this Agreement, unless the context otherwise requires:

(a) the term “Botswana” means the Republic of Botswana;

(b) the term “Zimbabwe” means the Republic of Zimbabwe;

(d) the term “competent authority” means

(i) in the case of Botswana, the Minister responsible for Finance or the authorised representative;

(ii) in the case of Zimbabwe, the Commissioner General or the authorised representative.

(e) the terms “a Contracting State” and “the other Contracting State” mean Botswana or Zimbabwe as the context requires;

(f) the term “enterprise” applies to carrying on of any business and includes performance of professional services and other activities of an independent character;

(g) the term “international traffic” means any transport by ship, aircraft or rail or transport vehicle operated by an enterprise of a Contracting State except when the ship, aircraft or rail or road transport vehicle is operated solely between places in the other Contracting State;

(h) the term “national” means:

(i) any individual possessing the nationality of a Contracting State;

(ii) any legal person, partnership and association deriving its status as such from the laws in force in a Contracting State.

(i) the term “person” includes an individual, a company, a trust, an estate and any other body of persons which is treated as an entity for tax purposes.

2. As regards the application of the Agreement at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which the Agreement applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.

ARTICLE 4
Resident

1. For the purposes of this Agreement, the term “resident of a Contracting State” means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature, but does not include any person who is liable to tax in that State in respect only of income from sources in that State.

2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:

(a) He shall be deemed to be a resident of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident of the State with which his personal and economic relations are closer (centre of vital interests);

(b) if the State in which he has his centre of vital interests cannot be determined, or if he does not have a permanent home available to him in either State, he shall be deemed to be a resident of the State in which he has a habitual abode;

(c) if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident of the State of which he is a national;

(d) if he is a national of both States or of neither of them the competent authorities of the Contracting States shall settle the question by mutual agreement.

3. Where by reason of the provisions of paragraph 1, a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the State in which its place of effective management is situated.

ARTICLE 5
Permanent Establishment

1. For the purposes of this Agreement, the term “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

2. The term “permanent establishment” shall include especially:

(a) a place of management;

(b) a branch;

(d) a factory;

(e) a workshop;

(f) a mine, an oil or gas well, a quarry or any other place of extraction or exploitation of natural resources;

(g) an installation or structure used for the exploration of natural resources, provided that the installation or structure continues for a period of not less than six months

3. The term “permanent establishment” likewise encompasses:

(a) a building site, a construction, assembly or installation project or supervisory activities in connection therewith, but only where such site, project or activities continue for a period of more than six months;

(b) the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose, but only where activities of that nature continue (for the same or a connected project) within the country for a period or periods aggregating more than six months within any period of twelve months;

(c) the performance of professional services or other activities of an independent character by an individual, but only where those services or activities continue within a Contracting State for a period or periods exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned.

4. Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not to include:

(a) the use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise;

(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display;

(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting information for the enterprise;

(e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary nature;

(f) the maintenance of a fixed place of business solely for any combination of activities mentioned in subparagraphs (a) to (e) of this paragraph, provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.

5. Notwithstanding the provisions of paragraphs 1 and 2, where a person – other than an agent of an independent status to whom paragraph 6 applies – is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned Contracting State in respect of any activities which that person undertakes for the enterprise, if such person:

(a) has and habitually exercises in that State an authority to conclude contracts in the name of the enterprise;

(b) has no such authority, but habitually maintains in the first-mentioned Contracting State a stock of goods or merchandise belonging to the enterprise from which he regularly fills orders or makes deliveries on behalf of the enterprise;

unless the activities of such person are limited to those mentioned in paragraph 4 which if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph.

6. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, he shall not be considered an agent of an independent status within the meaning of this paragraph.

7. Notwithstanding the preceding provisions of this Article, an insurance enterprise of a Contracting State shall, except in regard to reinsurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums in the territory of that other State or insures risks situated therein through a person other than an agent of an independent status to whom paragraph 6 applies.

8. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.

ARTICLE 6
Income from Immovable Property

2. For purposes of this Agreement, the term “immovable property” shall have the meaning which it has under the laws of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, buildings, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships, boats, aircraft and rail and road transport vehicles shall not be regarded as immovable property.

3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property.

4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise.

ARTICLE 7
Business Profits

1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforementioned, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.

2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.

3. In the determination of the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the business of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or except in the case of a banking enterprise, by way of interest on moneys lent to the permanent establishment. Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged (otherwise than towards reimbursement of actual expenses), by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission for specific services performed or for management, or, except in the case of a banking enterprise by way of interest on moneys lent to the head office of the enterprise or any of its other offices.

4. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

5. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.

6. Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.

ARTICLE 8
International Transport

1. Profits of an enterprise of a Contracting State derived from the operation or rental of ships, aircraft or rail or road transport vehicles in international traffic and the rental of containers and related equipment which is incidental to the operation of ships, aircraft or rail or road transport vehicles in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

2. The provisions of paragraph 1 shall also apply to the share of profits from the operation of ships, aircraft or rail or road transport vehicles derived by a resident of a Contracting State through participation in a pool, a joint venture business or an international operating agency.

ARTICLE 9
Associated Enterprises

1. Where:

(a) An enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or

(b) The same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State;

and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.

2. Where a Contracting State includes in the profits of an enterprise of that State – and taxes accordingly – profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall, if necessary, consult each other.

ARTICLE 10
Dividends

1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.

2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:

(a) 5 per cent of the gross amount of the dividend if the beneficial owner is a company (other than a partnership) which holds directly at least 25 per cent of the capital of the company paying the dividend;

(b) 10 per cent of the gross amount of the dividends in all other cases.

The provisions of this paragraph shall not affect taxation of the company in respect of the profits out of which the dividends were distributed.

3. The term “dividends” as used in this Article means income from shares, mining shares, founders’ shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.

5. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment situated in that other State, nor subject the company’s undistributed profits to a tax on the company’s undistributed profits, even if the dividends paid or the undistributed profits consists wholly or partly of profits or income arising in such other State.

ARTICLE 11
Interest

1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the recipient is the beneficial owner of the interest the tax so charged shall not exceed 10 per cent of the gross amount of interest.

3. Notwithstanding the provisions of paragraph 2, interest mentioned in paragraph 1 shall be taxable only in the Contracting State where the recipient of the interest is resident if:

(a) The recipient thereof is the Government of a Contracting State, the Central Bank of a Contracting State or a local authority thereof, or

(b) The interest is paid in respect of a loan granted or guaranteed by a financial institution of a public character with the objective of promoting exports and development, if the credit granted or guaranteed:

(i) contains an element of subsidy; or

(ii) is for purposes approved by the Minister of Finance.

4. The term “interest” as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.

5. The provisions of paragraph 1, 2 and 3 shall not apply if the beneficial owner of the interest being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.

6. Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a local authority or a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment, then such interest shall be deemed to arise in the State in which the permanent establishment is situated.

7. Where by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

ARTICLE 12
Royalties

1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, such royalties may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the recipient is the beneficial owner of the royalties the tax so charged shall not exceed 10 per cent of the gross amount of the royalties.

3. The term “royalties” as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work (including cinematograph films and films, tapes or discs and other means of production for radio or television broadcasting) any patent, trade mark, design or model, plan, secret formula or process or for the use of or the right to use industrial, commercial or scientific equipment involving a transfer of know-how or for information concerning industrial, commercial or scientific experience.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment. In such cases the provisions of Article 7 shall apply.

5. Royalties shall be deemed to arise in a Contracting State when the payer is that State itself, a local authority or a resident of that State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment, then such royalties shall be deemed to arise in the State in which the permanent establishment is situated.

6. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

ARTICLE 13
Technical fees

1. Technical fees arising in a Contracting State which are derived by a resident of the other Contracting State may be taxed in that other State.

2. However, such technical fees may also be taxed in the Contracting State in which they arise, and according to the laws of that State, but where such technical fees are derived by a resident of the other Contracting State who is subject to tax in that State in respect thereof, the tax charged in the Contracting State in which the technical fees arise shall not exceed 10 per cent of the gross amount of the such fees.

3. The term “technical fees” as used in this Article means payments of any kind to any person, other than to an employee of the person making the payments, in consideration of any services of an administrative, technical, managerial or consultancy nature.

4. The provisions of paragraphs 1 and 2 shall not apply if the recipient of the technical fees, being a resident of a Contracting State, carries on business in the other Contracting State in which the technical fees arise, through a permanent establishment situated therein, and the technical fees are effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.

5. Technical fees shall be deemed to arise in a Contracting State when the payer is that State itself, a local authority thereof or a resident of that State. Where, however, the person paying the technical fees, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the obligation to pay the technical fees was incurred, and such technical fees are borne by the permanent establishment, then such technical fees shall be deemed to arise in the State in which the permanent establishment is situated.

6. Where, by reason of a special relationship between the payer and the recipient or between both of them and some other person, the amount of the technical fees paid exceeds, for whatever reason, the amount which would have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

ARTICLE 14
Capital gains

1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State, or from the alienation of shares in a company the assets of which consist principally of such property, may be taxed in that other State.

2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) may be taxed in that other State.

3. Gains derived by a resident of a Contracting State from the alienation of ships, aircraft or rail or road transport vehicles operated in international traffic or movable property pertaining to the operation of such ships, aircraft or rail or road transport vehicles shall be taxable only in that State.

4. Gains from the alienation of any property other than that referred to in paragraphs 1, 2 and 3 shall be taxable only in the Contracting State of which the alienator is a resident.

5. Notwithstanding the provisions of paragraph 4, gains from the alienation of shares or other corporate rights of a company which is a resident of one of the Contracting States derived by an individual who has become a resident of the other Contracting State, may be taxed in the first-mentioned Contracting State if the alienation of the shares or other corporate rights occur at any time during the ten years next following the date on which the individual has ceased to be a resident of that first-mentioned State.

ARTICLE 15
Income from Employment

1. Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.

2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:

(a) the recipient is present in the other Contracting State for a period or periods not exceeding in the aggregate 183 days within any period of twelve months; and

(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other Contracting State; and

3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship, aircraft or rail or road transport vehicles operated in international traffic may be taxed in the Contracting State in which the place of effective management of the enterprise is situated.

ARTICLE 16
Directors’ fees

Directors’ fees and other similar payments derived by a resident of a Contracting State in that person’s capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.

ARTICLE 17
Entertainers and Sportspersons

1. Notwithstanding the provisions of Articles 7 and 15, income derived by a resident of a Contracting State as an entertainer such as a theatre, motion picture, radio or television artiste, or a musician, or as a sports-person, from that person’s personal activities as such, exercised in the other Contracting State, may be taxed in that other State.

2. Where income in respect of personal activities exercised by an entertainer or sportsperson in that person’s capacity as such accrues not to the entertainer or sportsperson but to another person, that income may, notwithstanding the provisions of Articles 7 and 15 be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised.

3. The provisions of paragraphs 1 and 2 shall not apply to income derived as aforesaid if the activities of entertainers or sportspersons in the Contracting State are supported wholly or substantially from public funds of the other Contracting State, local authorities or public institutions thereof, directly or indirectly.

ARTICLE 18
Pensions and Annuities

1. Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration and annuities arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in the first-mentioned Contracting State.

2. Notwithstanding the provisions of paragraph 1, pensions and other similar payments made under the social security legislation of the Contracting State shall be taxable only in that State.

3. The term “annuity” means a stated sum payable periodically at stated times during life or during a specified or ascertainable period of time under an obligation to make the payments in return for adequate and full consideration in money or money’s worth.

ARTICLE 19
Government Service

1. (a) Remuneration, other than a pension, paid by a Contracting State or a local authority or statutory body thereof to an individual in respect of services rendered to that State or local authority or statutory body shall be taxable only in that state.

(b) However such remunerations shall be taxable only in the other Contracting State if the services are rendered in that other State and the individual is a resident of that State who:

(i) is a national of that State; or

(ii) did not become a resident of that State solely for the purpose of rendering the services.

2. (a) Any pension paid by, or out of funds created by, a Contracting State, or a local authority or a statutory body thereof to an individual in respect of services rendered to that State or local authority or statutory body shall be taxable in that State.

(b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident and a national of that other State.

3. The provisions of Articles 15, 16, 17 and 18 shall apply to remuneration and pensions in respect of services rendered in connection with a business carried on by a Contracting State, or a local authority or a statutory body thereof.

ARTICLE 20
Students and Apprentices

1. A student, apprentice or business trainee who is present in a Contracting State solely for the purpose of his education or training and who is, or immediately before being so present was, a resident of the other Contracting State, shall be exempt from tax in the first-mentioned State on payments received from outside that State for the purposes of his maintenance, education or training.

2. In respect of grants or scholarships not covered by paragraph 1 a student or business apprentice referred to in paragraph 1 shall be entitled to the same exemptions, reliefs or reductions in respect of taxes available to residents of the first-mentioned Contracting State.

ARTICLE 21
Other Income

1. Items of income of a resident of a Contracting State wherever arising not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.

2. The provisions of paragraph 1 shall not apply to income other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.

3. Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing Articles of this Agreement and arising in the other Contracting State may be taxed in that other State.

ARTICLE 22
Elimination of Double Taxation

1. Double taxation shall be eliminated as follows:

(a) In the case of Botswana, subject to the provisions of the laws of Botswana regarding the allowance of a credit against Botswana tax of tax payable under the laws of a country outside Botswana, Zimbabwean tax payable under the laws of Zimbabwe and in accordance with this Agreement, whether directly or by deduction, on profits or income liable to tax in Zimbabwe shall be allowed as a credit against any Botswana tax payable in respect of the same profits or income by reference to which the Zimbabwean tax is computed. However, the amount of such credit shall not exceed the amount of the Botswana tax payable on that income in accordance with the laws of Botswana.

(b) In the case of Zimbabwe, subject to the provisions of the laws of Zimbabwe regarding the allowance as a credit against Zimbabwean tax of the tax payable in a country outside Zimbabwe (which shall not affect the general principle hereof) Botswana tax payable, whether directly or by deduction, in respect of taxable income or chargeable gains from sources within Botswana shall be allowed as a credit against any Zimbabwean tax computed by reference to the same taxable income or chargeable gains by reference to which the Botswana tax is computed.

2. The terms “Botswana tax payable” and “Zimbabwean tax payable” referred to in paragraphs 1 and 2 respectively, shall be deemed to include the tax which would have been payable but for any legal provisions concerning reduction in the rates of tax or exemption from tax for the promotion of economic development.

ARTICLE 23
Non-discrimination

3. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, paragraph 6 of Article 12 or paragraph 6 of Article 13 apply, interest, royalties, technical fees and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State.

4. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected.

5. Nothing contained in this Article shall be construed as obliging either Contracting State to grant to individuals not resident in that State any of the personal allowances, reliefs and reductions for tax purposes which are granted to individuals so resident.

6. The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description.

ARTICLE 24
Mutual Agreement Procedure

1. Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the domestic laws of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 23, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Agreement.

2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.

3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Agreement. They may also consult together for the elimination of double taxation in cases not provided for in the Agreement.

4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs.

ARTICLE 25
Exchange of Information

1. The competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions of this Agreement or of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or local authorities, insofar as the taxation thereunder is not contrary to this Agreement. The exchange of information is not restricted by Articles 1 and 2. Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to the taxes referred to in the first sentence. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.

2. In no case shall the provisions of paragraph 1 be construed so as to impose on a Contracting State the obligation:

(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

(b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;

(c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (order public).

3. The competent authorities should, through consultation, develop appropriate conditions, methods and techniques concerning the matters respecting which such exchange of information should be made, as well as exchange information regarding tax avoidance where appropriate.

ARTICLE 26
Assistance in Recovery

1. The Contracting States shall, to the extent permitted by their respective domestic law, lend assistance to each other in order to recover the taxes referred to in Article 2 as well as interest and penalties with regard to such taxes, provided that reasonable steps to recover such taxes have been taken by the Contracting State requesting such assistance.

2. Claims, which are the subject of requests for assistance, shall not have priority over taxes owing in the Contracting State rendering assistance and the provisions of paragraph 1 of Article 25 shall also apply to any information which, by virtue of this Article, is supplied to the competent authority of a Contracting State.

3. It is understood that unless otherwise agreed by the competent authorities of both Contracting States:

(a) ordinary costs incurred by a Contracting State in providing assistance shall be borne by that State;

(b) extraordinary costs incurred by a Contracting State in providing assistance shall be borne by the other State and shall be payable regardless of the amount collected on its behalf by the first mentioned State.

4. As soon as a Contracting State anticipates that extraordinary costs may be incurred, it shall so advise the other Contracting State and indicate the estimated amount of such costs.

ARTICLE 27
Diplomatic Agents and Consular Officers

Nothing in this Agreement shall affect the fiscal privileges of diplomatic agents or consular officers under the general rules of international law or under the provisions of special agreements.

ARTICLE 28
Entry into Force

1. Each of the Contracting States shall notify to the other the completion of the procedures required by its law for the bringing into force of this Agreement. The Agreement shall enter into force on the date of receipt of the later of these notifications.

2. The provisions of this Agreement shall apply with regards to taxes covered by this Agreement on or after the first day of the second month following the date upon which the Agreement enters into force.

ARTICLE 29
Termination

1. This Agreement shall remain in force until termination by one of the Contracting States. Either Contracting State may terminate the Agreement through the diplomatic channel, by giving notice of termination on or before June 30th in any calendar year beginning after the expiration of five years from the date of entry into force of the Agreement.

2. In such case the Agreement shall cease to apply after the end of the calendar year in which notification is given.

IN WITNESS WHEREOF the undersigned, being duly authorised thereto by their respective Governments, have signed this Agreement.

Done at GABORONE this 16th day of June 2004 in duplicate in the English language.

Hon. Baledzi Gaolathe
FOR THE GOVERNMENT OF THE REPUBLIC OF BOTSWANA

Hon. Dr H. M. Murerwa
FOR THE GOVERNMENT OF THE REPUBLIC OF ZIMBABWE

BOTSWANA-LESOTHO DOUBLE TAXATION AVOIDANCE AGREEMENT ORDER

(section 53(1))

(Published on 29th March, 2019)

ARRANGEMENT OF PARAGRAPHS

PARAGRAPH

1. Citation

2. Approval and effective date of commencement

S.I. 30, 2019.

1. Citation

This Order may be cited as Botswana-Lesotho Double Taxation Avoidance Agreement Order.

2. Approval and effective date of commencement

The Double Taxation Avoidance Agreement set out in the Schedule hereto between the Government of the Republic of Botswana and the Government of the Kingdom of Lesotho is presented to the National Assembly for approval and shall, upon approval take effect from the date specified in the Agreement.

SCHEDULE

Preamble

The Government of the Republic of Botswana and the Government of the Kingdom of Lesotho desiring to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital,

Have agreed as follows:

Article 1
Persons Covered

This Agreement shall apply to persons who are residents of one or both of the Contracting States.

Article 2
Taxes Covered

1. This Agreement shall apply to taxes on income imposed on behalf of a Contracting State or of its political subdivisions, irrespective of the manner in which they are levied.

2. There shall be regarded as taxes on income all taxes imposed on total income, on total capital, or on elements of income or of capital, including taxes on gains from the alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises as well as taxes on capital appreciation.

3. The existing taxes to which the Agreement shall apply are:

(a) In Botswana:

(i) the income tax; and

(ii) the capital gains tax;

(hereinafter referred to as “Botswana tax”); and

(b) In Lesotho, the taxes imposed under the Income Tax Act, 1993 (Act No. 9 of 1993), as at the date of signature of this Agreement;

(hereinafter referred to as “Lesotho tax”).

5. This Agreement shall also apply to any identical or substantially similar taxes that are imposed by either Contracting State after the date of signature of the Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes that have been made in their respective taxation laws.

Article 3
General Definitions

1. For the purposes of this Agreement, unless the context otherwise requires:

(a) the term “Botswana” means the Republic of Botswana;

(b) the term “Lesotho” means the sovereign Kingdom of Lesotho comprising all the areas that immediately before 4 October 1966 were comprised in the former colony of Basutoland together with such other areas that may, in accordance with international law, be declared by an Act of the Lesotho Parliament to form part of Lesotho;

(d) the term “business” includes the performance of professional services and of other activities of an independent character;

(e) the term “company” means any body corporate or any entity that is treated as a body corporate for tax purposes;

(f) the term “competent authority” means:

(i) in Botswana, the Minister of Finance and Development Planning, represented by the Commissioner General of the Botswana Unified Revenue Service; and

(ii) in Lesotho, the Commissioner General of the Lesotho Revenue Authority or an authorised representative of the Commissioner General;

(g) the term “enterprise” applies to the carrying on of any business;

(h) the terms “enterprise of a Contracting State” and “enterprise of the other Contracting State” mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;

(i) the term “international traffic” means any transport by a ship, aircraft or rail or road transport vehicle operated by an enterprise of a Contracting State, except when the ship, aircraft or rail or road transport vehicle is operated solely between places in the other Contracting State;

(j) the term “national” means:

(i) any individual possessing the nationality or citizenship of a Contracting State; and

(ii) any legal person or association deriving its status as such from the laws in force in a Contracting State; and

(k) the term “person” includes an individual, a company, a trust, an estate and any other body of persons that is treated as an entity for tax purposes.

2. As regards the application of the provisions of this Agreement at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which the Agreement applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.

Article 4
Resident

1. For the purposes of this Agreement, the term “resident of a Contracting State” means any person who, under the laws of that State, is liable to tax therein by reason of that person’s domicile, residence, place of management or any other criterion of a similar nature, and, where applicable, includes that State and any political subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State.

2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then that individual’s status shall be determined as follows:

(a) the individual shall be deemed to be a resident solely of the State in which a permanent home is available to the individual; if a permanent home is available to the individual in both States, the individual shall be deemed to be a resident solely of the State with which the individual’s personal and economic relations are closer (centre of vital interests);

(b) if the State in which the person has centre of vital interest cannot be determined, or the person does not have a permanent home available in both States, the individual shall be deemed to be a resident solely of the State in which the individual has an habitual abode;

(c) if the individual has an habitual abode in both States or in neither of them, the individual shall be deemed to be a resident solely of the State of which the individual is a national;

(d) if the individual is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.

3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, the competent authorities of the Contracting States shall endeavour to determine by mutual agreement the Contracting State of which that person shall be deemed to be a resident for the purposes of this Agreement having regard to its place of effective management, the place where it is incorporated or otherwise constituted and any other relevant factors. In the absence of a mutual agreement by the competent authorities of the Contracting States, the person shall not be considered a resident of either Contracting State for the purposes of claiming any benefits provided by the Agreement, except those provided by Article 28 and Article 29.

Article 5
Permanent Establishment

1. For the purposes of this Agreement, the term “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

2. The term “permanent establishment” includes especially:

(a) a place of management;

(b) a branch;

(d) a factory;

(e) a workshop;

(f) a mine, an oil or gas well, a quarry or any other place of extraction or exploitation of natural resources; and

(g) an installation or structure used for the exploration of natural resources provided that the installation or structure continues for a period of not less than 183 days.

3. The term “permanent establishment” likewise encompasses:

(a) a building site, a construction, assembly or installation project or any supervisory activity in connection with such site, project or activity but only where such site, project or activity continues for a period of not less than 183 days;

(b) the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by an enterprise for such purpose, but only where activities of that nature continue (for the same or a connected project) within the Contracting State for a period or periods aggregating not less than 183 days in any twelve-month period commencing or ending in the fiscal year concerned;

(c) the performance of professional services or other activities of an independent character by an individual, but only where those services or activities continue within a Contracting State for a period or periods aggregating not less than 183 days in any twelve-month period commencing or ending in the fiscal year concerned.

4. Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not to include:

(a) the use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise;

(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display;

(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or of collecting information, for the enterprise;

(e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character; and

(f) the maintenance of a fixed place of business solely for any combination of activities mentioned in subparagraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.

(a) has, and habitually exercises in that State an authority to conclude contracts in the name of the enterprise; or

unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph.

6. An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business.

Article 6
Income from Immovable Property

2. The term “immovable property” shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources. Ships, boats, aircraft and rail or road transport vehicles shall not be regarded as immovable property.

3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting or use in any other form of immovable property.

4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise.

Article 7
Business Profits

1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as are attributable to that permanent establishment.

3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the business of the permanent establishment, including executive and general administrative expenses so incurred, whether in the Contracting State in which the permanent establishment is situated or elsewhere. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or, except in the case of a banking enterprise by way of interest on moneys lent to the permanent establishment. Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged (otherwise than towards reimbursement of actual expenses), by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission for specific services performed or for management, or, except in the case of a banking enterprise by way of interest on moneys lent to the head office of the enterprise or any of its other offices.

4. In so far as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary. The method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.

5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

6. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.

7. Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.

Article 8
International Transport

1. Profits of an enterprise of a Contracting State from the operation of ships, aircraft or rail or road transport vehicles in international traffic shall be taxable only in that State.

2. For the purposes of this Article, profits from the operation of ships, aircraft or rail or road transport vehicles in international traffic shall include:

(a) profits derived from the rental on a bare boat basis of ships or aircraft used in international traffic,

(b) profits derived from the rental of rail or road transport vehicles,

if such profits are incidental to the profits to which the provisions of paragraph 1 apply.

3. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.

Article 9
Associated Enterprises

1. Where:

(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or

(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,

2. Where a Contracting State includes in the profits of an enterprise of that State – and taxes accordingly – profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State may make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall if necessary consult each other.

3. Where paragraph 2 requires a Contracting State to make an appropriate adjustment to reflect the inclusion and taxation of profits by the other Contracting State falling within paragraph 1, the State making the appropriate adjustment shall not be required to take into account any penalty, whether tax or non-tax, imposed by that other Contracting State.

Article 10
Dividends

1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.

(a) 10 per cent of the gross amount of the dividends if the beneficial owner is a company which holds at least 25 per cent of the capital of the company paying dividends; or

(b) 15 per cent of the gross amount of the dividends in all other cases.

This paragraph shall not affect taxation of the company in respect of the profits out of which the dividends were distributed.

3. The term “dividends” as used in this Article means income from shares or other rights participating in profits (not being debt-claims), as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the Contracting State of which the company making the distribution is a resident.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident through a permanent establishment situated therein and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.

5. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except in so far as such dividends are paid to a resident of that other State or in so far as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment situated in that other State, nor subject the company’s undistributed profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.

6. Nothing in this Agreement shall be construed as preventing a Contracting State from imposing an income tax (referred to as a “branch profits tax”) on the repatriated income of a company which is a resident of the other Contracting State in addition to the income tax imposed on the chargeable income of the company; provided that any branch profits tax so imposed shall not exceed 10 per cent of the amount of the repatriated income.

7. No relief shall be available under the Article if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the shares or rights in respect of which the dividend is paid to take advantage of this Article by means of that creation or assignment.

Article 11
Interest

1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, such interest may also be taxed in the Contracting State in which it arises, and according to the laws of that State, but if the recipient is the beneficial owner of the interest and is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest.

3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State shall be exempt from tax in that State if it is derived by the Government of the other Contracting State or a political subdivision or a local authority thereof, or any agency wholly owned and controlled by that Government or subdivision or authority.

5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises through a permanent establishment situated therein and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.

6. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the interest, whether that person is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment, then such interest shall be deemed to arise in the State in which the permanent establishment is situated.

7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

8. No relief shall be available under the Article if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the shares or rights in respect of which the interest is paid to take advantage of this Article by means of that creation or assignment.

Article 12
Royalties

1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, such royalties may also be taxed in the Contracting State in which they arise, and according to the laws of that State, but if the recipient is the beneficial owner of the royalties and is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the royalties.

3. The term “royalties” as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work (including cinematograph films and films, tapes or discs for radio or television broadcasting), any patent, trade mark, design or model, plan, secret formula or process, or for the use of or the right to use industrial, commercial or scientific equipment or for information concerning industrial, commercial or scientific experience.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise through a permanent establishment situated therein and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.

5. Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the royalties, whether that person is a resident of a Contracting State or not, has in a Contracting State a permanent establishment with which the right or property in respect of which the royalties are paid is effectively connected, and such royalties are borne by such permanent establishment, then such royalties shall be deemed to arise in the State in which the permanent establishment is situated.

7. No relief shall be available under the Article if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the shares or rights in respect of which the royalties is paid to take advantage of this Article by means of that creation or assignment.

Article 13
Technical Fees

1. Technical fees arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, such technical fees may also be taxed in the Contracting State in which they arise, and according to the laws of that State, but if the recipient is the beneficial owner of the technical fees and is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the technical fees.

3. The term “technical fees” as used in this Article means payments of any kind to any person, other than to an employee of the person making the payments, in consideration for any service of an administrative, technical, managerial or consultancy nature.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the technical fees, being a resident of a Contracting State, carries on business in the other Contracting State in which the technical fees arise, through a permanent establishment situated therein and the technical fees are effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.

5. Technical fees shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the technical fees, whether that person is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the obligation to pay the technical fees was incurred, and such technical fees are borne by the permanent establishment, then such technical fees shall be deemed to arise in the State in which the permanent establishment is situated.

6. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the technical fees paid exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

Article 14
Capital Gains

1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State, may be taxed in that other State.

2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise), may be taxed in that other State.

3. Gains of an enterprise of a Contracting State from the alienation of ships, aircraft or rail or road transport vehicles operated in international traffic or movable property pertaining to the operation of such ships, aircraft or rail or road transport vehicles, shall be taxable only in that State.

4. Gains from the alienation of shares of the capital stock of a company the property of which consists directly or indirectly principally of immovable property situated in a Contracting State may be taxed in that State.

5. Gains from the alienation of any property other than that referred to in the preceding paragraphs, shall be taxable only in the Contracting State of which the alienator is a resident.

6. Notwithstanding the provisions of paragraph 5, gains from the alienation of shares or other corporate rights of a company which is a resident of one of the Contracting States derived by an individual who was a resident of that State and who after acquiring such shares or rights has become a resident of the other Contracting State, may be taxed in the first-mentioned State if the alienation of the shares or other corporate rights occur at any time during the ten years next following the date on which the individual has ceased to be a resident of that first-mentioned State.

Article 15
Income from Employment

(a) the recipient is present in the other State for a period or periods aggregating not less than 183 days in any twelve-month period commencing or ending in the fiscal year concerned, and

(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and

3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship, aircraft or rail or road transport vehicle operated in international traffic by an enterprise of a Contracting State may be taxed in that State.

Article 16
Directors’ Fees

Directors’ fees and similar payments derived by a resident of a Contracting State in that person’s capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.

Article 17
Entertainers and Sportspersons

1. Notwithstanding the provisions of Articles 7 and 15, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from that person’s personal activities as such exercised in the other Contracting State, may be taxed in that other State.

2. Where income in respect of personal activities exercised by an entertainer or a sportsperson in that person’s capacity as such accrues not to the entertainer or sportsperson but to another person, that income may, notwithstanding the provisions of Articles 7 and 15 be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised.

3. Income derived by a resident of a Contracting State from the activities exercised in the other Contracting State as envisaged in paragraph 1 shall be exempt from tax in that other State if the visit to that State is supported wholly or mainly by public funds of the first mentioned State, the political subdivision or a local authority thereof, and such proceeds are for the benefit of the public.

Article 18
Pensions and Annuities

1. Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration, and annuities, arising in a Contracting State and paid to a resident of the other Contracting State, may be taxed in the first-mentioned State.

2. The term “annuity” means a stated sum payable periodically at stated times during life or during a specified or ascertainable period of time under an obligation to make the payments in return for adequate and full consideration in money or money’s worth.

3. Notwithstanding the provisions of paragraph 1, pensions paid and other payments made under a public scheme which is part of the social security system of a Contracting State, a political subdivision or a local authority thereof shall be taxable only in that state.

Article 19
Government Service

1. (a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.

(b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who:

(i) is a national of that State; or

(ii) did not become a resident of that State solely for the purpose of rendering the services.

2. (a) Any pension paid by, or out of funds created by, a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.

(b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.

3. The provisions of Articles 15, 16, 17 and 18 shall apply to salaries, wages and other similar remuneration, and to pensions, in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or a local authority thereof.

Article 20
Students and Business Apprentices

A student or business apprentice who is present in a Contracting State solely for the purpose of the student or business apprentice’s education or training and who is, or immediately before being so present was, a resident of the other Contracting State, shall be exempt from tax in the first-mentioned State on payments received from outside that first-mentioned State for the purposes of the student or business apprentice’s maintenance, education or training.

Article 21
Professors, Teachers and Research Scholars

1. Notwithstanding the provisions of Article 15, a professor, teacher or research scholar who makes a temporary visit to one of the Contracting States for a period not exceeding two years from the date of first arrival in that State, solely for the purpose of teaching or carrying out research at a university, college, school or other educational institution in that State and who is, or immediately before such visit was, a resident of the other Contracting State shall, in respect of remuneration for such teaching or research, be exempt from tax in the first-mentioned State, provided that such remuneration is derived by the professor, teacher or research scholar from outside that State or such remuneration is not borne by a university, college, school or other educational institution in the first-mentioned state.

2. The provisions of this Article shall apply to income from research if such research is undertaken in the public interest and not primarily for the private benefit of a specific person or persons.

3. For the purpose of this Article, an individual shall be deemed to be a resident of a Contracting State if he is resident in that State in the fiscal year in which he visits the other Contracting State or in the immediately preceding fiscal year.

Article 22
Other Income

1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.

2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein and the right or property in respect of which the income is paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.

3. Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing Articles of the Agreement and arising in the other Contracting State may also be taxed in that other State.

Article 23
Capital

1. Capital represented by immovable property referred to in Article 6, owned by a resident of a Contracting State and situated in the other Contracting State, may be taxed in that other Contracting State.

2. Capital represented by movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State may be taxed in that other State.

3. Capital represented by ships, aircraft or rail or road transport vehicles operated in international traffic and by movable property pertaining to the operation of such ships, aircraft or rail or road transport vehicles shall be taxable only in the Contracting State in which the enterprise is resident, having regard to such factors as its place of effective management, the place where it is incorporated or otherwise constituted and any other relevant factors.

4. All other elements of capital of a resident of a Contracting State shall be taxable only in that State.

Article 24
Members of Diplomatic Missions and Consular Posts

Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements.

Article 25
Elimination of Double Taxation

Double taxation shall be eliminated as follows:

1. In Botswana, subject to the provisions of the law of Botswana regarding the allowance of a credit against Botswana tax of tax paid under the laws of a country outside Botswana, Lesotho tax paid under the laws of Lesotho and in accordance with this Agreement, whether directly or by deduction, on profits or income liable to tax in Lesotho shall be allowed as a credit against any Botswana tax payable in respect of the same profits or income by reference to which the Lesotho tax is computed. However, the amount of such credit shall not exceed the amount of the Botswana tax payable on that income in accordance with the laws of Botswana.

2. In Lesotho, subject to the provisions of the law of Lesotho, from time to time in force, which relates to the allowance of credit against Lesotho tax of tax paid in a country outside Lesotho (which shall not affect the general principle of this Article), Botswana tax paid under the law of Botswana and in accordance with this Agreement, whether directly or by deduction, in respect of income derived by a person who is a resident of Lesotho from sources in Botswana shall be allowed as a credit against Lesotho tax payable in respect of that income.

3. For the purposes of paragraphs 1 and 2 of this Article, the terms “Botswana tax payable” and “Lesotho tax payable” shall be deemed to include the amount of tax which would have been paid in Botswana or in Lesotho as the case may be, but for any exemption or reduction granted in accordance with laws designed to promote economic development in that Contracting State.

4. A grant given by a Contracting State or a political subdivision or a local authority thereof to a resident of the other Contracting State in accordance with laws which establish schemes for the promotion of economic development, such schemes having been mutually agreed by the competent authorities of the Contracting States as qualifying for the purposes of this paragraph, shall be taxable only in the first-mentioned State.

Article 26
Non-discrimination

1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.

3. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected.

4. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, paragraph 6 of Article 12 or paragraph 6 of Article 13 apply, interest, royalties, technical fees and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State.

5. The provisions of this Article shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.

6. The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description.

Article 27
Mutual Agreement Procedure

1. Where a person considers that the actions of one or both of the Contracting States result or will result for that person in taxation not in accordance with the provisions of this Agreement, that person may, irrespective of the remedies provided by the domestic laws of those States, present a case to the competent authority of the Contracting State of which the person is a resident or, if the case comes under paragraphs 1 and 2 of Article 24, to that of the Contracting State of which the person is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Agreement.

4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs.

Article 28
Exchange of Information

1. The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions in so far as the taxation thereunder is not contrary to the Agreement. The exchange of information is not restricted by Articles 1 and 2.

2. Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred to in paragraph 1, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. Notwithstanding the foregoing, information received by a Contracting State may be used for other purposes when such information may be used for such other purposes under the laws of both State and the competent authority of the supplying State authorises such use.

3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:

(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

(b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;

(c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information the disclosure of which would be contrary to public policy (ordre public).

4. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.

5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.

6. The competent authorities should, through consultation, develop the appropriate condition, methods and techniques concerning the matters respecting which such exchange of information should be made, as well as exchange of information regarding tax avoidance where appropriate.

Article 29
Assistance in Recovery

1. The Contracting States shall lend assistance to each other in the collection of revenue claims. This assistance is not restricted by Articles 1 and 2. The competent authorities of the Contracting States may by mutual agreement settle the mode of application of this article.

2. The term “revenue claim” as used in this Article means an amount owed in respect of taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to this Agreement or any other instrument to which the Contracting States are parties, as well as interest, administrative penalties and costs of collection or conservancy related to such amount.

3. When a revenue claim of a Contracting State is enforceable under the laws of that state and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of collection by the competent authority of the other Contracting State. That revenue claim shall be collected by that other State in accordance with the provisions of its laws applicable to the enforcement and collection of its own taxes as if the revenue claim were a revenue claim of that other State.

4. When a revenue claim of a Contracting State is a claim in respect of which that State may, under its law, take measures of conservancy with a view to ensure its collection, that revenue claim shall, at the request of the competent authority of that State, be accepted for purposes of taking measures of conservancy by the competent authority of the other Contracting State. That other State shall take measures of conservancy in respect of that revenue claim in accordance with the provisions of its laws as if the revenue claim were a revenue claim of that other State even if, at the time when such measures are applied, the revenue claim is not enforceable in the first-mentioned State or is owed by a person who has a right to prevent its collection.

5. Notwithstanding the provisions of paragraphs 3 and 4, a revenue claim accepted by a Contracting State for purposes of paragraph 3 or 4 shall not, in that State, be subject to the time limits or accorded any priority applicable to a revenue claim under the laws of that State by reason of its nature as such. In addition, a revenue claim accepted by a Contracting State for the purposes of paragraph 3 and 4 shall not, in that State, have any priority applicable to that revenue claim under the laws of the other Contracting State.

6. Proceedings with respect to the existence, validity or the amount of a revenue claim of a Contracting State shall not be brought before the courts or administrative bodies of the other Contracting State.

7. Where, at any time after a request has been made by a Contracting State under paragraph 3 or 4 and before the other Contracting State has collected and remitted the relevant revenue claim to the first-mentioned State, the relevant claim ceases to be:

(a) in the case of a request under paragraph 3, a revenue claim of the first-mentioned State that is enforceable under the laws of that State and is owed by a person who, at that time, cannot, under the laws of that State, prevent its collection, or

(b) in the case of a request under paragraph 4, a revenue claim of the first-mentioned State in respect of which that State may, under its laws, take measures of conservancy with a view to ensure its collection;

the competent authority of the first-mentioned State shall promptly notify the competent authority of the other State of that fact and, at the option of the other State, the first-mentioned State shall either suspend or withdraw its request.

8. In no case shall the provisions of this Article be construed so as to impose on a Contracting State the obligation:

(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

(b) to carry out measures which would be contrary to public policy (ordre public);

(c) to provide assistance if the other Contracting State has not pursued all reasonable measures of collection or conservancy, as the case may be, available under its laws or administrative practice;

(d) to provide assistance in those cases where the administrative burden of that State is clearly disproportionate to the benefit to be derived by the other Contracting State.

Article 30
Entry into Force

2. The provisions of the Agreement shall apply:

(a) with regard to taxes withheld at source, in respect of amounts paid or credited on or after the thirtieth day following the date upon which the Agreement enters into force; and

(b) with regard to other taxes, in respect of years of assessment beginning on or after the date upon which this Agreement enters into force.

Article 31
Termination

1. This Agreement shall remain in force indefinitely but either of the Contracting States may terminate the Agreement through diplomatic channels, by giving to the other Contracting State written notice of termination of at least six months, starting five years after the year in which the Agreement entered into force.

2. In such event the Agreement shall cease to apply:

(a) with regard to taxes withheld at source, in respect of amounts paid or credited after the end of the calendar year in which such notice is given; and

(b) with regard to other taxes, in respect of years of assessment beginning after the end of the calendar year in which such notice is given.

IN WITNESS WHEREOF the undersigned, being duly authorised thereto, have signed this Agreement.

Done at Gaborone in duplicate, this 30th day of October, 2017.

HON. O. K. MATAMBO,
for the Government of the
Republic of Botswana.

HON. DR. MOEKETSI MAJORO,
for the Government of the
Kingdom of Lesotho.

BOTSWANA-GUERNSEY TAXATION INFORMATION AGREEMENT ORDER

(section 53(1))

(28th March, 2014)

ARRANGEMENT OF PARAGRAPHS

PARAGRAPH

1. Citation

2. Approval and effective date of commencement

SCHEDULE

University of Botswana.

S.I. 24, 2014.

WHEREAS in the exercise of the powers conferred on him by section 53(1) of the Income Tax Act, the Minister of Finance and Development Planning has, on behalf of the Government, entered into an Agreement with the Government of the States of Guernsey for the exchange of information relating to taxation matters;

NOW THEREFORE the following Order is hereby made—

1. Citation

This Order may be cited as the Botswana-Guernsey Taxation Information Agreement Order.

2. Approval and effective date of commencement

The Taxation Information Exchange Agreement set out in the Schedule hereto between the Government of the Republic of Botswana and the Government of the States of Guernsey is presented to the National Assembly for approval and shall, upon approval, take effect from the date specified in the Agreement.

SCHEDULE

WHEREAS the Government of the Republic of Botswana and the States of Guernsey wish to enhance and facilitate the terms and conditions governing the exchange of information relating to taxes and thereby protect the tax base of the Parties;

WHEREAS it is acknowledged that the States of Guernsey has the right, under the terms of the Entrustment from the United Kingdom of Great Britain and Northern Ireland, to negotiate, conclude, perform and subject to the terms of this Agreement terminate a tax information exchange agreement with the Republic of Botswana.;

WHEREAS the States of Guernsey on the 21st February 2002 entered into a political commitment to the OECD’s principles of effective exchange of information;

NOW, therefore, the Parties have agreed to conclude the following Agreement which contains obligations on the part of the Parties only:

ARTICLE 1
Scope of the Agreement

The Parties shall provide assistance through exchange of information that is foreseeably relevant to the administration and enforcement of the domestic laws of the Parties concerning the taxes covered by this Agreement, including information that is foreseeably relevant to the determination, assessment, enforcement or collection of tax with respect to persons subject to such taxes, or to the investigation of tax matters or the prosecution of criminal tax matters in relation to such persons. A requested Party is not obliged to provide information which is neither held by its authorities nor in the possession of or obtainable by persons who are within its territorial jurisdiction. The rights and safeguards secured to persons by the laws or administrative practice of the requested Party remain applicable. The requested Party shall use its best endeavours to ensure that the effective exchange of information is not unduly prevented or delayed.

ARTICLE 2
Taxes Covered

1. This Agreement shall apply to the following taxes imposed by the Parties:

(a) in the case of Botswana:

(i) Income tax including taxation of capital gains;

(ii) Value Added Tax;

(b) in the case of Guernsey:

(i) income tax;

(ii) dwellings profits tax.

2. This Agreement shall apply also to any identical or substantially similar taxes imposed after the date of signature of the Agreement in addition to or in place of the existing taxes. The competent authority of each Party shall notify the other of substantial changes in laws which may affect the obligations of that Party pursuant to this Agreement.

ARTICLE 3
Definitions

1. In this Agreement:

(a) “Botswana” means the Republic of Botswana;

(b) “Guernsey” means the States of Guernsey, and when used in a geographical sense means Guernsey, Alderney and Herm, including the territorial sea adjacent to those islands, in accordance with international law;

(d) “competent authority” means:

(i) in the case of Botswana, the Minister of Finance and Development Planning as represented by the Commissioner General of the Botswana Unified Revenue Service or his authorised representative;

(ii) in the case of Guernsey, the Director of Income Tax or his delegate;

(e) “criminal laws” means all criminal laws designated as such under domestic law, irrespective of whether such are contained in the tax laws, the criminal code or other statutes;

(f) “criminal tax matters” means tax matters involving intentional conduct whether before or after the entry into force of this Agreement which is liable to prosecution under the criminal laws of the requesting Party;

(g) “information” means any fact, statement, document or record in whatever form;

(h) “information gathering measures” means laws and administrative or judicial procedures enabling a requested Party to obtain and provide the information requested;

(i) “Parties” means:

(i) Botswana; and

(ii) Guernsey;

(j) “person” means an individual, a company or any other body or group of persons;

(k) “principal class of shares” means the class or classes of shares representing a majority of the voting power and value of the company;

(l) “public collective investment scheme” means any scheme or fund, in which the purchase, sale or redemption of shares or other interests is not implicitly or explicitly restricted to a limited group of investors;

(m) “publicly traded company” means any company whose principal class of shares is listed on a recognised stock exchange provided its listed shares can be readily purchased or sold by the public. Shares can be purchased or sold “by the public” if the purchase or sale of shares is not implicitly or explicitly restricted to a limited group of investors;

(n) “recognised stock exchange” means any stock exchange agreed upon by the competent authorities of the Parties;

(o) “requested Party” means the Party to this Agreement which is requested to provide or has provided information or assistance in response to a request;

(p) “requesting Party” means the Party to this Agreement submitting a request for or having received information or assistance from the requested Party;

(q) “tax” means any tax covered by this Agreement.

2. As regards the application of this Agreement at any time by a Party, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the laws of that Party, any meaning under the applicable tax laws of that Party prevailing over a meaning given to the term under other laws of that Party.

ARTICLE 4
Exchange of lnformation Upon Request

1. The competent authority of the requested Party shall provide upon request by the requesting Party information for the purposes referred to in Article 1. Such information shall be exchanged without regard to whether the requested Party needs such information for its own tax purposes or the conduct being investigated would constitute a crime under the laws of the requested Party if it had occurred in the territory of the requested Party. The competent authority of the requesting Party shall only make a request for information pursuant to this Article when it is unable to obtain the requested information by other means within its own territory, except where recourse to such means would give rise to disproportionate difficulty.

2. If the information in the possession of the competent authority of the requested Party is not sufficient to enable it to comply with the request for information, the requested Party shall use at its own discretion all relevant information gathering measures necessary to provide the requesting Party with the information requested, notwithstanding that the requested Party may not need such information for its own tax purposes.

3. If specifically requested by the competent authority of the requesting Party, the competent authority of the requested Party shall provide information under this Article, to the extent allowable under its domestic laws, in the form of depositions of witnesses and authenticated copies of original records.

4. Each Party shall ensure that it has the authority, subject to the terms of Article 1, to obtain and provide, through its competent authority and upon request:

(a) information held by banks, other financial institutions, and any person, including nominees and trustees, acting in an agency or fiduciary capacity;

(b) (i) information regarding the beneficial ownership of companies, partnerships, foundations and other persons, including in the case of collective investment schemes, information on shares, units and other interests;

(ii) in the case of trusts, information on settlors, trustees, and beneficiaries,

provided that this Agreement does not create an obligation for a Party to obtain or provide ownership information with respect to publicly traded companies or public collective investment schemes, unless such information can be obtained without giving rise to disproportionate difficulties.

5. Any request for information shall be formulated with the greatest detail possible and shall specify in writing:

(a) the identity of the person under examination or investigation;

(b) the period for which the information is requested;

(d) the tax purpose for which the information is sought;

(e) the reasons for believing that the information requested is foreseeably relevant to tax administration and enforcement of the requesting Party, with respect to the person identified in subparagraph (a) of this paragraph;

(f) the grounds for believing that the information requested is present in the requested Party or is in the possession of or obtainable by a person within the jurisdiction of the requested Party;

(g) to the extent known, the name and address of any person believed to be in possession of or able to obtain the information requested;

(h) a statement that the request is in conformity with the laws and administrative practices of the requesting Party, that if the requested information was within the jurisdiction of the requesting Party then the competent authority of the requesting Party would be able to obtain the information under the laws of the requesting Party or in the normal course of administrative practice and that it is in conformity with this Agreement;

(i) a statement that the requesting Party has pursued all means available in its own territory to obtain the information, except where that would give rise to disproportionate difficulty.

6. The competent authority of the requested Party shall use its best endeavours to forward the requested information to the requesting Party with the least possible delay. To ensure a prompt response, the competent authority of the requested Party shall:

(a) confirm receipt of a request in writing to the competent authority of the requesting Party within 30 days of the receipt of the request and shall notify the competent authority of the requesting Party of deficiencies in the request, if any, within 60 days of the receipt of the request;

(b) if the competent authority of the requested Party has been unable to obtain and provide the information within 90 days of receipt of the complete request, including if it encounters obstacles in furnishing the information or it refuses to furnish the information, it shall immediately inform the competent authority of the requesting Party, explaining the reason for its inability, the nature of the obstacles or the reasons for its refusal.

ARTICLE 5
Tax Examinations Abroad

1. With reasonable notice, the requesting Party may request that the requested Party allow representatives of the competent authority of the requesting Party to enter the territory of the requested Party, to the extent permitted under its domestic laws, to interview individuals and examine records with the prior written consent of the individuals or other persons concerned. The competent authority of the requesting Party shall notify the competent authority of the requested Party of the time and place of the intended meeting with the individuals concerned.

2. At the request of the competent authority of the requesting Party, the competent authority of the requested Party may permit representatives of the competent authority of the requesting Party to attend a tax examination in the territory of the requested Party, to the extent permitted under its domestic laws.

3. If the request referred to in paragraph 2 is granted, the competent authority of the requested Party conducting the examination shall, as soon as possible, notify the competent authority of the requesting Party of the time and place of the examination, the authority or person authorised to carry out the examination and the procedures and conditions required by the requested Party for the conduct of the examination. All decisions regarding the conduct of the examination shall be made by the requested Party conducting the examination.

4. For the purposes of this Article the term “domestic laws” refers to laws or instruments governing entry into, or exit from, the territories of the Parties.

ARTICLE 6
Possibility of Declining a Request

1. The competent authority of the requested Party may decline to assist:

(a) where the request is not made in conformity with this Agreement;

(b) where the requesting Party has not pursued all means available in its own territory to obtain the information, except where recourse to such means would give rise to disproportionate difficulty; or

2. This Agreement shall not impose upon a requested Party any obligation to provide items subject to legal privilege or which would disclose any trade, business, industrial, commercial or professional secret or trade process, provided that information described in Article 4, paragraph 4, shall not by reason of that fact alone be treated as such a secret or trade process.

3. A request for information shall not be refused on the ground that the tax claim giving rise to the request is disputed.

4. The requested Party shall not be required to obtain and provide information which, if the requested information was within the jurisdiction of the requesting Party, the competent authority of the requesting Party would not be able to obtain under its laws or in the normal course of administrative practice.

5. The requested Party may decline a request for information if the information is requested by the requesting Party to administer or enforce a provision of the tax law of the requesting Party, or any requirement connected therewith, which discriminates against a national or citizen of the requested Party as compared with a national or citizen of the requesting Party in the same circumstances.

ARTICLE 7
Confidentiality

1. All information provided and received by the competent authorities of the Parties shall be kept confidential.

2. Such information shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the purposes specified in Article 1, and used by such persons or authorities only for such purposes, including the determination of any appeal. For these purposes, information may be disclosed in public court proceedings or in judicial decisions.

3. Such information shall not be used for any purpose other than for the purposes stated in Article 1 without the express written consent of the competent authority of the requested Party.

4. Information provided to a requesting Party under this Agreement shall not be disclosed to any other jurisdiction.

ARTICLE 8
Costs

Unless the competent authorities of the Parties otherwise agree, indirect costs incurred in providing assistance shall be borne by the requested Party, and direct costs incurred in providing assistance (including costs of engaging external advisors in connection with litigation or otherwise) shall be borne by the requesting Party. The respective competent authorities shall consult from time to time with regard to this Article, and in particular the competent authority of the requested Party shall consult with the competent authority of the requesting Party in advance if the costs of providing information with respect to a specific request are expected to be significant.

ARTICLE 9
Mutual Agreement Procedures

1. Where difficulties or doubts arise between the Parties regarding the implementation or interpretation of this Agreement, the competent authorities shall use their best efforts to resolve the matter by mutual agreement.

2. In addition to the agreements referred to in paragraph 1, the competent authorities of the Parties may mutually agree on the procedures to be used under Articles 4,5 and 8.

3. The Parties may also agree on other forms of dispute resolution should this become necessary.

ARTICLE 10
Mutual Assistance Procedure

If both competent authorities of the Parties consider it appropriate to do so they may agree to exchange technical know-how, develop new audit techniques, identify new areas of non-compliance, and jointly study non-compliance areas.

ARTICLE 11
No Prejudicial or Restrictive Measures

1. A Party shall not apply prejudicial or restrictive measures based on harmful tax practices to residents, nationals or citizens of the other Party so long as this Agreement is in force and effective.

2. For the purposes of this Article, “prejudicial or restrictive measures based on harmful tax practices” means measures applied by one Party to residents, nationals or citizens of either Party on the basis that the other Party does not engage in effective exchange of information and/or because it lacks transparency in the operation of its laws, regulations or administrative practices, or on the basis of no or nominal taxes and one of the preceding criteria.

3. Without limiting the generality of paragraph 2 the term “prejudicial or restrictive measures” includes the denial of a deduction, credit or exemption, the imposition of a tax, charge or levy, or special reporting requirements.

ARTICLE 12
Entry into Force

This Agreement shall enter into force 30 days after receipt of written notification by the latter Party of completion of all legal formalities required for entry into force. Upon the date of entry into force, it shall have effect:

(a) for criminal tax matters on that date; and

(b) for all other matters covered in Article 1 on that date, but only in respect of taxable periods beginning on or after that date or, where there is no taxable period, all charges to tax arising on or after that date.

ARTICLE 13
Termination

1. This Agreement shall remain in force until terminated by either Party.

2. Either Party may terminate this Agreement by giving notice of termination in writing. Such termination shall become effective on the first day of the month following the expiration of a period of 6 months after the date of receipt of notice of termination by the other Party. All requests received up to the effective date of termination will be dealt with in accordance with the terms of this Agreement.

3. If the Agreement is terminated the Parties shall remain bound by the provisions of Article 7 with respect to any information obtained under this Agreement.

IN WITNESS WHEREOF the undersigned, being duly authorised in that behalf by the respective Parties, have signed the Agreement.

DONE at London in duplicate this 10th day of May, 2013, in the English language.

H.E. ROY W. BLACKBEARD,
for the Government of the
Republic of Botswana.

DEPUTY GAVIN ST PIER,
for the States of Guernsey.

BOTSWANA-ISLE OF MAN TAXATION INFORMATION EXCHANGE AGREEMENT ORDER

(under section 53(1))

(25th July, 2014)

ARRANGEMENT OF PARAGRAPHS

PARAGRAPH

1. Citation

2. Approval and effective date of commencement

S.I. 92, 2014.

WHEREAS in the exercise of the powers conferred on him by section 53(1) of the Income Tax Act (Cap. 52:01), the Minister of Finance and Development Planning has, on behalf of the Government, entered into an Agreement with the Government of the Isle of Man for the exchange of information relating to taxation matters;

NOW THEREFORE the following Order is hereby made—

1. Citation

This Order may be cited as the Botswana-Isle of Man Taxation Information Exchange Agreement Order.

2. Approval and effective date of commencement

The Taxation Information Exchange Agreement set out in the effective Schedule hereto between the Government of the Republic of Botswana and the Government of the Isle of Man is presented to the National Assembly for approval and shall, upon approval, take effect from the date specified in the agreement.

SCHEDULE

WHEREAS the Government of the Republic of Botswana and the Government of the Isle of Man wish to agree to the terms and conditions governing the exchange of information relating to tax matters and thereby protect the tax base of the Parties;

WHEREAS it is acknowledged that the Government of the Isle of Man has the right, under the terms of the Entrustment from the United Kingdom of Great Britain and Northern Ireland, to negotiate, conclude, perform and subject to the terms of this Agreement terminate a tax information exchange agreement with the Republic of Botswana;

NOW, therefore, the Parties have agreed to conclude the following Agreement which contains obligations on the part of the Parties only:

ARTICLE 1
Scope of the Agreement

The Parties shall provide assistance through exchange of information that is foreseeably relevant to the administration and enforcement of the domestic laws of the Parties concerning the taxes covered by this Agreement, including information that is foreseeably relevant to the determination, assessment, enforcement, recovery or collection of tax with respect to persons subject to such taxes, or to the investigation of tax matters or the prosecution of criminal tax matters in relation to such persons. A requested Party is not obliged to provide information which is neither held by its authorities nor in the possession of or obtainable by persons who are within its territorial jurisdiction. The rights and safeguards secured to persons by the laws or administrative practice of the requested Party remain applicable. The requested Party shall use its best endeavours to ensure that the effective exchange of information is not unduly prevented or delayed.

ARTICLE 2
Taxes Covered

1. This Agreement shall apply to the following taxes imposed by the Parties:

(a) in the case of Botswana:

(i) Income tax including taxation of capital gains;

(ii) Value Added Tax; and

(b) in the case of the Isle of Man:

(i) the Income Tax;

(ii) the Value Added Tax.

ARTICLE 3
Definitions

1. In this Agreement:

(a) “Botswana” means the Republic of Botswana;

(b) “Isle of Man” means the island of the Isle of Man, including its territorial sea, in accordance with international law;

(c) “collective investment fund or scheme” means any pooled investment vehicle, irrespective of legal form. The term “public collective investment fund or scheme” means any collective investment fund or scheme provided the units, shares or other interests in the fund or scheme can be readily purchased, sold or redeemed by the public. Units, shares or other interests in the fund or scheme can be readily purchased, sold or redeemed “by the public” if the purchase, sale or redemption is not implicitly or explicitly restricted to a limited group of investors;

(d) “company” means any body corporate or any entity that is treated as a body corporate for tax purposes;

(e) “competent authority” means:

(i) in the case of Botswana, the Minister of Finance and Development Planning, represented by the Commissioner General of the Botswana Unified Revenue Service or his authorised representative; and

(ii) in the case of the Isle of Man, the Assessor of Income Tax or his or her delegate;

(f) “criminal laws” means all criminal laws designated as such under domestic law, irrespective of whether such are contained in the tax laws, the criminal code or other statutes;

(g) “criminal tax matters” means tax matters involving intentional conduct whether before or after the entry into force of this Agreement which is liable to prosecution under the criminal laws of the requesting Party;

(h) “information” means any fact, statement, document or record in whatever form;

(i) “information gathering measures” means laws and administrative or judicial procedures enabling a requested Party to obtain and provide the information requested;

(j) “Parties” means:

(i) Botswana; and

(ii) the Isle of Man;

(k) “person” includes an individual, a company or any other body or group of persons;

(l) “principal class of shares” means the class or classes of shares representing a majority of the voting power and value of the company;

(m) “publicly traded company” means any company whose principal class of shares is listed on a recognised stock exchange provided its listed shares can be readily purchased or sold by the public. Shares can be purchased or sold “by the public” if the purchase or sale of shares is not implicitly or explicitly restricted to a limited group of investors;

(n) “recognised stock exchange” means any stock exchange agreed upon, by the competent authorities of the Parties;

(o) “requested Party” means the Party to this Agreement which is requested to provide or has provided information or assistance in response to a request;

(p) “requesting Party” means the Party to this Agreement submitting a request for or having received information or assistance from the requested Party;

(q) “tax” means any tax covered by this Agreement.

ARTICLE 4
Exchange of Information Upon Request

2. If the information in the possession of the competent authority of the requested Party is not sufficient to enable it to comply with the request for information, the requested Party shall use at its own discretion, all relevant information gathering measures necessary to provide the requesting Party with the information requested, notwithstanding that the requested Party may not need such information for its own tax purposes.

4. Each Party shall ensure that it has the authority, subject to the terms of Article 1, to obtain and provide, through its competent authority and upon request:

(a) information held by banks, other financial institutions, and any person acting in an agency or fiduciary capacity including nominees and trustees;

(b) (i) information regarding the legal and beneficial ownership of companies, partnerships, foundations and other persons, and within the constraints of Article 1 any other persons in an ownership chain, including in the case of collective investment funds or schemes, information on shares, units and other interests;

(ii) in the case of trusts, information on settlors, trustees, protectors, enforcers and beneficiaries; and

(iii) in the case of foundations, information on founders, members of the foundation council and beneficiaries,

provided that this Agreement does not create an obligation for a Party to obtain or provide ownership information with respect to publicly traded companies or public collective investment funds or schemes, unless such information can be obtained without giving rise to disproportionate difficulties.

5. The competent authority of the requesting Party shall provide the following information to the competent authority of the requested Party when making a request for information under this Agreement to demonstrate the foreseeable relevance of the information to the request:

(a) the identity of the person under examination or investigation;

(b) the period for which the information is requested;

(d) the tax purpose for which the information is sought;

(f) the grounds for believing that the information requested is present in the requested Party or is in the possession of or obtainable by a person within the jurisdiction of the requested Party;

(g) to the extent known, the name and address of any person believed to be in possession of or able to obtain the information requested;

(i) a statement that the requesting Party has pursued all means available in its own territory to obtain the information, except where that would give rise to disproportionate difficulty.

(a) confirm receipt of a request in writing to the competent authority of the requesting Party within 30 days of receipt of the request and shall notify the competent authority of the requesting Party of deficiencies in the request, if any, within 60 days of receipt of the request;

ARTICLE 5
Tax Examinations Aboard

4. For purposes of this Article, the term “domestic laws” refers to laws or instruments governing entry into, or exit from, the territories of the Parties.

ARTICLE 6
Possibility of Declining a Request

1. The competent authority of the requested Party may decline to assist:

(a) where the request is not made in conformity with this Agreement;

2. This Agreement shall not impose upon a requested Party any obligation to provide items subject to legal privilege or which would disclose any trade, business, industrial, commercial or professional secret or trade process, provided that information described in paragraph 4 of Article 4, shall not by reason of that fact alone be treated as such a secret or trade process.

3. A request for information shall not be refused on the ground that the tax claim giving rise to the request is disputed.

ARTICLE 7
Confidentiality

1. All information provided and received by the competent authorities of the Parties shall be kept confidential.

3. Such information shall not be used for any purpose other than for the purposes stated in Article 1 without the express written consent of the competent authority of the requested Party.

4. Information provided to a requesting Party under this Agreement shall not be disclosed to any other jurisdiction.

ARTICLE 8
Costs

Unless the competent authorities of the Parties otherwise agree, ordinary costs incurred in providing assistance shall be borne by the requested Party, and extraordinary costs incurred in providing assistance (including costs of engaging external advisors in connection with litigation or otherwise) shall be borne by the requesting Party. The respective competent authorities shall consult from time to time with regard to this Article, and in particular the competent authority of the requested Party shall consult with the competent authority of the requesting Party in advance if the costs of providing information with respect to a specific request are expected to be extraordinary.

ARTICLE 9
Mutual Agreement Procedures

2. In addition to the agreements referred to in paragraph 1, the competent authorities of the Parties may mutually agree on the procedures to be used under Articles 4, 5 and 8.

3. The Parties may also agree on other forms of dispute resolution should this become necessary.

ARTICLE 10
Mutual Technical Assistance

If both competent authorities of the Parties consider it appropriate to do so, they may agree to exchange technical know-how, develop new audit techniques, identify new areas of non-compliance, and jointly study non-compliance areas.

ARTICLE 11
No Prejudicial or Restrictive Measures

3. Without limiting the generality of paragraph 2, the term “prejudicial or restrictive measures” includes the denial of a deduction, credit or exemption, the imposition of a tax, charge or levy, or special reporting requirements.

ARTICLE 12
Entry into Force

The Parties shall notify each other in writing, through appropriate channels, of the completion of the necessary internal procedures for the entry into force of this Agreement. This Agreement shall enter into force 30 days after receipt of the later notification. Upon the entry into force, it shall have effect:

(a) for criminal tax matters on that date; and

ARTICLE 13
Termination

1. This Agreement shall remain in force until terminated by either Party.

3. If the Agreement is terminated the Parties shall remain bound by the provisions of Article 7 with respect to any information obtained under this Agreement.

IN WITNESS WHEREOF, the undersigned, being duly authorised in that behalf by the respective Parties, have signed the Agreement.

DONE at London in duplicate this 14th day of June, 2013, in the English language.

H.E. ROY W. BLACKBEARD,
for the Government of
the Republic of Botswana.

HON. EDDIE TEARE MHK,
for the Government of
the Isle of Man.

BOTSWANA-SWAZILAND DOUBLE TAXATION AVOIDANCE AGREEMENT ORDER

(under section 53(2))

(25th July, 2014)

ARRANGEMENT OF PARAGRAPHS

PARAGRAPH

1. Citation

2. Approval and effective date of commencement

S.I. 77, 2010,
S.I. 93, 2014.

WHEREAS in the exercise of the powers conferred on him by section 53(1) of the Income Tax Act (Cap. 52:01), the Minister of Finance and Development Planning has, on behalf of the Government, entered into an Agreement with the Government of the Kingdom of Swaziland for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital gains;

AND WHEREAS in accordance with the provisions of section 53(2) of the Income Tax Act, the said Agreement shall be laid before the National Assembly, and shall not take effect unless approved by resolution of the National Assembly;

NOW THEREFORE, the following Order is hereby made—

1. Citation

This Order may be cited as the Botswana-Swaziland Double Taxation Avoidance Agreement Order.

2. Approval and effective date of commencement

The Double Taxation Avoidance Agreement set out in the effective Schedule hereto between the Government of the Republic of Botswana and the Government of the Kingdom of Swaziland is presented to the National Assembly for approval and shall, upon approval, take effect from the date specified in the agreement.

SCHEDULE

The Government of the Republic of Botswana and the Kingdom of Swaziland desiring to conclude an agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, have agreed as follows:

ARTICLE 1
Persons Covered

This Agreement shall apply to persons who are residents of one or both of the Contracting States.

ARTICLE 2
Taxes Covered

(1) This Agreement shall apply to taxes on income imposed on behalf of a Contracting State, irrespective of the manner in which they are levied.

(2) There shall be regarded as taxes on income all taxes imposed on total income or on elements of income, including taxes on gains from the alienation of movable and immovable property.

(3) The existing taxes to which this Agreement shall apply are in particular:

(a) in Botswana:

(i) the income tax including any withholding tax, prepayment or advance tax payment with respect to aforesaid tax; and

(ii) the capital gains tax,

(hereinafter referred to as “Botswana tax”); and

(b) in Swaziland, the taxes imposed under the Income Tax Order 1975, as amended. (hereinafter referred to as “Swaziland tax”);

(4) Nothing in this Agreement shall limit the right of either Contracting State to charge tax on the profits of a mineral enterprise at an effective rate different from that charged on the profits of any other enterprise. The term ‘a mineral enterprise’ means an enterprise carrying on the business of mining.

(5) This Agreement shall apply also to any identical or substantially similar taxes, which are imposed by either Contracting State after the date of signature of the Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any substantial changes, which have been made in their respective taxation laws.

ARTICLE 3
General Definitions

(1) For the purposes of this Agreement, unless the context otherwise requires:

(a) the term “Botswana” means the Republic of Botswana;

(b) the term “Swaziland” means the Kingdom of Swaziland;

(c) the terms “a Contracting State” and “the other Contracting State” mean Botswana or Swaziland, as the context requires;

(d) the term “business” includes the performance of professional services and of other activities of an independent character;

(e) the term “company” means any body corporate or any entity that is treated as a company or body corporate for tax purposes;

(f) the term “competent authority” means;

(i) in Botswana, the Minister of Finance and Development Planning, represented by the Commissioner General of the Botswana Unified Revenue Service; and

(ii) in Swaziland, the Minister of Finance, represented by the Commissioner of Taxes or an authorised representative;

(g) the term “enterprise” applies to the carrying on of any business;

(j) the term “nationals” means all individuals having the nationality or citizenship of a Contracting State and all legal persons, associations and other entities deriving their status as such from the laws in force in a Contracting State; and

(k) the term “person” includes an individual, a company, a trust, an estate and any other body of persons which is treated as an entity for tax purposes.

(2) As regards the application of the provisions of the Agreement at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which the Agreement applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under the other laws of that State.

ARTICLE 4
Resident

(1) For purposes of this Agreement, the term “resident of a Contracting State” means any person who, under the laws of that State, is liable to tax therein by reason of that person’s domicile, residence, place of management, place of incorporation or any other criterion of a similar nature, and also includes that State or any political subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State.

(2) Where by reason of the provisions of paragraph (1) an individual is a resident of both Contracting States, then his status shall be determined as follows:

(a) he shall be deemed to be a resident solely of the Contracting State in which a permanent home is available to him; if a permanent home is available to him in both states, he shall be deemed to be a resident solely of the State in which his personal and economic relations are closer (centre of vital interests);

(b) if the State in which he has his centre of vital interests cannot be determined, or if he has no permanent home available to him in either State, he shall be deemed to be a resident of the State in which he has an habitual abode;

(c) if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident solely of the State of which he is a national;

(d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.

(3) Where by reason of the provisions of paragraph (1), a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident solely of the State in which its place of effective management is situated.

ARTICLE 5
Permanent Establishment

(1) For the purposes of this Agreement, the term “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

(2) The term “permanent establishment” includes especially:

(a) a place of management;

(b) a branch;

(d) a factory;

(e) a workshop;

(f) a mine, an oil or gas well, a quarry or any other place of extraction or exploitation of natural resources; and

(g) an installation or structure used for the exploration of natural resources, provided that the installation or structure continues for a period aggregating more than 183 days.

(3) The term “permanent establishment” likewise encompasses:

(a) a building site, a construction, assembly or installation project or supervisory activity in connection with such site, project or activity only if it lasts more than 183 days;

(b) the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose, but only where activities of that nature continue (for the same or a connected project) within a Contracting State for a period or periods aggregating more than three (3) months in any twelve-month period commencing or ending in the year of assessment concerned.

(c) the performance of professional services or other activities of an independent character by an individual, but only where those services or activities continue within a Contracting State for a period or periods exceeding in the aggregate 183 days in any twelve-month period commencing or ending in the year of assessment concerned.

(4) Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not to include:

(a) the use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise;

(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display;

(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or for collecting information for the enterprise;

(e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character;

(5) Notwithstanding the provisions of paragraphs (1) and (2), where a person – other than an agent of an independent status to whom paragraph (6) applies – is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned Contracting State in respect of any activities which that person undertakes for the enterprise, if such person—

(a) has, and habitually exercises in that State an authority to conclude contracts in the name of the enterprise;

unless the activities of such person are limited to those mentioned in paragraph (4) which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph.

(6) An enterprise shall not be deemed to have a permanent establishment in a Contracting State merely because it carries on business in that State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business.

(7) Notwithstanding the preceding provisions of this Article, an insurance enterprise of a Contracting State shall, except in regard to reinsurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums in the territory of that other State or insures risks situated therein through a person other than an agent of an independent status to whom paragraph (6) applies.

(8) The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise) shall not of itself constitute either company a permanent establishment of the other.

ARTICLE 6
Income from Immovable Property

(1) Income derived by a resident of a Contracting State from immovable property, including income from agriculture or forestry, situated in the other Contracting State may be taxed in that other State.

(2) The term “immovable property” shall have the meaning, which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources. Ships, boats, aircrafts and rail or road transport vehicles shall not be regarded as immovable property.

(3) The provisions of paragraph (1) shall apply to income derived from the direct use, letting, or use in any other form of immovable property.

(4) The provisions of paragraphs (I) and (3) shall also apply to the income from immovable property of an enterprise.

ARTICLE 7
Business Profits

(1) The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as are attributable to that permanent establishment.

(2) Subject to the provisions of paragraph (3), where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.

(3) In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the business of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or, except in the case of a banking enterprise by way of interest on moneys lent to the permanent establishment. Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged (otherwise than towards reimbursement of actual expenses), by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission for specific services performed or for management, or, except in the case of a banking enterprise by way of interest on moneys lent to the head office of the enterprise or any of its other offices.

(4) No profits shall be attributed to a permanent establishment by reason of mere purchase by that permanent establishment of goods or merchandise for the enterprise.

(5) For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.

(6) Where profits include items of income, which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.

ARTICLE 8
International Transport

(1) Profits of an enterprise of a Contracting State from the operation of ships, aircraft or rail or road transport vehicles in international traffic shall be taxable only in that State.

(2) The provisions of paragraph (1) shall also apply to profits from participation in a pool, a joint business or an international operating agency.

(3) For the purposes of this Article, profits from the operation of ships, aircraft or rail or road transport vehicles in international traffic shall include:

(a) profits derived from the rental on a bare boat basis of ships or aircraft used in international traffic;

(b) profits derived from the use or rental of containers; and

if such profits are incidental to the profits to which the provisions of paragraph (1) apply.

ARTICLE 9
Associated Enterprises

(1) Where:

(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or

(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,

(2) Where a Contracting State includes in the profits of an enterprise of that State – and taxes accordingly – profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State may make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall, if necessary, consult each other.

ARTICLE 10
Dividends

(1) Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.

(2) However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the recipient is the beneficial owner of the dividends and is a resident of the other Contracting State, the tax so charged shall not exceed:

(a) 10 per cent of the gross amount of the dividends if the beneficial owner is a company which holds at least 25 per cent of the capital of the company paying dividends; or

(b) 15 per cent of the gross amount of the dividends in all other cases.

The competent authorities of the Contracting States shall settle the mode of application of these limitations by mutual agreement.

This paragraph shall not affect taxation of the company in respect of the profits out of which the dividends were declared.

(3) The term “dividends” as used in this Article means income from shares or other rights participating in profits (not being debt-claims), as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the Contracting State of which the company making the distribution is a resident.

(4) The provisions of paragraphs (1) and (2) shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case, the provision of Article 7 shall apply.

(5) Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except in so far as such dividends are paid to a resident of that other State or in so far as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment situated in that other State, nor subject the company’s undistributed profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.

ARTICLE 11
Interest

(1) Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

(2) However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the recipient is the beneficial owner of the interest and a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest.

The competent authorities of the Contracting States shall settle the mode of application of these limitations by mutual agreement.

(3) Notwithstanding the provisions of paragraph (2), interest arising in a Contracting State shall be exempt from tax in that State if it is derived by the Government of the other Contracting State or a political subdivision or a local authority thereof, or any agency wholly owned and controlled by that Government or subdivision or authority.

(4) The term “interest” as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.

(5) The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises through a permanent establishment situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.

(6) Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision, a local authority or a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment, then such interest shall be deemed to arise in the State in which the permanent establishment is situated.

(6) Where by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

ARTICLE 12
Royalties

(1) Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

(2) However, such royalties may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the recipient is the beneficial owner of royalties and a resident of the other Contracting state, the tax so charged shall not exceed 10 per cent of the gross amount of the royalties.

The competent authorities of the Contracting States shall settle the mode of application of these limitations by mutual agreement.

(3) The term “royalties” as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work (including cinematography films and films, tapes or disks for radio or television broadcasting) any patent, trade mark, design or model, plan, secret formula or process, or for the use of or the right to use industrial, commercial or scientific equipment or for information concerning industrial, commercial or scientific experience.

(4) The provisions of paragraphs (1) and (2) shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise through a permanent establishment situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.

(5) Royalties shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision, a local authority or a resident of that State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the right or property in respect of which the royalties are paid is effectively connected and such royalties are borne by such permanent establishment, then such royalties shall be deemed to arise in the State in which the permanent establishment is situated.

(6) Where by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

ARTICLE 13
Technical fees

(1) Technical fees arising in a Contracting State which are paid to a resident of the other Contracting State may be taxed in that other State.

(2) However, such technical fees may also be taxed in the Contracting State in which they arise, and according to the law of that State; but where such technical fees are paid to a resident of the other Contracting State who is subject to tax in that State in respect thereof, the tax charged in the Contracting State in which the technical fees arise shall not exceed 10 per cent of the gross amount of such fees.

The competent authorities of the Contracting States shall settle the mode of application of these limitations by mutual agreement.

(3) The term “technical fees” as used in this Article means payments of any kind to any person, other than to an employee of the person making the payments, in consideration for any services of an administrative, technical, managerial or consultancy nature.

(4) The provisions of paragraphs (1) and (2) shall not apply if the beneficial owner of the technical fees, being a resident of a Contracting State, carries on business in the other Contracting State in which the technical fees arise through a permanent establishment situated therein, and the technical fees are effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.

(5) Technical fees shall be deemed to arise in a Contracting State when the payer is that State, a political subdivision, a local authority or a resident of that State. Where, however, the person paying the technical fees, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the obligation to pay the technical fees was incurred, and such technical fees are borne by that permanent establishment, then such technical fees shall be deemed to arise in the State in which the permanent establishment is situated.

(6) Where by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the technical fees paid exceeds, for whatever reason, the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Agreement.

ARTICLE 14
Capital Gains

(1) Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State, or from the alienation of shares in a company the assets of which consist principally of such property, may be taxed in that other State.

(2) Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise), may be taxed in that other State.

(3) Gains of an enterprise of a Contracting State from the alienation of ships, aircraft or rail or road transport vehicles operated in international traffic or movable property pertaining to the operation of such ships, aircraft, or rail or road transport vehicles, shall be taxable only in that State.

(4) Gains from the alienation of any property other than that referred to in paragraphs (1),(2) and (3), shall be taxable only in the Contracting State of which the alienator is a resident.

(5) Notwithstanding the provisions of paragraph (4), gains from the alienation of shares or other corporate rights of a company which is a resident of one of the Contracting States derived by an individual who was a resident of that State and who after acquiring such shares or rights has become a resident of the other Contracting State, may be taxed in the first-mentioned State if the alienation of the shares or other corporate rights occur at any time during the ten years following the date on which the individual has ceased to be a resident of that first-mentioned State.

ARTICLE 15
Income from Employment

(1) Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.

(2) Notwithstanding the provisions of paragraph (1), remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:

(a) the recipient is present in the other Contracting State for a period or periods not exceeding in the aggregate 183 days in any twelve-month period commencing or ending in the year of assessment concerned; and

(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and

(3) Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship, aircraft or rail or road transport vehicle operated in international traffic by an enterprise of a Contracting State may be taxed in that State.

ARTICLE 16
Director’s Fees

Directors’ fees and other similar payments derived by a resident of a Contracting State in that person’s capacity as a member of a board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.

ARTICLE 17
Entertainers and Sportspersons

(1) Notwithstanding the provisions of Articles 7 and 15, income derived by a resident of a Contracting State as an entertainer such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from that person’s personal activities as such exercised in the other State, may be taxed in that other State.

(2) Where income in respect of personal activities exercised by an entertainer or a sportsperson in his capacity as such accrues not to the entertainer or sportsperson himself but to another person, that income may, notwithstanding the provisions of Article 7 and 15, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised.

(3) Income derived by a resident of a Contracting State from the activities exercised in the other Contracting State as envisaged in paragraph (1) shall be exempt from tax in that other State if the visit to that State is supported wholly or mainly by public funds of the first mentioned State, the political subdivision or a local authority thereof, and such proceeds are for the benefit of the public.

ARTICLE 18
Pensions

(1) Subject to the provisions of paragraph (2) of Article 19, pensions and other similar remuneration, arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in the first-mentioned Contracting State.

(2) Notwithstanding the provisions of paragraph (1), pensions and other similar payments made under the social security legislation of a Contracting State shall be taxable only in that State.

ARTICLE 19
Government Service

(1)(a) Remuneration, other than a pension, paid by a Contracting State, political subdivision or a local authority thereof to an individual in respect of services rendered to that State, political subdivision or authority shall be taxable only in that State.

(b) However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that other State and the individual is a resident of that State who:

(i) is a national of that State; or

(ii) did not become a resident of that State solely for the purpose of rendering the services.

(2)(a) Any pension paid by, or out of funds created by, a Contracting State, political subdivision or a local authority thereof to an individual in respect of services rendered to that State, or subdivision or authority shall be taxable only in that State.

(b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.

(3) The provisions of Articles 15,16,17 and 18 shall apply to remuneration and pensions in respect of services rendered in connection with a business carried on by a Contracting State, political subdivision or a local authority thereof.

ARTICLE 20
Professors, Teachers and Research Scholars

(1) A Professor, or research scholar who is or was a resident of one of the Contracting States immediately before visiting the other Contracting State for the purpose of engaging in research in the other contracting State, shall be exempt from tax in that other State on any remuneration for such research for a period not exceeding an aggregate of two years, from the date of his arrival in that other State.

(2) This Article shall apply to income from research only if such research is undertaken in the public interest and not primarily for the benefit of some private person or persons.

(2) For the purpose of this Article, an individual shall be deemed to be a resident of a Contracting State if he is resident m that State in the fiscal year in which he visits the other Contracting State or in the immediate preceding fiscal year.

ARTICLE 21
Students, Apprentices and Business Trainees

(1) A student, apprentice or business trainee who is present in a Contracting State solely for the purpose of the education or training of the student, apprentice or business trainee and who is, or immediately before being so present, was a resident of the other Contracting State, shall be exempt from tax in the first-mentioned State on payments received from outside that first-mentioned State for the maintenance, education or training of the student, apprentice or business trainee.

(2) In respect of grants or scholarships not covered by paragraph (1), a student, apprentice or business trainee referred to in paragraph (1) shall be entitled to the same exemptions, reliefs or reductions in respect of taxes available to residents of the first-mentioned Contracting State.

ARTICLE 22
Other Income

(1) Items of income of a resident of a Contracting State, wherever arising, which are not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.

(2) The provisions oi paragraph (1) shall not apply to income, other than income from immovable property as defined in paragraph (2) of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.

(3) Notwithstanding the provisions of paragraphs (I) and (2), items of income of a resident of a Contracting State not dealt with in the foregoing Articles of this Agreement and arising in the other Contracting State may also be taxed in that other State.

ARTICLE 23
Elimination of Double Taxation

(1) Double taxation shall be eliminated as follows:

(a) In Botswana, subject to the provisions of the law of Botswana regarding the allowance of a credit against Botswana tax of tax paid under the laws of a country outside Botswana, Swaziland tax paid under the laws of Swaziland and in accordance with this Agreement, whether directly or by deduction, on profits or income liable to tax in Swaziland, shall be allowed as a credit against any Botswana tax payable in respect of the same profits or income by reference to which the Swaziland tax is computed. However, the amount of such credit shall not exceed the amount of the Botswana tax payable on that income in accordance with the laws of Botswana.

(b) In Swaziland, subject to the provisions of the law of Swaziland, from time to time in force, which relates to the allowance of credit against Swaziland tax of tax paid in a country outside Swaziland (which shall not affect the general principle of this Article), Botswana tax paid under the laws of Botswana and in accordance with this Agreement, whether directly or by deduction, in respect of income derived by a person who is a resident of Swaziland from sources in Botswana, shall be allowed as a credit against Swaziland tax payable in respect of that income but such credit shall not exceed the amount of Swaziland income tax on that income.

(2) For the purposes of paragraph (1) of this Article, the terms “Botswana tax payable” and “Swaziland tax payable” shall be deemed to include the amount of tax which would have been paid in Botswana or in Swaziland, as the case may be, but for any exemption or reduction granted in accordance with laws designed to promote economic development in that Contracting State.

(3) A grant given by a Contracting State or a political subdivision thereof to a resident of the other Contracting State in accordance with laws which establish schemes for the promotion of economic development in Botswana or Swaziland, as the case may be, such schemes having been mutually agreed by the competent authorities of the Contracting States as qualifying for the purposes of this paragraph, shall not be taxable in the other State.

ARTICLE 24

Non-discrimination

(1) Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances are, or may be, subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.

(2) The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. Nothing in this Agreement shall be construed as preventing a Contracting State from imposing under its laws an income tax (referred to as a “branch profits tax”) on the deemed repatriated income of a company which is a resident of the other Contracting State in addition to the income tax imposed on the chargeable income of the company in accordance with this Agreement; provided that any branch profits tax so imposed shall not exceed 10 per cent of the amount of the deemed repatriated income in the year of assessment.

(3) Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected.

(4) Except where the provisions of paragraph (1) of Article 9, paragraph (7) of Article 11, paragraph (6) of Article 12, or paragraph (6) of Article 13 apply, interest, royalties, technical fees and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State.

(5) Nothing contained in this Article shall be construed as obliging either Contracting State to grant to individuals not resident in that State any of the personal allowances, reliefs and reductions for tax purposes which are granted to individuals so resident.

ARTICLE 25
Mutual Agreement Procedure

(1) Where a person considers that the actions of one or both of the Contracting States result or will result for that person in taxation not in accordance with the provisions of this Agreement, that person may, irrespective of the remedies provided by the domestic laws of those States, present a case to the competent authority of the Contracting State of which the person is a resident or, if the case comes under paragraph (1) of Article 24, to that of the Contracting State of which the person is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of this Agreement.

(2) The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with this Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.

(3) The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of this Agreement. They may also consult together for the elimination of double taxation in cases not provided for in this Agreement.

(4) The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs.

ARTICLE 26
Exchange of Information

(1) The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, in particular for the prevention of fraud or evasion of such taxes, in so far as the taxation thereunder is not contrary to the Agreement. The exchange of information is not restricted by Articles 1 and 2.

(2) Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes covered by this Agreement. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.

(3) Each Contracting State shall take the necessary measures to ensure the availability of information as well as the ability of its competent authority to access information and to transmit it to its counterpart. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation to:

(a) carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

(b) supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;

(c) supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information the disclosure of which would be contrary to public policy (ordre public).

(4) If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.

(5) In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.

ARTICLE 27
Assistance in Recovery

(1) The Contracting States shall, to the extent permitted by their respective domestic laws, lend assistance to each other in order to recover the taxes referred to in Article 2 as well as interest and penalties with regard to such taxes, provided that reasonable steps to recover such taxes have been taken by the Contracting State requesting such assistance.

(2) Claims which are the subject of requests for assistance shall not have priority over taxes owing in the Contracting State rendering assistance and the provisions of paragraph (1) of Article 26 shall also apply to any information which, by virtue of this Article, is supplied to the competent authority of a Contracting State.

(1) The competent authorities of the Contracting States shall, by mutual agreement, settle the mode of application of the provisions of this Article.

(2) It is understood that unless otherwise agreed by the competent authorities of both Contracting States,

(a) ordinary costs incurred by a Contracting State in providing assistance shall be borne by that State;

(b) extraordinary costs incurred by a Contracting State in providing assistance shall be borne by that other State and shall be payable regardless of the amount collected on its behalf by the first-mentioned State.

As soon as a Contracting State anticipates that extraordinary costs may be incurred, it shall so advise the other Contracting State and indicate the estimated amount of such costs.

ARTICLE 28
Members of Diplomatic Missions and Consular Posts

ARTICLE 29
Entry into force

(1) Each of the Contracting States shall notify the other of the completion of the procedures required by its law for the bringing into force of this Agreement. The Agreement shall enter into force on the date of receipt of the later of these notifications.

(2) The provisions of this Agreement shall apply:

(a) with regard to taxes withheld at source, in respect of amounts paid or credited on or after the thirtieth day following the date upon which the Agreement enters into force; and

(b) with regard to other taxes, in respect of years of assessment beginning on or after the date upon which the Agreement enters into force.

ARTICLE 30
Termination

(1) This Agreement shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Agreement, through diplomatic channels, by giving written notice of termination at least six months before the end of any calendar year after the expiration of a period of five years from the date of its entry into force,

(2) In such an event, the Agreement shall cease to apply:

(a) with regard to taxes withheld at source, in respect of amounts paid or credited on or after the end of the calendar year in which such notice is given; and

(b) with regard to other taxes, in respect of years of assessment beginning after the end of the calendar year in which such notice is given.

IN WITNESS WHEREOF the undersigned, being duly authorised thereto, have signed this Agreement.

Done at Gaborone this 20th day of March, 2014 in duplicate in the English language.

BOTSWANA-IRELAND DOUBLE TAXATION AVOIDANCE AGREEMENT ORDER

(under section 53(2))

(10th April, 2015)

ARRANGEMENT OF PARAGRAPHS

PARAGRAPH

1. Citation

2. Approval and effective date of commencement

SCHEDULE

S.I. 40, 2015.

WHEREAS in the exercise of the powers conferred on him by section 53(1) of the Income Tax Act (Cap. 52:01), the Minister of Finance and Development Planning has on behalf of the Government of the Republic of Botswana, entered into an Agreement with the Government of Ireland for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital gains;

AND WHEREAS in accordance with the provisions of section 53(2) of the Income Tax Act, the said agreement shall be laid before the National Assembly, and shall not take effect unless approved by resolution of the National Assembly;

NOW THEREFORE the following Order is hereby made—

1. Citation

This Order may be cited as the Botswana-Ireland Double Taxation Avoidance Agreement Order.

2. Approval and effective date of commencement

The Double Taxation Avoidance Agreement set out in the Schedule hereto between the Government of the Republic of Botswana and the Government of Ireland is presented to the National Assembly for approval and shall, upon approval, take effect from the date specified in the agreement.

SCHEDULE

The Government of the Republic of Botswana and the Government of Ireland, desiring to conclude an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, have agreed as follows:

ARTICLE 1
Persons Covered

This Agreement shall apply to persons who are residents of one or both of the Contracting States.

ARTICLE 2
Taxes Covered

1. This Agreement shall apply to taxes on income imposed by each Contracting State, irrespective of the manner in which they are levied.

2. There shall be regarded as taxes on income all taxes imposed on total income or on elements of income, including taxes on gains from the alienation of movable or immovable property.

3. The existing taxes to which this Agreement shall apply are in particular:

(a) in Botswana:

(i) the income tax; and

(ii) the capital gains tax;

(hereinafter referred to as “Botswana tax”); and

(b) in Ireland:

(i) the income tax;

(ii) the universal social charge;

(iii) the corporation tax; and

(iv) the capital gains tax;

(hereinafter referred to as “Irish tax”).

4. The Agreement shall apply also to any identical or substantially similar taxes which are imposed by either Contracting State after the date of signature of the Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes which have been made in their respective taxation laws.

ARTICLE 3
General Definitions

1. For the purposes of this Agreement, unless the context otherwise requires:

(a) the term “Botswana” means the Republic of Botswana;

(b) the term “Ireland” includes any area outside the territorial waters of Ireland which has been or may hereafter be designated, under the laws of Ireland concerning the Exclusive Economic Zone and the Continental Shelf, as an area within which Ireland may exercise such sovereign rights and jurisdiction as are in conformity with international law;

(c) the terms “a Contracting State” and “the other Contracting State” mean Botswana or Ireland, as the context requires; and the term “Contracting States” means Botswana and Ireland;

(d) the term “company” means any body corporate or any entity which is treated as a body corporate for tax purposes;

(e) the term “competent authority” means:

(i) in Botswana, the Minister of Finance and Development Planning, represented by the Commissioner General of the Botswana Unified Revenue Service or his authorised representative; and

(ii) in Ireland, the Revenue Commissioners or their authorised representative;

(f) the term “enterprise” applies to the carrying on of any business;

(g) the terms “enterprise of a Contracting State” and “enterprise of the other Contracting State” mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;

(h) the term “international traffic” means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;

(i) the term “national”, in relation to a Contracting State, means:

(i) any individual possessing the nationality or citizenship of that Contracting State; and

(ii) any legal person or association deriving its status as such from the laws in force in that Contracting State;

(j) the term “person” includes an individual, a trust, a company and any other body of persons;

(k) the term “business” includes the performance of professional services and of other activities of an independent character.

2. As regards the application of the provisions of this Agreement at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which this Agreement applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.

ARTICLE 4
Resident

1. For the purposes of this Agreement, the term “resident of a Contracting State” means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature, and also includes that State and any local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State.

2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:

(a) he shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests);

(b) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he has an habitual abode;

(c) if he has a habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national;

(d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.

3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated. If the place in which its place of effective management is situated cannot be determined, then the competent authorities of the Contracting States shall endeavour to settle the question by mutual agreement.

ARTICLE 5
Permanent Establishment

1. For the purposes of this Agreement, the term “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

2. The term “permanent establishment” includes especially:

(a) a place of management;

(b) a branch;

(d) a factory;

(e) a workshop;

(f) a mine, an oil or gas well, a quarry or any other place of extraction or exploitation of natural resources; and

(g) an installation or structure used for the exploration of natural resources provided that the installation or structure continues for a period of more than six months within any twelve-month period.

3. The term “permanent establishment” likewise encompasses:

(a) a building site, a construction, assembly or installation project, but only where such site or project continues for a period of more than six months within any twelve-month period;

(b) the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by an enterprise for such purpose, but only where activities of that nature continue (for the same or a connected project) within the Contracting State for a period or periods aggregating more than six months within any twelve-month period; and

(c) the performance of professional services or other activities of an independent character by an individual, but only where those services or activities continue within a Contracting State for a period or periods exceeding in the aggregate 183 days in any twelve-month period commencing or ending in the fiscal year concerned.

4. Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not to include:

(a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;

(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;

(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or for collecting information, for the enterprise;

(e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character; and

5. Notwithstanding the provisions of paragraphs 1 and 2, where a person, other than an agent of an independent status to whom paragraph 6 applies, is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned Contracting State in respect of any activities which that person undertakes for the enterprise, if such person has, and habitually exercises, in that State an authority to conclude contracts in the name of the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph.

7. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.

ARTICLE 6
Income From Immovable Property

1. Income derived by a resident of a Contracting State from immovable property, including income from agriculture or forestry, situated in the other Contracting State may be taxed in that other State.

2. The term “immovable property” shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships, boats and aircraft shall not be regarded as immovable property.

3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting or use in any other form of immovable property.

4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise.

ARTICLE 7
Business Profits

1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.

3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the permanent establishment. Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for use of patents or other rights, or by way of commission for specific services performed or for management, or except in the case of a banking enterprise, by way of interest on moneys lent to the head office of the enterprise or any of its other offices.

4. Insofar as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary; the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.

5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

7. Where profits include items of income or gains which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.

ARTICLE 8
International Transport

1. Profits of an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State.

2. For the purposes of this Article, profits derived from the operation of ships or aircraft in international traffic include profits derived from the rental of ships or aircraft if such ships or aircraft are operated in international traffic or if such rental profits are incidental to other profits described in paragraph 1.

3. Profits of an enterprise of a Contracting State from the use or rental of containers (including trailers, barges, and related equipment for the transport of containers) used for the transport in international traffic of goods or merchandise shall be taxable only in that State.

4. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.

ARTICLE 9
Associated Enterprises

1. Where:

(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or

(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,

2. Where a Contracting State includes in the profits of an enterprise of that State, and taxes accordingly, profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall if necessary consult each other.

ARTICLE 10
Dividends

1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.

This paragraph shall not affect taxation of the company in respect of the profits out of which the dividends are paid.

3. Notwithstanding the provisions of paragraph 2, dividends arising in a Contracting State and paid to, and beneficially owned by, the Government of the other Contracting State shall be exempt from tax in the first-mentioned State.

4. The term “dividends” as used in this Article means income from shares, “jouissance” shares or “jouissance” rights, mining shares, founders’ shares or other rights (not being debt-claims) participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the Contracting State of which the company making the distribution is a resident.

5. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident through a permanent establishment situated therein and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.

6. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar’ as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment situated in that other State, nor subject the company’s undistributed profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.

ARTICLE 11
Interest

1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, such interest may also be taxed in the State in which it arises and according to the laws of that State, but if the recipient is the beneficial owner of the interest, the tax so charged shall not exceed 7.5 per cent of the gross amount of the interest.

3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State shall be exempt from tax in that State if it is paid to, and beneficially owned by, the Government of the other Contracting State or a local authority thereof.

6. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment, then such interest shall be deemed to arise in the State in which the permanent establishment is situated.

ARTICLE 12
Royalties

1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

(a) 5 per cent of the gross amount of the royalties in respect of the use of or the right to use industrial, commercial or scientific equipment; and

(b) 7.5 per cent of the gross amount of the royalties in all other cases.

3. The term “royalties” as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work (including cinematographic films and recordings on tape or other media used for radio or television broadcasting or other means of reproduction or transmission), any patent, trade mark, design or model, plan, secret formula or process, or the use of or the right to use industrial, commercial or scientific equipment or for information concerning industrial, commercial or scientific experience.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise through a permanent establishment situated therein and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.

5. Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment, then such royalties shall be deemed to arise in the State in which the permanent establishment is situated.

ARTICLE 13
Capital Gains

1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.

2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise), may be taxed in that other State.

3. Gains of an enterprise of a Contracting State from the alienation of ships or aircraft operated in international traffic, or movable property pertaining to the operation of such ships or aircraft, shall be taxable only in that State.

4. Gains derived by a resident of a Contracting State from the alienation of:

(a) shares, other than shares quoted on a recognised stock exchange, deriving more than 50 per cent of their value directly or indirectly from immovable property situated in the other Contracting State; or

(b) an interest in a partnership or trust deriving more than 50 per cent of its value directly or indirectly from immovable property situated in the other Contracting State,

may be taxed in that other State.

5. Gains from the alienation of any property, other than that referred to in paragraphs 1,2,3 and 4, shall be taxable only in the Contracting State of which the alienator is a resident.

6. The provisions of paragraph 5 shall not affect the right of a Contracting State to levy, according to its law, a tax on gains from the alienation of any property derived by an individual who is a resident of the other Contracting State and has been a resident of the first-mentioned State at any time during the five years immediately preceding the alienation of the property.

ARTICLE 14
Income From Employment

1. Subject to the provisions of Articles 15, 17 and 18, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.

(a) the recipient is present in the other Contracting State for a period or periods not exceeding in the aggregate 183 days in any twelve-month period commencing or ending in the fiscal year concerned; and

(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and

3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State may be taxed in that Contracting State.

ARTICLE 15
Directors’ Fees

Directors’ fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.

ARTICLE 16
Entertainers and Sportspersons

1. Notwithstanding the provisions of Articles 7 and 14, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State.

2. Where income in respect of personal activities exercised by an entertainer or a sportsperson is his capacity as such accrues not to the entertainer or sportsperson himself but to another person, that income may, notwithstanding the provisions of Articles 7 and 14, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised.

3. The provisions of paragraphs 1 and 2 shall not apply to income derived by entertainers or sportspersons who are residents of a Contracting State from their personal activities as entertainers or sportspersons exercised in the other Contracting State if their visit to that other State is supported wholly or mainly by public funds of the first-mentioned Contracting State, or a local authority thereof, or takes place under a cultural agreement or arrangement between the Governments of the Contracting States. In such a case, the income shall be taxable only in the Contracting State of which the entertainer or sportsperson, as the case may be, is a resident.

ARTICLE 17
Pensions And Annuities

1. Subject to the provisions of paragraph 2 of Article 18, pensions and other similar remuneration in consideration of past employment and any annuity arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in the first-mentioned Contracting State.

ARTICLE 18
Government Service

1. (a) Salaries, wages and other similar remuneration paid by a Contracting State or a local authority thereof to an individual in respect of services rendered to that State or authority shall be taxable only in that State.

(i) is a national of that State; or

(ii) did not become a resident of that State solely for the purpose of rendering the services.

2. (a) Notwithstanding the provisions of paragraph 1, pensions and other similar remuneration paid by, or out of funds created by, a Contracting State or a local authority thereof to an individual in respect of services rendered to that State or authority shall be taxable only in that State.

(b) However, such pensions and other similar remuneration shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.

3. The provisions of Articles 14, 15, 16 and 17 shall apply to salaries, wages, pensions and other similar remuneration in respect of services rendered in connection with a business carried on by a Contracting State or a local authority thereof.

ARTICLE 19
Students, Apprentices and Business Trainees

A student, apprentice or business trainee who is present in a Contracting State solely for the purpose of his education or training and who is, or immediately before being so present was, a resident of the other Contracting State shall be exempt from tax in the first-mentioned State on payments received from outside that first-mentioned State for the purposes of his maintenance, education or training.

ARTICLE 20
Technical Fees

1. Technical fees arising in a Contracting State which are paid to a resident of the other Contracting State may be taxed in that other State.

2. However, such technical fees may also be taxed in the Contracting State in which they arise, and according to the law of that State, but where such technical fees are paid to a resident of the other Contracting State who is subject to tax in that State in respect thereof, the tax charged in the Contracting State in which the technical fees arise shall not exceed 7.5 per cent of the gross amount of such fees.

3. The term “technical fees” as used in this Article means payments of any kind to any person, other than to an employee of the person making the payments, in consideration for any services of an administrative, technical, managerial or consultancy nature.

4. The provisions of paragraphs 1 and 2 of this Article shall not apply if the recipient of the technical fees, being a resident of a Contracting State, carries on business in the other Contracting State in which the technical fees arise, through a permanent establishment situated therein and the technical fees are effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.

5. Technical fees shall be deemed to arise in a Contracting State when the payer is that State, or a local authority thereof or a resident of that State. Where, however, the person paying the technical fees, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the obligation to pay the technical fees was incurred, and such technical fees are borne by that permanent establishment, then such technical fees shall be deemed to arise in the State in which the permanent establishment is situated.

6. Where, by reason of a special relationship between the payer and the recipient or between both of them and some other person, the amount of the technical fees paid exceeds, for whatever reason, the amount which would have been agreed upon by the payer and the recipient in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Agreement.

7. Notwithstanding paragraph 2, where, in any Agreement for the avoidance of double taxation and the prevention of fiscal evasion entered into by Botswana with any State other than Ireland after the signing of this Agreement, the rate of tax specified in the Article relating to technical fees is a rate less than 7.5 per cent, such lower rate shall apply as if it had been the rate specified in this Article.

ARTICLE 21
Other Income

1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.

2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the beneficial owner of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein and the right or property in respect of which the income is paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.

ARTICLE 22
Miscellaneous Rules Applicable To Certain Offshore Activities

1. The provisions of this Article shall apply notwithstanding any other provision of this Agreement where activities (in this Article called “relevant activities”) are carried on offshore in connection with the exploration or exploitation of the seabed and subsoil and their natural resources situated in a Contracting State.

2. An enterprise of a Contracting State which carries on relevant activities in the other Contracting State shall, subject to paragraph 3 of this Article, be deemed to be carrying on business in that other State through a permanent establishment situated therein.

3. Relevant activities which are carried on by an enterprise of a Contracting State in the other Contracting State for a period or periods not exceeding in the aggregate 30 days within any period of twelve months shall not constitute the carrying on of business through a permanent establishment situated therein. For the purposes of this paragraph:

(a) where an enterprise of a Contracting State carrying on relevant activities in the other Contracting State is associated with another enterprise carrying on substantially similar relevant activities there, the former enterprise shall be deemed to be carrying on all such activities of the latter enterprise, except to the extent that those activities are carried on at the same time as its own activities;

(b) an enterprise shall be regarded as associated with another enterprise if one participates directly or indirectly in the management, control or capital of the other or if the same persons participate directly or indirectly in the management, control or capital of both enterprises.

3. Salaries, wages and similar remuneration derived by a resident of a Contracting State in respect of an employment connected with relevant activities in the other Contracting State may, to the extent that the duties are performed offshore in that other State, be taxed in that other State.

4. Gains derived by a resident of a Contracting State from the alienation of:

(a) exploration or exploitation rights; or

(b) shares (or comparable instruments) deriving their value or the greater part of their value directly or indirectly from such rights,

may be taxed in that other State.

In this paragraph “exploration or exploitation rights” mean rights to assets to be produced by the exploration or exploitation of the seabed or subsoil or their natural resources in the other Contracting State, including rights to interests in or to the benefit of such assets.

ARTICLE 23
Elimination of Double Taxation

1. Double taxation shall be eliminated as follows:

(a) in Botswana, subject to the provisions of the laws of Botswana regarding the allowance of a credit against Botswana tax of tax payable under the laws of a country outside Botswana, Irish tax payable under the laws of Ireland and in accordance with this Agreement, whether directly or by deduction, on profits or income liable to tax in Ireland shall be allowed as a credit against any Botswana tax payable in respect of the same profits or income by reference to which the Irish tax is computed. However, the amount of such credit shall not exceed the amount of the Botswana tax payable on that income in accordance with the laws of Botswana;

(b) in Ireland, subject to the provisions of the laws of Ireland regarding the allowance as a credit against Irish tax of tax payable in a territory outside Ireland (which shall not affect the general principle thereof)—

(i) Botswana tax payable under the laws of Botswana and in accordance with this Agreement, whether directly or by deduction, on profits, income or gains from sources within Botswana (excluding in the case of a dividend tax payable in respect of the profits out of which the dividend is paid) shall be allowed as a credit against any Irish tax computed by reference to the same profits, income or gains by reference to which Botswana tax is computed;

(ii) in the case of a dividend paid by a company which is a resident of Botswana to a company which is a resident of Ireland and which controls directly or indirectly 5 per cent or more of the voting power in the company paying the dividend, the credit shall take into account (in addition to any Botswana tax creditable under the provisions of subparagraph (b)(i)) Botswana tax payable by the company in respect of the profits out of which such dividend is paid;

(iii) for the purposes of subparagraph (i), profits, income and capital gains owned by a resident of Ireland which may be taxed in Botswana in accordance with this Agreement shall be deemed to be derived from sources in Botswana.

2. Where, in accordance with any provision of the Agreement, income derived by a resident of a Contracting State is exempt from tax in that State, such State may nevertheless, in calculating the amount of tax on the remaining income of such resident, take into account the exempted income.

3. Where, under any provision of this Agreement, income or gains is or are wholly or partly relieved from tax in a Contracting State and, under the laws in force in the other Contracting State, an individual, in respect of the said income or gains, is subject to tax by reference to the amount thereof which is remitted to or received in that other State, and not by reference to the full amount thereof, then the relief to be allowed under this Agreement in the first-mentioned State shall apply only to so much of the income or gains as is remitted to or received in that other State.

ARTICLE 24
Non-Discrimination

1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.

2. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.

4. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, paragraph 6 of Article 12 and paragraph 6 of Article 20 apply, interest, royalties, technical fees and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State.

ARTICLE 25
Mutual Agreement Procedure

1. Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 24, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of this Agreement.

4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs.

ARTICLE 26
Exchange of Information

1. The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to the Agreement. The exchange of information is not restricted by Articles 1 and 2.

3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:

(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

(b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;

ARTICLE 27
Assistance in Collection

1. The Contracting States shall to the extent permitted by their respective domestic law, lend assistance to each other in order to collect the taxes referred to in Article 2 as well as interest and penalties with regard to such taxes, provided that reasonable steps to recover such taxes have been taken by the Contracting State requesting such assistance.

2. Claims which are the subject of requests for assistance shall not have priority over taxes owing in the Contracting State rendering assistance and the provisions of paragraph 1 of Article 26 shall also apply to any information which, by virtue of this Article, is supplied to the competent authority of a Contracting State.

3. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of the provisions of this Article.

ARTICLE 28
Members of Diplomatic Missions and Consular Posts

ARTICLE 29
Entry Into Force

1. Each of the Contracting States shall notify to the other the completion of the procedures required by its law for the bringing into force of this Agreement. This Agreement shall enter into force on the date of receipt of the later of these notifications.

2. The provisions of the Agreement shall thereupon have effect:

(a) in Botswana:

(i) as respects taxes withheld at source, for any amounts paid or credited on or after the thirtieth day following the date upon which the Agreement enters into force; and

(ii) as respects other taxes, for any year of assessment beginning on or after the first day of July next following the year in which the Agreement enters into force;

(b) in Ireland:

(i) as respects income tax, the universal social charge and capital gains tax, for any year of assessment beginning on or after the first day of January next following the year in which this Agreement enters into force; and

(ii) as respects corporation tax, for any financial year beginning on or after the first day of January next following the year in which this Agreement enters into force.

ARTICLE 30
Termination

1. This Agreement shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Agreement after five years from the date on which the Agreement enters into force provided that at least six months prior written notice of termination has been given through diplomatic channels.

2. In such event this Agreement shall cease to have effect:

(a) in Botswana:

(i) as respects taxes withheld at source, for any amounts credited on or after the thirtieth day following the date on which the notice of termination is given;

(ii) as respects other taxes, for taxable income derived on or after the first day of July of the year next following that in which the notice of termination is given;

(b) in Ireland:

(i) as respects income tax, the universal social charge and capital gains tax, for any year of assessment beginning on or after the first day of January in the calendar year next following that in which the notice of termination is given;

(ii) as respects corporation tax, for any financial year beginning on or after the first day of January in the calendar year next following that in which the notice of termination is given.

PROTOCOL

On signing the Agreement between the Government of the Republic of Botswana and the Government of Ireland for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, the signatories, being duly authorised thereto, have in addition agreed on the following provisions which shall form an integral part of the said Agreement:

(1) With reference to Article 4:

It is understood that a Common Contractual Fund (CCF) established in Ireland shall not be regarded as a resident of Ireland and shall be treated as fiscally transparent for the purposes of granting tax treaty benefits.

(2) With reference to Articles 10 and 11:

For the purpose of paragraph 3 of Article 10 and paragraph 3 of Article 11, the term “Government” shall include:

(i) in the case of Botswana, the Bank of Botswana;

(ii) in the case of Ireland, the Central Bank of Ireland and the National Treasury Management Agency and bodies under its aegis; and

(iii) in either case, a statutory body or any institution wholly or mainly owned by the Government of the Republic of Botswana or the Government of Ireland as may be agreed from time to time between the competent authorities of the Contracting States.

IN WITNESS WHEREOF the undersigned, being duly authorised thereto, have signed this Protocol.

DONE at Gaborone this 10th day of June, 2014 in duplicate, in the English Language.

HON. O. K. MATAMBO,
for the Government of
the Republic of Botswana.

HON. JOE COSTELLO,
for the Government of
Ireland

BOTSWANA-MALAWI DOUBLE TAXATION AVOIDANCE AGREEMENT ORDER

(under section 53(2))

(27th May, 2016)

ARRANGEMENT OF PARAGRAPHS

PARAGRAPH

1. Citation

2. Approval and effective date of commencement

SCHEDULE

S.I. 54, 2016.

1. Citation

This Order may be cited as the Botswana-Malawi Double Taxation Avoidance Agreement Order.

2. Approval and effective date of commencement

The Double Taxation Avoidance Agreement set out in the Schedule hereto between the Government of the Republic of Botswana and the Government of the Republic of Malawi is presented to the National Assembly for approval, and shall, upon approval, take effect from the date specified in the Agreement.

SCHEDULE

The Government of the Republic of Botswana and the Government of the Republic of Malawi desiring to conclude an agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income,

Have agreed as follows:

Article 1
PERSONS COVERED

This Agreement shall apply to persons who are residents of one or both of the Contracting States.

Article 2
TAXES COVERED

1. This Agreement shall apply to taxes on income imposed on behalf of a Contracting State or of its local authorities, irrespective of the manner in which they are levied.

2. There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property.

3. The existing taxes to which this Agreement shall apply are:

(a) in Botswana:

(i) the income tax; and

(ii) the capital gains tax

(hereinafter referred to as “Botswana tax”); and

(b) in Malawi:

(i) the income tax;

(ii) the fringe benefits tax;

(hereinafter referred to as “Malawi tax”).

4. Nothing in this Agreement shall limit the right of either Contracting State to charge tax on the profits of a mineral enterprise at an effective rate different from that charged on the profits of any other enterprise. The term ‘a mineral enterprise’ means an enterprise carrying on the business of mining.

5. Notwithstanding any other provisions of this Agreement, where Botswana tax is paid or payable in accordance with a Tax Agreement, this Agreement shall not apply except to such an extent as may be provided in such Tax Agreement.

6. The Agreement shall apply also to any identical or substantially similar taxes which are imposed by either Contracting State after the date of signature of the Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes which have been made in their respective taxation laws.

Article 3
GENERAL DEFINITIONS

1. For the purpose of this Agreement, unless the context otherwise requires:

(a) the term “Botswana” means the “Republic of Botswana”; and

(b) the term “Malawi” means the Republic of Malawi and includes all territory comprising of Malawi in accordance with the Constitution of the Republic of Malawi;

(d) the term “company” means any body corporate or any entity which is treated as a body corporate for tax purposes;

(e) the term “competent authority” means:

(i) in Botswana, the Minister of Finance and Development Planning, represented by the Commissioner General of the Botswana Unified Revenue Service or his authorised representative; and

(ii) in Malawi, the Minister of Finance represented by the Commissioner General for the Malawi Revenue Authority or his authorised representative;

(f) the terms “enterprise of a Contracting State” and “enterprise of the other Contracting State” mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;

(g) the term “international traffic” means any transport by a ship, aircraft or rail or road transport vehicle operated by an enterprise of a Contracting State, except when the ship, aircraft or rail or road transport vehicle is operated solely between places in the other Contracting State;

(h) the term “national” means:

(i) any individual possessing the nationality of a Contracting State;

(ii) any legal person or association deriving its status as such from the laws in force in a Contracting State;

(i) the term “person” includes an individual, an estate, a trust, a company and any other body of persons which is treated as an entity for tax purposes; and

(j) the term “business” includes the performance of professional services and of other activities of an independent character.

2. As regards the application of the provisions of this Agreement at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning which it has at that time under the law of that State for the purposes of the taxes to which this Agreement applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under laws of that State.

Article 4
RESIDENT

1. For the purposes of this Agreement, the term “resident of a Contracting State” means;

(a) any individual who is ordinarily resident in that State and any person other than an individual which has its place of effective management in that State;

(b) that State or local authority thereof;

2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:

(c) if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national;

(d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.

Article 5
PERMANENT ESTABLISHMENT

1. For the purposes of this Agreement, the term “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

2. The term “permanent establishment” includes especially:

(a) a place of management;

(b) a branch;

(d) a factory;

(e) a workshop;

(f) a mine, an oil or gas well, a quarry or any other place of extraction or exploitation of natural resources;

(g) an installation or structure used for the exploration of natural resources provided that the installation or structure continues for a period of more than six months; and

(h) a farm or plantation.

3. The term “permanent establishment” likewise encompasses:

(a) a building site, a construction, assembly or installation project or any supervisory activity in connection with such site or project, but only where such site, project or activity continues for a period of more than six months within any twelve-month period;

(b) the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by an enterprise for such purpose, but only where activities of that nature continue (for the same or a connected project) within the Contracting State for a period or periods aggregating more than six months within any twelve-month period.

(c) the performance of professional services or other activities of an independent character by an individual, but only where those services or activities continue within a Contracting State for a period or periods exceeding in the aggregate 183 days in any twelve-month period commencing or ending in the fiscal year concerned.

4. Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not to include:

(a) the use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise;

(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

(c) the maintenance of stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display;

(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or for collecting information, for the enterprise;

(e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character; and

(a) has, and habitually exercises in that State an authority to conclude contracts in the name of the enterprise;

7. Notwithstanding the preceding provisions of this Article, an insurance enterprise of a Contracting State shall, except in regard to reinsurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums in the territory of that State or insures risks situated therein through an employee or through a person other than an agent of an independent status to whom paragraph 6 applies.

8. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment of otherwise), shall not of itself constitute either company a permanent establishment of the other.

Article 6
INCOME FROM IMMOVABLE PROPERTY

2. The term “immovable property” shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources. Ships, boats, aircraft, rail and road transport vehicles shall not be regarded as immovable property.

3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting or use in any other form of immovable property.

4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise.

Article 7
BUSINESS PROFITS

1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as are attributed to that permanent establishment.

3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the business of the permanent establishment including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the permanent establishment. Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for use of patents or other rights, or by way of commission for specific services performed or for management, or except in the case of a banking enterprise by way of interest on moneys lent to the head office of the enterprise or any of its other offices.

4. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

Article 8
INTERNATIONAL TRANSPORT

1. Profits of an enterprise of a Contracting State from the operation of ships, aircraft or rail or road transport vehicles in international traffic shall be taxable only in that State.

2. For the purposes of this Article, profits from the operation of ships, aircraft or rail or road transport vehicles in international traffic shall include:

(a) in the case of ships or aircraft, profits derived from the rental on a bare boat basis of ships or aircraft used in international traffic and

(b) in the case of rail or road transport vehicles, profits derived from the rental of rail or road transport vehicles used in international traffic,

if such profits are incidental to the profits to which the provisions of paragraph 1 apply.

4. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.

Article 9
ASSOCIATED ENTERPRISES

1. Where:

(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or

(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,

2. Where a Contracting State includes in the profits of an enterprise of that State – and taxes accordingly – profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State may make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall, if necessary, consult each other.

Article 10
DIVIDENDS

1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.

(a) 5 percent of the gross amount of the dividends if the beneficial owner is a company which holds at least 25 percent of the capital of the company paying dividends; or

(b) 8 percent of the gross amount of the dividends in all other cases.

This paragraph shall not affect taxation of the company in respect of the profits out of which the dividends were distributed.

3. The term “dividends” as used in this Article means income from shares, “jouissance” shares or “jouissance” rights, mining shares, founders’ shares or other rights (not being debt-claims) participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the Contracting State of which the company making the distribution is a resident.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.

5. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except in so far as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment situated in that other State, nor subject the company’s undistributed profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.

Article 11
INTEREST

1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

3. Notwithstanding the provisions of paragraph 2, interest mentioned in paragraph 1 shall not be taxable in the Contracting State where the interest arises if—

(a) the recipient thereof is the government of the other Contracting State or a local authority thereof or any agency wholly owned and controlled by that government or authority; and

(b) the interest is paid in respect of a loan granted or guaranteed by a financial institution of a public character with the objective of promoting exports and development, if the credit granted or guaranteed contains an element of subsidy.

5. The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.

Article 12
ROYALTIES

1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, such royalties may also be taxed in the Contracting State in which they arise, and according to the laws of that State, but if the recipient is the beneficial owner of the royalties, the tax so charged shall not exceed 12 percent of the gross amount of the royalties.

3. The term “royalties” as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work (including cinematography films and films, tapes or discs for radio or television broadcasting), any patent, trade mark, design or model, plan, secret formula or process, or for the use of or the right to use industrial, commercial, or scientific equipment or for information concerning industrial, commercial or scientific experience.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.

5. Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the right or property in respect of which the royalties are paid is effectively connected, and such royalties are borne by such permanent establishment, then such royalties shall be deemed to arise in the State in which the permanent establishment is situated.

Article 13
CAPITAL GAINS

1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State, may be taxed in that other State.

2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise), may be taxed in that other State.

4. Gains derived by a resident of a Contracting State from the alienation of shares deriving more than 50 percent of their value directly or indirectly from immovable property situated in the other Contracting State may be taxed in that other State.

5. Gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3 and 4, shall be taxable only in the Contracting State of which the alienator is a resident.

Article 14
DEPENDENT PERSONAL SERVICES

1. Subject to the provisions of Articles 15, 17, and 18, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.

(b) the remuneration is paid by or on behalf of an employer who is not a resident of the other State; and

3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship, aircraft or rail or road transport vehicle operated in international traffic by an enterprise of a Contracting State may be taxed in the State in which the place of effective management of the enterprise is situated.

Article 15
DIRECTORS’ FEES

Article 16
ENTERTAINERS AND SPORTS PERSONS

1. Notwithstanding the provisions of Articles 7 and 14, income derived by a resident of a Contracting State as an entertainer such as a theatre, motion picture, radio or television artiste, or a musician, or as a sports person, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State.

2. Where income in respect of personal activities exercised by an entertainer or a sports person in his capacity as such accrues not to the entertainer or sports person himself but to another person, that income may, notwithstanding the provisions of Articles 7 and 14, be taxed in the Contracting State in which the activities of the entertainer or sports person are exercised.

3. Income derived by a resident of a Contracting State from activities exercised in the other Contracting State as envisaged in paragraphs 1 and 2, shall be exempt from tax in that other State if the visit to that other State is supported wholly or mainly by public funds of the first-mentioned Contracting State, or a local authority thereof, or takes place under a cultural agreement or arrangement between the Governments of the Contracting States.

Article 17
PENSIONS AND ANNUITIES

1. Subject to the provisions of paragraph 2 of Article 18, pensions and other similar remuneration, and annuities, arising in a Contracting State and paid to a resident of the other Contracting State, may be taxed in the first-mentioned Contracting State.

3. Notwithstanding the provisions of paragraph 1, pensions paid and other similar payments made under a public scheme which is part of the social security system of a Contracting State or a local authority thereof shall be taxable only in that State.

Article 18
GOVERNMENT SERVICE

(a) Salaries, wages and other similar remuneration, other than pension, paid by a Contracting State or a local authority thereof to an individual in respect of services rendered to that State or authority shall be taxable only in that State.

(i) is a national of that State; or

(ii) did not become a resident of that State solely for the purpose of rendering the services.

(a) Any pension paid by, or out of funds created by, a Contracting State or a local authority thereof to an individual in respect of services rendered to that State or authority shall be taxable only in that State.

(b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.

3. The provisions of Articles 14, 15, 16 and 17 shall apply to salaries, wages and other similar remuneration, and to pensions, in respect of services rendered in connection with a business carried on by a Contracting State or a local authority.

Article 19
STUDENTS, APPRENTICES AND BUSINESS TRAINEES

A student, apprentice or business trainee who is present in a Contracting State solely for the purpose of his education or training and who is, or immediately before being so present was, a resident of the other Contracting State, shall be exempt from tax in the first mentioned State on payments received from outside that first-mentioned State for the purposes of his maintenance, education or training.

Article 20
TECHNICAL FEES

1. Technical fees arising in a Contracting State which are derived by a resident of the other Contracting State may be taxed in that other State.

2. However, such technical fees may also be taxed in the Contracting State in which they arise, and according to the law of that State; but where such technical fees are derived by a resident of the other Contracting State who is subject to tax in that State in respect thereof, the tax charged in the Contracting State in which the technical fees arise shall not exceed 10 percent of the gross amount of such fees.

3. The term “technical fees” as used in this Article means payments of any kind to any person, other than to an employee of the person making the payments, in consideration for any services of an administrative, technical, managerial or consultancy nature performed outside that State.

4. The provisions of paragraphs 1 and 2 of this Article shall not apply if the beneficial owner of the technical fees, being a resident of a Contracting State, carries on business in the other Contracting State in which the technical fees arise, through a permanent establishment situated therein and the technical fees are effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.

5. Technical fees shall be deemed to arise in a Contracting State when the payer is that State, a local authority or a resident of that State. Where, however, the person paying the technical fees, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the obligation to pay the technical fees was incurred, and such technical fees are borne by that permanent establishment, then such technical fees shall be deemed to arise in the State in which the permanent establishment is situated.

6. Where by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the technical fees paid exceeds, for whatever reason, the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the law of each Contracting State, due regard being had to the other provisions of this Agreement.

Article 21
OTHER INCOME

1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.

2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.

Article 22
ELIMINATION OF DOUBLE TAXATION

1. Double taxation shall be eliminated as follows:

(a) In Botswana, subject to the provisions of the laws of Botswana regarding the allowance of a credit against Botswana tax of tax payable under the laws of a country outside Botswana, Malawi tax payable under the laws of Malawi and in accordance with this Agreement, whether directly or by deduction, on profits or income liable to tax in Malawi shall be allowed as a credit against any Botswana tax payable in respect of the same profits or income by reference to which the Malawi tax is computed. However, the amount of such credit shall not exceed the amount of the Botswana tax payable on that income in accordance with the laws of Botswana;

(b) in Malawi, tax paid by residents of Malawi in respect of income taxable in Botswana in accordance with the provisions of this Agreement, shall be deducted from the taxes due according to Malawi fiscal law. Such deduction shall not, however, exceed that part of the Malawi tax, as computed before the deduction is given, which is attributable to the income which, in accordance with the provisions of this Agreement, may be taxed in Botswana.

2. For purposes of paragraph 1 of this Article, the terms “Botswana tax payable” and “Malawi tax paid” shall be deemed to include the amount of tax which would have been paid in Botswana or in Malawi, as the case may be, but for an exemption or reduction granted in accordance with laws designed to promote economic development in that Contracting State.

3. A grant given by a Contracting State to a resident of the other Contracting State in accordance with laws designed to promote economic development in that first mentioned State, shall not be taxable in the other State.

Article 23
NON-DISCRIMINATION

5. The provisions of this Article shall not be construed as preventing a Contracting State from imposing on the profits attributable to a permanent establishment in that Contracting State of a company which is a resident of the other contracting State, a tax at a rate which does not exceed the rate of income tax or normal tax on companies, as the case may be, by more than five percentage points.

Article 24
MUTUAL AGREEMENT PROCEDURE

3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of this Agreement. They may also consult together for the elimination of double taxation in cases not provided for in this Agreement.

4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs.

Article 25
EXCHANGE OF INFORMATION

1. The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions in particular for the prevention of fraud or evasion of such taxes, in so far as the taxation thereunder is not contrary to the Agreement. The exchange of information is not restricted by Articles 1 and 2.

2. Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to the taxes referred to in paragraph 1, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. Notwithstanding the foregoing, information received by a Contracting State may be used for other purposes when such information may be used for such other purposes under the laws of both States and the competent authority of the supplying State authorises such use.

3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:

(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

(b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;

4. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit the Contracting State to decline to supply information solely because it has no domestic interest in such information.

Article 26
ASSISTANCE IN COLLECTION

1. The Contracting States shall, to the extent permitted by their respective domestic law, lend assistance to each other in order to collect the taxes referred to in Article 2 as well as interest and penalties with regard to such taxes, provided that reasonable steps to recover such taxes have been taken by the Contracting State requesting such assistance.

2. Claims which are the subject of requests for assistance shall not have priority over taxes owing in the Contracting State rendering assistance and the provisions of paragraph 1 of Article 25 shall also apply to any information which, by virtue of this Article is supplied to the competent authority of a Contracting State.

3. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of the provisions of this Article.

Article 27
MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS

Article 28
ENTRY INTO FORCE

1. Each of the Contracting States shall notify the other of the completion of the procedures required by its law for the bringing into force of this Agreement. This Agreement shall enter into force on the date of receipt of the latter of these notifications.

2. The provisions of this Agreement shall apply:

(a) with regard to taxes withheld at source, in respect of amounts paid or credited on or after the first day of the second month next following the date upon which this Agreement enters into force; and

(b) with regard to other taxes, on taxable income derived on or after the first day of July of the year next following that of the entry into force of this Agreement.

Article 29
TERMINATION

1. This Agreement shall remain in force indefinitely but either of the Contracting States may terminate the Agreement through the diplomatic channel, by giving the other Contracting State written notice of termination not later than 30 June of any calendar year starting five years after the year in which this Agreement entered into force.

2. In such event this Agreement shall cease to apply:—

(a) with regard to taxes withheld at source, in respect of amounts paid or credited on or after the first day of the second month next following the date upon which the notice of termination is given; and

(b) with regard to other taxes, on taxable income derived on or after the first day of July of the year next following that in which the notice of termination is given.

IN WITNESS WHEREOF the undersigned, being duly authorised thereto, have signed this Agreement.

DONE at GABORONE this 15th day of March, 2016 in duplicate, in the English Language.

HON. O.K.MATAMBO, MP	HON. DR. GEORGE T. CHAPONDA, MP
for the Government of the Republic of Botswana.	for the Government of the Republic of Malawi.

INCOME TAX (BODIES CORPORATE EXEMPT FROM TAX) REGULATIONS

(section 11(b))

(1st July 2016)

ARRANGEMENT OF REGULATIONS

REGULATION

1. Citation

2. Bodies corporate exempt from tax

S.I. 41, 2016,
S.I. 67, 2017,
S.I. 105, 2019,
S.I. 11, 2020,
S.I. 14, 2020,
S.I. 8, 2021,
S.I. 63, 2021,
S.I. 4, 2022,
S.I. 148, 2022,
S.I. 53, 2023.

1. Citation

These Regulations may be cited as the Income Tax (Bodies Corporate Exempt from Tax) Regulations.

2. Bodies corporate exempt from tax

The following bodies corporate wholly owned by the Government are exempt from tax under paragraph (xx) Part 1 of the Second Schedule—

Botswana Accountancy College;

Botswana Accounting Oversight Authority;

Botswana Bureau of Standards;

Botswana College of Distance and Open Learning;

Botswana Energy Regulatory Authority;

Botswana Examinations Council;

Botswana Gambling Authority;

Botswana Geoscience Institute;

Botswana Innovation Hub;

Botswana Institute for Development Policy Analysis;

Botswana Institute for Technology Research and Innovation;

Botswana Institute of Chartered Accountants;

Botswana International University of Science and Technology;

Botswana Investment and Trade Centre;

Botswana Medicines Regulatory Authority;

Botswana National Productivity Centre;

Botswana National Sports Commission

Botswana Privatisation Asset Holdings

Botswana Qualifications Authority;

Botswana Tourism Organisation;

Botswana Trade Commission;

Botswana Unified Revenue Service;

Botswana University of Agriculture and Natural Resources;

Citizen Entrepreneurial Development Agency;

Civil Aviation Authority;

Companies and Intellectual Property Authority;

Competition Authority;

Human Resources Development Council;

Institute of Development Management;

Local Enterprises Authority;

Motor Vehicle Accident Fund;

National Agriculture Research and Development Institute;

National Food Technology Centre;

Non-Bank Financial Institutions Regulatory Authority;

Public Enterprises Evaluation and Privatisation Agency;

Public Procurement and Asset Disposal Board;

Selebi-Phikwe Economic Diversification Unit;

Sir Ketumile Masire Teaching Hospital;

Special Economic Zones Authority *;

Statistics Botswana; and

University of Botswana.

* From 1st July, 2022 to 30th June, 2032.

INCOME TAX (DONATIONS) REGULATIONS

(under section 51(2))

(1st January, 2018)

ARRANGEMENT OF REGULATIONS

REGULATION

1. Citation

2. Beneficiaries of donations for tax deduction purposes

S.I. 102, 2017.

1. Citation

These Regulations may be cited as the Income Tax (Donations) Regulations.

2. Beneficiaries of donations for tax deduction purposes

(1) A person may benefit from a tax deduction under section 51 where he or she makes a donation to the following beneficiaries—

(a) orphaned children under the age of 18;

(b) destitute persons;

(d) an institution that provides for the well-being of the persons listed in paragraphs (a) to (c).

(2) The relevant office shall recommend to the Commissioner General the beneficiaries under subregulation (1).

(3) For purposes of these Regulations, the Commissioner General shall accept the following as the “relevant office”—

(a) the Ministry of Local Government and Rural Development – for donations made to orphaned children; and

(b) Office of the President – for donations made to destitute persons and people living with disabilities.

(4) A recommendation accepted by the Commissioner General shall be valid for a period of three years.

(5) Where the Commissioner General is satisfied that the circumstances upon which acceptance was granted under subregulation (3) have changed materially so as to affect the acceptance, the Commissioner General may at any time during the duration of the acceptance, withdraw such acceptance.

INCOME TAX (SPEDU REGION DEVELOPMENT APPROVAL) ORDER

(section 52)

(16th February, 2018)

ARRANGEMENT OF PARAGRAPHS

PARAGRAPH

1. Citation

2. Interpretation

3. Application of Order

4. Tax relief tax rate

5. Eligibility criteria

6. Application for tax relief

7. Issuance of tax relief certificate

8. Withdrawal and revocation of tax relief certificate

Schedule

S.I. 19, 2018.

1. Citation

This Order may be cited as the Income Tax (SPEDU Region Development Approval) Order.

2. Interpretation

In this Order, unless the context otherwise requires—

“Commissioner General” has the same meaning assigned to it in the Botswana Unified Revenue Service Act (Cap. 53:03);

“manufacturing” means the subjection of a raw material to a process, or processes, that will result in a product having new and distinctive characteristics from the raw material from which it is made, and it includes processes for the—

(a) cutting, polishing and refining of minerals; and

(b) tanning of leather;

Provided that the following processes shall not on their own qualify as manufacturing—

(i) packaging and bottling,

(ii) diluting, mixing or blending of ingredients which does not result in the formation of a different product,

(iii) printing, marking and labelling,

(iv) washing, painting dyeing, bleaching, texturising of textile goods and impregnating or mercerising operations,

(v) etching, decorating, calibration, polishing, cutting up, reinforcing of an otherwise finished product,

(vi) simple assembly operations,

(vii) baking, and

(viii) simple operations consisting of removal of dust, sifting or screening, sorting grading, classifying and matching including the making up of sets of goods;

“SPEDU Region” means the areas referred to, collectively, in paragraph 3;

“SPEDU business” means any business registered in Botswana that are undertaking, in the SPEDU Region, any development project or activity listed in paragraph 5 of this Order and is granted tax relief by the Minister responsible for finance; and

“tourism and tourism related services” mean activities licenced under the Tourism Act (Cap. 42:09).

3. Application of Order

For purposes of section 52(1)(d) of the Act, this Order shall apply to development projects or activities in the following areas, hereinafter referred to as the “SPEDU Region”—

(a) Selebi-Phikwe;

(b) Bobonong;

(d) Lerala-Maunatlala; and

(e) neighbouring villages, farms and cattle posts.

4. Tax relief tax rate

(1) The income of a company, which has been approved as a SPEDU business, arising from its operation in the SPEDU Region shall—

(a) for a new business, be taxable at a special rate of five percent for the first five years of the business operation; and

(b) for an existing business, be taxable at a special rate of five percent for the first five years of the business operation commencing on the date specified in the Tax Relief Certificate.

(2) The income of a company referred to under subparagraph (1) shall, after the first five years, respectively, be taxable at a special rate of 10 percent for operations in the SPEDU Region.

(3) For the avoidance of doubt, the special tax rate relief applicable under this paragraph shall only apply to income arising from the operations of a business in relation to the development projects or activities for which a certificate is granted in accordance with paragraph 7.

5. Eligibility criteria

Notwithstanding paragraph 6, the tax relief granted under paragraph 4 shall only be applicable to an applicant who—

(a) sets up a new business or operates an existing business in the SPEDU Region; and

(b) produces goods and services in the areas of agriculture, manufacturing and tourism in the SPEDU Region.

6. Application for tax relief

(1) A business which wishes to be granted tax relief under paragraph 4 shall apply to the Minister in accordance with Form A set out in the Schedule.

(2) An application made under subparagraph (1) shall be accompanied by an assessment report and a recommendation letter from the Minister responsible for investment, trade and industry.

(3) The form referred to in subparagraph (1) shall be accompanied by the following documentation—

(a) for a new business, an approved registration for tax;

(b) for an existing business, a tax clearance certificate;

(d) any documentation that the Minister may require.

(4) For purposes of satisfying himself or herself that a proposed project or activity would be beneficial to the development of the economy in accordance with section 52(5) of the Act, the Minister shall consider a recommendation from the Minister responsible for investment, trade and industry on an applicant’s application for the granting of tax relief.

7. Issuance of tax relief certificate

Where the Minister issues an applicant with a development approval order in accordance with section 52(5) of the Act, the Minister may issue the applicant with a certificate of tax relief in accordance with Form B set out in the Schedule, indicating the tax rates applicable to the applicant’s business.

8. Withdrawal and revocation of tax relief certificate

(1) The Minister may withdraw the tax relief granted under this Order, where a business ceases to operate the development project or activity for which the tax relief was granted.

(2) Where the Minister withdraws the tax relief in accordance with subparagraph (1), he or she shall revoke the tax relief certificate issued in accordance with this Order.

(1) The Minister shall notify the applicant of the decision to revoke the tax relief certificate within 30 days of the business ceasing to operate the development project or activity for which the tax relief was granted and the notice shall specify the effective date of revocation of the tax relief certificate.

FORM A

(Paragraph 6(1))

APPLICATION FOR A DEVELOPMENT APPROVAL ORDER IN RESPECT OF SPEDU BUSINESSES

SPEDU BUSINESS

    To:    Permanent Secretary
            Ministry of Finance and Economic Development
            Private Bag 008
            GABORONE

Application for approval is hereby made in terms of section 52 of the Income Tax Act, for the issue of a development approval order in respect of a SPEDU business:

1. Name of applicant: ……………………………………………………………………………………………….

2. Postal address: …………………………………………………………………………………………………..

……………………………………………………………………………………………………………………………

3. Physical address: ………………………………………………………………………………………………..

Contact telephone: ……………………………………………………………………………………………….

4. Tax Identification Number (if available): ………………………………………………………………….

5. Date of commencement of business:

existing business: ……………………………………………………………………20……………………….

new business: proposed date of commencement: …………………………………………..20………..

6. Capital investment excluding vehicles: ……………………………………………………………………….

…………………………………………………………………………………………………………………………

8. Number of people employed or to be employed by the company:

Citizens Non-Citizens Total
………………. …………………… ……………………

10. Particulars of facilities, if any, for training and imparting skills to Botswana citizens:

…………………………………………………………………………………………………………………………

11. Any other relevant information relating to your business:

……………………………………………………………………………………………………………………………..

12. The effect your activity is likely to have on the development of the economy of the SPEDU area or the economic advancement of its citizens:

(a) in what way will your business stimulate other economic, industrial or commercial activity whether business or otherwise?

……………………………………………………………………………………………………………………………..

(b) is there potential of the business to attract down-stream activities to SPEDU area?

……………………………………………………………………………………………………………………………..

(d) is there any potential for substitution of materials produced outside the SPEDU area with materials produced in the area?

…………………………………………………………………………………………………………………………….

(e) will your business activity result in the reduction of prices to consumers?

…………………………………………………………………………………………………………………………….

DECLARATION:

As an Officer of

……………………………………………………………………………………………………………………………
(Name of company)

I, …………………………………………………………………………………………………………………………of
(Full name of Declarant)

……………………………………………………………………………………………………………………………
(Postal Address)

declare that to the best of my knowledge and belief, the information given in this application is true and correct.

Date: ………………………………………………………………………………………………………………..

Signature: ………………………………………………………………………………………………………….

Declarant/Authorised Agent*

* Authorised Agent’s Full Name: ………………………………………………………………………………….

FORM B

(Paragraph 7)

TAX RELIEF CERTIFICATE

ISSUED UNDER THE INCOME TAX (SPEDU DEVELOPMENT APPROVAL) ORDER [CAP 52:01]

1. NAME OF BUSINESS

This tax relief certificate is issued to: ……………………………………………………………………..

……………………………………………………………………………………………………………………..

2. APPROVED BUSINESS DEVELOPMENT PROJECT OR ACTIVITY

The following are the development projects or activities for which the tax relief applies:

……………………………………………………………………………………………………………………..

3. AREA WHERE DEVELOPMENT PROJECT OR ACTIVITY WILL BE CARRIED OUT

The business shall operate in the following area or areas-

……………………………………………………………………………………………………………………..

4. TYPES AND RATES OF TAX RELIEF

(a) NEW COMPANY

…………………………………………………………………………………………………………….

(b) EXISTING COMPANY

…………………………………………………………………………………………………………….

5. DATE OF COMMENCEMENT OF TAX RELIEF

……………………………………………………………………………………………………………………..

6. TERMS AND CONDITIONS OF CERTIFICATE

(a) The development project or activity shall only be carried out in the areas listed hereunder. The applicant shall apply to the Minister for approval to conduct the same or a different development project or activity in an area not listed in this certificate.

(b) Where the development project or activity is relocated to an area not listed in this certificate without prior approval by the Minister shall result in the revocation of this certificate.

7. REVOCATION

The Minister may upon satisfaction that the applicant has ceased operating in the approved area, revoke the certificate.

8. CERTIFICATION

I,……………………………………………. Minister of Finance and Economic Development, certify that ……………………………………….to which this certificate refers is with effect from……………. granted the tax relief in accordance with the purpose of section 52 of the Act.

…………………………………………………………………
Minister of Finance and Economic Development

…………………………………………………………………
Date

Official Stamp

BOTSWANA-BELGIUM DOUBLE TAXATION AVOIDANCE AGREEMENT ORDER

(section 53(1))

(27th July, 2018)

ARRANGEMENT OF PARAGRAPHS

PARAGRAPH

1. Citation

2. Approval and effective date of commencement

Schedule

S.I. 109, 2018.

WHEREAS in exercise of the powers conferred on him by section 53(1) of the Income Tax Act, the Minister of Finance and Economic Development has, on behalf of the Government, entered into an Agreement with the Government of the Kingdom of Belgium for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income;

NOW THEREFORE, the following Order is hereby made-

1. Citation

This Order may be cited as the Botswana-Belgium Double Taxation Avoidance Agreement Order.

2. Approval and effective date of commencement

The Double Taxation Avoidance Agreement set out in the Schedule hereto between the Government of the Republic of Botswana and the Government of the Kingdom of Belgium is presented to the National Assembly for approval, and shall, upon approval, take effect from the date specified in the Agreement.

SCHEDULE

The Government of the Republic of Botswana on the one hand

and

The Government of the Kingdom of Belgium,

The Government of the Flemish Community,

The Government of the French Community,

The Government of the German-Speaking Community,

The Government of the Flemish Region,

The Government of the Walloon Region,

and The Government of the Brussels-Capital Region,

on the other hand,

Desiring to conclude an agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income,

Have agreed as follows:

CHAPTER I
SCOPE OF THE AGREEMENT

ARTICLE 1
Persons Covered

This Agreement shall apply to persons who are residents of one or both of the Contracting States.

ARTICLE 2
Taxes Covered

1. This Agreement shall apply to taxes on income and on capital imposed on behalf of a Contracting State or of its political subdivisions or local authorities, irrespective of the manner in which they are levied.

2. There shall be regarded as taxes on income and on capital all taxes imposed on total income, on total capital, or on elements of income or of capital, including taxes on gains from the alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation.

3. The existing taxes to which the Agreement shall apply are in particular:

a) in the case of Botswana:

(i) the income tax including any withholding tax, prepayment or advance tax payment with respect to aforesaid tax; and

(ii) the capital gains tax;

(hereinafter referred to as “Botswana tax”); and

b) in the case of Belgium:

(i) the individual income tax;

(ii) the corporate income tax;

(iii) the income tax on legal entities;

(iv) the income tax on non-residents;

including the prepayments and the surcharges on these taxes and prepayments; (hereinafter referred to as “Belgian tax”).

4. The Agreement shall apply also to any identical or substantially similar taxes that are imposed after the date of signature of the Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes that have been made in their Taxation Laws.

CHAPTER II
DEFINITIONS

ARTICLE 3
General Definitions

1. For the purposes of this Agreement, unless the context otherwise requires:

a) (i) the term “Botswana” means the Republic of Botswana;

(ii) the term “Belgium” means the Kingdom of Belgium; used in a geographical sense, it means the territory of the Kingdom of Belgium, including the territorial sea and any other area in the sea and in the air within which the Kingdom of Belgium, in accordance with international law, exercises sovereign rights or its jurisdiction;

b) the terms “a Contracting State” and “the other Contracting State” mean Botswana or Belgium as the context requires;

c) the term “business” includes the performance of professional services and of other activities of an independent character;

d) the term “company” means any body corporate or any entity that is treated as a body corporate for tax purposes in the Contracting State of which it is a resident;

e) the term “competent authority” means:

(i) in the case of Botswana, the Minister responsible for finance, represented by the Commissioner General of the Botswana Unified Revenue Service, and

(ii) in the case of Belgium, as the case may be, the Minister of Finance of the federal Government and/or of a Region and/or of a Community, or his authorised representative;

f) the term “enterprise” applies to the carrying on of any business;

g) the terms “enterprise of a Contracting State” and “enterprise of the other Contracting State” mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State; the terms also include an enterprise carried on by a resident of a Contracting State through an entity that is treated as fiscally transparent in that Contracting State;

h) the term “international traffic” means any transport by a ship or aircraft operated by an enterprise that has its place of effective management in a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;

i) the term “national”, in relation to a Contracting State, means:

(i) any individual possessing the nationality or citizenship of that Contracting State; and

(ii) any legal person, partnership or association deriving its status as such from the laws in force in that Contracting State;

j) the term “pension fund” means any person established in a Contracting State:

(i) that administers pension schemes or provides retirement benefits; or

(ii) that earns income on behalf of one or more persons operated to administer pension schemes or provide retirement benefits; and

provided it is either:

A) in the case of Botswana, an entity established under Botswana Law and regulated by the Non Bank Financial Institutions Regulatory Authority; or

B) in the case of Belgium, regulated by the Financial Services and Markets Authority (FSMA) or by the National Bank of Belgium, or registered with the Belgian Tax Administration;

k) the term “person” includes an individual, a company, a trust, an estate and any other body of persons which is treated as an entity for tax purposes.

ARTICLE 4
Resident

1. For the purposes of this Agreement, the term “resident of a Contracting State” means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature, and also includes that State and any political subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State or capital situated therein.

2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:

a) he shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests);

b) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he has a habitual abode;

c) if he has a habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national;

d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.

ARTICLE 5
Permanent Establishment

1. For the purposes of this Agreement, the term “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

2. The term “permanent establishment” includes especially:

a) a place of management;

b) a branch;

c) an office;

d) a factory;

e) a workshop, and

f) a mine, an oil or gas well, a quarry or any other place of extraction or exploitation of natural resources; and

g) an installation or structure used for the exploration of natural resources, provided that the installation or structure continues for a period or periods aggregating more than 183 days in any twelve-month period commencing or ending in the fiscal year concerned.

3. The term “permanent establishment” likewise encompasses:

a) a building site, a construction, assembly or installation project or on-site supervisory activity in connection with such site or activity, but only where such site, project or activity continue for a period or periods aggregating more than 183 days in any twelve-month period commencing or ending in the fiscal year concerned;

b) the furnishing of services, including consultancy services, by an enterprise directly or through employees or other personnel engaged by the enterprise for such purpose, but only where activities of that nature are exercised and continue (for the same or connected project) within a Contracting State for a period or periods aggregating more than 183 days in any twelve-month period commencing or ending in the fiscal year concerned.

4. Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not to include:

a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;

b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;

c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information for the enterprise;

e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character;

f) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs a) to e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.

5. Notwithstanding the provisions of paragraphs 1 and 2, where a person other than an agent of an independent status to whom paragraph 6 applies is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned Contracting State in respect of any activities which that person undertakes for the enterprise, if such a person:

a) has and habitually exercises in that State an authority to conclude contracts in the name of the enterprise; or

b) has no such authority, but habitually maintains in the first-mentioned Contracting State a stock of goods or merchandise belonging to the enterprise from which he regularly fills orders or makes deliveries on behalf of the enterprise;

CHAPTER III
TAXATION OF INCOME

ARTICLE 6
Income from Immovable Property

2. The term “immovable property” shall have the meaning which it has under the Law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships, boats and aircraft shall not be regarded as immovable property.

3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property.

4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise.

ARTICLE 7
Business Profits

1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.

3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or, except in the case of a banking enterprise by way of interest on moneys lent to the permanent establishment. Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged (otherwise than towards reimbursement of actual expenses), by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission for specific services performed or for management, or, except in the case of a banking enterprise by way of interest on moneys lent to the head office of the enterprise or any of its other offices.

4. Insofar as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary; the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.

5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

ARTICLE 8
International Transport

1. Profits from the operation of ships or aircraft in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

2. For the purpose of this Article, profits from the operation of ships or aircraft in international traffic shall include in particular:

a) profits from the leasing of ships or aircraft engaged in international traffic on charter fully equipped, manned and supplied;

b) profits from the leasing of ships or aircraft on a bare boat charter basis if such leasing activity is an ancillary activity for the enterprise engaged in international traffic;

c) profits from the leasing of containers if such leasing activity is an ancillary activity for the enterprise engaged in international traffic.

3. If the place of effective management of a shipping enterprise is aboard a ship, then it shall be deemed to be situated in the Contracting State in which the home harbour of the ship is situated, or, if there is no such home harbour, in the Contracting State of which the operator of the ship is a resident.

4. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.

ARTICLE 9
Associated Enterprises

1. Where

(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or

(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,

2. Where a Contracting State includes in the profits of an enterprise of that State – and taxes accordingly – profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make such an adjustment as it considers appropriate to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall if necessary consult each other.

3. The provisions of paragraph 2 shall not apply in case of fraud or wilful default by one of the concerned enterprises in the transactions leading to an adjustment of profits in accordance with paragraph 1.

ARTICLE 10
Dividends

1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.

a) 5 per cent of the gross amount of the dividends if the beneficial owner is a pension fund, provided that the shares or other rights in respect of which such dividends are paid are held for the purpose of an activity mentioned under Article 3, 1), j);

b) 5 per cent of the gross amount of the dividends if the beneficial owner is a company which holds directly or indirectly at least 25 per cent of the capital of the company paying the dividends; or

c) 12 per cent of the gross amount of the dividends in all other cases.

This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

3. The term “dividends” as used in this Article means income from shares, “jouissance” shares or “jouissance” rights, mining shares, founders’ shares or other rights, not being debt-claims, participating in profits, as well as income-even paid in the form of interest- which is subjected to the same taxation treatment as income from shares by the tax legislation of the State of which the paying company is a resident.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident through a permanent establishment situated therein and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.

5. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment situated in that other State, nor subject the company’s undistributed profits to a tax on the company’s undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.

6. No relief shall be available under this Article if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the shares or other rights in respect of which the dividend is paid to take advantage of this Article by means of that creation or assignment.

ARTICLE 11
Interest

1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 10 per cent of the gross amount of the interest.

3. Notwithstanding the provisions of paragraph 2, interest shall be exempted from tax in the Contracting State in which it arises if it is:

a) paid in respect of a loan granted, guaranteed or insured or a credit extended, guaranteed or insured under a scheme organised by a Contracting State or one of its political subdivisions or local authorities in order to promote export and/or economic development;

b) paid to a pension fund provided that the debt-claim in respect of which such interest is paid is held for the purpose of an activity mentioned in Article 3, 1), j);

c) paid to the other Contracting State, to one of its political subdivisions or local authorities or to a public entity.

4. The term “interest” as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. However, the term “interest” shall not include for the purpose of this Article penalty charges for late payment or interest regarded as dividends under paragraph 3 of Article 10.

5. The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises through a permanent establishment situated therein and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.

7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the Laws of each Contracting State, due regard being had to the other provisions of this Agreement.

8. No relief shall be available under this Article if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the debt-claim in respect of which the interest is paid to take advantage of this Article by means of that creation or assignment.

ARTICLE 12
Royalties

1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, such royalties may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the recipient is the beneficial owner of royalties the tax so charged shall not exceed:

a) 8 per cent of the gross amount of the royalties paid for the use of, or the right to use, any industrial, commercial or scientific equipment involving the transfer of know-how;

b) 10 per cent of the gross amount of the royalties in all other cases.

3. The term “royalties” as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films and films, tapes or disks for television or radio broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for the use of or the right to use industrial, commercial or scientific equipment involving the transfer of know-how or for information concerning industrial, commercial or scientific experience.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise through a permanent establishment situated therein and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.

7. No relief shall be available under this Article if it was the main purpose or one of the main purposes of any person concerned with the creation or assignment of the rights in respect of which the royalties are paid to take advantage of this Article by means of that creation or assignment.

ARTICLE 13
Capital Gains

1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.

2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise), may be taxed in that other State.

3. Gains from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

4. Gains derived by a resident of a Contracting State from the alienation of shares or other corporate rights participating in profits of a company more than 50 per cent of the value of which is derived directly or indirectly from immovable property situated in the other Contracting State, may be taxed in that other State. However, this paragraph does not apply to gains derived from the alienation of shares:

a) quoted on a recognised stock exchange of one of the States;

b) alienated or exchanged in the framework of a reorganisation of a company, of a merger, of a scission, or of a similar operation;

c) 50 per cent or more of the value of which is derived from immovable property through which the company carries out its activity;

d) owned by a person who owns directly less than 50 per cent of the capital of the company of which the shares have been alienated.

5. Gains from the alienation of any property other than that referred to in the preceding paragraphs, shall be taxable only in the Contracting State of which the alienator is a resident.

ARTICLE 14
Income from Employment

a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the taxable period concerned, and

b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and

c) the remuneration is not borne by a permanent establishment which the employer has in the other State.

3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic, may be taxed in the Contracting State in which the place of effective management of the enterprise is situated.

ARTICLE 15
Company Managers

1. Directors’ fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors or a similar organ of a company which is a resident of the other Contracting State may be taxed in that other State.

The preceding provision shall also apply to payments derived in respect of the discharge of functions which, under the laws of the Contracting State of which the company is a resident, are regarded as functions of a similar nature as those exercised by a person referred to in the said provision.

2. Remuneration derived by a person referred to in paragraph 1 from a company which is a resident of a Contracting State in respect of the discharge of day-to-day functions of a managerial or technical, commercial or financial nature and remuneration received by a resident of a Contracting State in respect of his day-to-day activity as a partner of a company, other than a company with share capital, which is a resident of a Contracting State, shall be taxable in accordance with the provisions of Article 14, as if such remuneration were remuneration derived by an employee in respect of an employment and as if references to the “employer” were references to the company.

ARTICLE 16
Artistes and Sportspersons

1. Notwithstanding the provisions of Articles 7 and 14, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from that person’s personal activities as such exercised in the other Contracting State, may be taxed in that other State.

2. Where income in respect of personal activities exercised by an entertainer or a sportsperson in that person’s capacity as such accrues not to the entertainer or sportsperson but to another person, that income may, notwithstanding the provisions of Articles 7 and 14, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised.

3. The provisions of paragraphs 1 and 2 shall not apply if the activities exercised in a Contracting State are substantially supported from public funds of the other Contracting State or a political subdivision or a local authority thereof. In such case, income derived from such activities shall be taxable only in that other Contracting State.

ARTICLE 17
Pensions

1. Subject to the provisions of paragraph 2 of Article 18, pensions and other similar remuneration and annuities arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in the first-mentioned Contracting State.

2. Notwithstanding the provisions of paragraph 1, pensions and other similar payments made under the social security legislation of a Contracting State shall be taxable only in that State.

4. Pensions and other similar remuneration arise in a Contracting State to the extent that the employment, in consideration of which pensions and other similar remuneration are paid, was exercised in that Contracting State and to the extent that the contributions to a pension scheme have given rise in that State to tax relief in determining the tax on the salaries, wages and other similar remuneration derived in respect of the employment or on the profits of an enterprise which may be taxed in that State.

ARTICLE 18
Government Service

1. a) Salaries, wages and other similar remuneration, other than a pension dealt with in paragraph 2, paid by a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.

b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the individual is a resident of that State who:

(i) is a national of that State; or

(ii) did not become a resident of that State solely for the purpose of rendering the services.

2. a) Any pension or other similar remuneration paid by, or out of funds created by, a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.

b) However, such pension or other similar remuneration shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.

3. The provisions of Articles 14, 15,16 and 17 shall apply to salaries, wages, pensions, and other similar remuneration in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or a local authority thereof.

ARTICLE 19
Students

1. A student, apprentice or business trainee who is present in a Contracting State solely for the purpose of his education or training and who is, or immediately before being so present was, a resident of the other Contracting State, shall be exempt from tax in the first-mentioned State on payments received from outside that first-mentioned State for the purpose of his maintenance, education and training.

2. In respect of grants or scholarships not covered by paragraph 1, a student or business apprentice referred to in paragraph 1 shall be entitled to the same exemptions, reliefs or reductions in respect of taxes available to residents of the first-mentioned Contracting State.

ARTICLE 20
Technical fees

1. Technical fees arising in a Contracting State which are derived by a resident of the other Contracting State may be taxed in that other State.

3. The term “technical fees” as used in this Article means payments of any kind to any person, other than to an employee of the person making the payments, in consideration for any services of an administrative, technical, managerial or consultancy nature other than services which under paragraph 3 of Article 5 are considered as a permanent establishment.

4. The provisions of paragraphs 1 and 2 of this Article shall not apply if the beneficial owner of the technical fees, being a resident of a Contracting State, carries on business in the other Contracting State in which the technical fees arise, through a permanent establishment situated therein, and the technical fees are effectively connected with such permanent establishment. In such a case, the provisions of Article 7 shall apply.

5. Notwithstanding the provisions of paragraph 2, the beneficial owner of the technical fees may choose to be taxed as if the activities giving rise to the technical fees were exercised through a permanent establishment situated in the Contracting State where such technical fees arise. In such a case, the provisions of Article 7 shall apply.

ARTICLE 21
Other Income

1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.

3. Notwithstanding the provisions of paragraphs 1 and 2, items of income of a resident of a Contracting State not dealt with in the foregoing articles of the Agreement and arising in the other Contracting State may also be taxed in that other State.

CHAPTER IV
TAXATION OF CAPITAL

ARTICLE 22
Capital

1. Capital represented by immovable property referred to in Article 6, owned by a resident of a Contracting State and situated in the other Contracting State, may be taxed in that other State.

3. Capital represented by ships and aircraft operated in international traffic, and by movable property pertaining to the operation of such ships or aircraft, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

4. All other elements of capital of a resident of a Contracting State shall be taxable only in that State.

CHAPTER V
METHODS FOR ELIMINATION OF DOUBLE TAXATION

ARTICLE 23
Elimination of Double Taxation

1. In the case of double taxation, Botswana shall eliminate this double taxation as follows:

In Botswana, subject to the provisions of the law of Botswana regarding the allowance as a credit against Botswana tax of tax payable under the laws of a country outside Botswana, Belgian tax payable under the Laws of Belgium and in accordance with this Agreement, whether directly or by deduction, on profits, income or capital liable to tax in Belgium shall be allowed as a credit against any Botswana tax payable in respect of the same profits, income or capital by reference to which the Belgian tax is computed. However, the amount of such credit shall not exceed the amount of the Botswana tax payable on that income or capital in accordance with the laws of Botswana.

2. In the case of double taxation, Belgium shall eliminate this double taxation as follows:

a) Where a resident of Belgium derives income, not being dividends, interest or royalties, or owns elements of capital which are taxed in Botswana in accordance with the provisions of this Agreement, Belgium shall exempt such income or such elements of capital from tax but if such resident is an individual, Belgium shall only exempt such income from tax to the extent that such income is effectively taxed in Botswana.

b) Notwithstanding the provisions of subparagraph a) and any other provision of the Agreement, Belgium shall, for the determination of the additional taxes established by Belgian municipalities and conurbations, take into account the earned income (revenus professionnels – beroepsinkomsten) that is exempted from tax in Belgium in accordance with subparagraph a). These additional taxes shall be calculated on the tax which would be payable in Belgium if the earned income in question had been derived from Belgian sources.

Where in accordance with any provision of the Agreement income derived or capital owned by a resident of Belgium is exempted from tax in Belgium, Belgium may nevertheless, in calculating the amount of tax on the remaining income or capital of such resident, apply the rate of tax which would have been applicable if such income or elements of capital had not been exempted.

c) Dividends derived by a company which is a resident of Belgium from a company which is a resident of Botswana shall be exempted from the corporate income tax in Belgium under the conditions and within the limits provided for in Belgian Law.

d) Where a company which is a resident of Belgium derives from a company which is a resident of Botswana dividends which are not exempted in accordance with subparagraph c), such dividends shall nevertheless be exempted from the corporate income tax in Belgium if the company which is a resident of Botswana is effectively engaged in the active conduct of a business in Botswana. In such case, such dividends shall be exempted under the conditions and within the limits provided for in Belgian Law except those related to the fiscal regime applicable to the company which is a resident of Botswana or to the income out of which the dividends are paid. This provision shall only apply to dividends paid out of income generated by the active conduct of a business.

e) Where a company which is a resident of Belgium derives from a company which is a resident of Botswana dividends which are included in its aggregate income for Belgian tax purposes and which are not exempted from the corporate income tax according to subparagraphs c) or d), Belgium shall deduct from the Belgian tax relating to these dividends, the Botswana tax levied on these dividends in accordance with Article 10 and the Botswana tax levied on the profits out of which these dividends are paid. This deduction shall not exceed that part of the Belgian tax which is proportionally relating to these dividends.

f) Subject to the provisions of Belgian law regarding the deduction from Belgian tax of taxes paid abroad, where a resident of Belgium derives items of his aggregate income for Belgian tax purposes which are interest or royalties, the Botswana tax levied on that income shall be allowed as a credit against Belgian tax relating to such income.

g) Where, in accordance with Belgian law, losses incurred by an enterprise carried on by a resident of Belgium in a permanent establishment situated in Botswana have been effectively deducted from the profits of that enterprise for its taxation in Belgium, the exemption provided for in sub-paragraph a) shall not apply in Belgium to the profits of other taxable periods attributable to that establishment to the extent that those profits have also been exempted from tax in Botswana by reason of compensation for the said losses.

CHAPTER VI
SPECIAL PROVISIONS

ARTICLE 24
Non-Discrimination

3. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, paragraph 6 of Article 12, or paragraph 6 of Article 20, apply, interest, royalties, technical fees and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. Similarly, any debts of an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable capital of such enterprise, be deductible under the same conditions as if they had been contracted to a resident of the first-mentioned State.

5. Nothing contained in this Article shall be construed as obliging a Contracting State to grant to individuals not resident in that State any personal allowances, reliefs and reductions for taxation purposes which are granted to individuals so resident.

6. The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description.

ARTICLE 25
Mutual Agreement Procedure

1. Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident, or if his case comes under paragraph 1 of Article 24, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Agreement.

2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance I of taxation which is not in accordance with the Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.

3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Agreement.

4. The competent authorities of the Contracting States shall agree on administrative measures necessary to carry out the provisions of the Agreement and particularly on the proofs to be furnished by residents of either Contracting State in order to benefit in the other State from the exemptions or reductions of tax provided for in the Agreement.

5. The competent authorities of the Contracting States shall communicate directly with each other for the application of the Agreement.

6. Where,

a) under paragraph 1, a person has presented a case to the competent authority of a Contracting State on the basis that the actions of one or both of the Contracting States have resulted for that person in taxation not in accordance with the provisions of this Agreement, and

b) the competent authorities are unable to reach an agreement to resolve that case pursuant to paragraph 2 within two years from the presentation of the case to the competent authority of the other Contracting State,

any unresolved issues arising from the case shall be submitted to arbitration if the person so requests. These unresolved issues shall not, however, be submitted to arbitration if a decision on these issues has already been rendered by a court or administrative tribunal of either State. Unless a person directly affected by the case does not accept the mutual agreement that implements the arbitration decision, that decision shall be binding on both Contracting States and shall be implemented notwithstanding any time limits in the domestic laws of these States.

ARTICLE 26
Exchange of Information

1. The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to the Agreement. The exchange of information is not restricted by Articles 1 and 2.

2. Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred to in paragraph 1, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. Notwithstanding the foregoing, information received by a Contracting State may be used for other purposes, when such information may be used for such other purposes under the Laws of both States and the competent authority of the supplying State authorises such use.

3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:

a) to carry out administrative measures at variance with the Laws and administrative practice of that or of the other Contracting State;

b) to supply information which is not obtainable under the Laws or in the normal course of the administration of that or of the other Contracting State;

c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (ordre public).

5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, trust, foundation, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.

6. The competent authorities shall, through consultation, develop appropriate conditions, methods and techniques concerning the matters respecting which such exchange of information should be made.

ARTICLE 27
Assistance in the Collection of Taxes

1. The Contracting States shall lend assistance to each other in order to recover taxes of every kind and description imposed on behalf of the Contracting States, or their political subdivisions or local authorities, insofar as the taxation thereunder is not contrary to this Convention or any other instrument to which the Contracting States are parties, as well as interest and penalties with regard to such taxes, provided that reasonable steps to recover such taxes have been taken by the Contracting State requesting such assistance.

2. Claims which are the subject of requests for assistance shall not have priority over taxes owing in the Contracting State rendering assistance and the provisions of paragraphs 1 and 2 of Article 26 shall also apply to any information which, by virtue of this Article, is supplied to the competent authority of a Contracting State.

3. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of the provisions of this Article.

ARTICLE 28
Members of Diplomatic Missions and Consular Posts

1. Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international Law or under the provisions of special agreements.

2. For the purposes of the Agreement, persons who are members of diplomatic missions or consular posts of a Contracting State in the other Contracting State or in a third State and who are nationals of the sending State, shall be deemed to be residents of the sending State if they are subjected therein to the same obligations in respect of taxes on income and on capital as are residents of that State.

3. The Agreement shall not apply to international organisations, to organs or officials thereof and to persons who are members of diplomatic missions or consular posts of a third State, being present in a Contracting State and not treated in either Contracting State as residents in respect of taxes on income or on capital.

ARTICLE 29
Miscellaneous

Notwithstanding the other provisions of this Agreement, the benefits of the Agreement shall not apply if income is paid or derived in connection with an artificial arrangement.

CHAPTER VII
FINAL PROVISIONS

ARTICLE 30
Entry into Force

1. Each Contracting State shall notify the other Contracting State of the completion of the procedures required by its laws for the bringing into force of this Agreement. The Agreement shall enter into force on the date on which the later of these notifications is received.

2. The provisions of the Agreement shall have effect:

a) in Botswana:

(i) with respect to income tax and capital gains tax, on taxable income or gains derived on or after the first day of July of the year next following the year in which the Agreement entered into force;

(ii) with respect to other taxes, on taxes due in respect of taxable events taking place on or after the first day of July of the year next following the year in which the Agreement entered into force;

b) in Belgium:

(i) with respect to taxes due at source, on income credited or payable on or after January 1 of the year next following the year in which the Agreement entered into force;

(ii) with respect to other income taxes, on income of taxable periods beginning on or after January 1 of the year next following the year in which the Agreement entered into force;

(iii) with respect to other taxes, on taxes due in respect of taxable events taking place on or after January 1 of the year next following the year in which the Agreement entered into force.

ARTICLE 31
Termination

This Agreement shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Agreement, through diplomatic channels, by giving to the other Contracting State, written notice of termination not later than the 30th June of any calendar year from the fifth year following that in which the Agreement entered into force. In the event of termination before July 1 of such year, the Agreement shall cease to have effect:

a) in Botswana:

(i) with respect to income tax and capital gains tax, on taxable income or gains derived on or after the first day of July of the year next following the year in which the notice of termination is given;

(ii) with respect to other taxes, on taxes due in respect of taxable events taking place on or after the first day of July of the year next following the year in which the notice of termination is given;

b) in Belgium:

(i) with respect to taxes due at source, on income credited or payable on or after January 1 of the year next following the year in which the notice of termination is given;

(ii) with respect to other income taxes, on income of taxable periods beginning on or after January 1 of the year next following the year in which the notice of termination is given;

(iii) with respect to other taxes, on taxes due in respect of taxable events taking place on or after January 1 of the year next following the year in which the notice of termination is given.

IN WITNESS WHEREOF the undersigned, being duly authorised thereto by their respective Governments, have signed this Agreement.

DONE in duplicate at Pretoria, this 30th day of November, 2017, in the English language.

H.E. Zenene Sinombe FOR THE GOVERNMENT OF THE REPUBLIC OF BOTSWANA	H.E. Hubert Cooreman FOR THE GOVERNMENT OF THE KINGDOM OF BELGIUM
	Dr. Geraldine Reymenants FOR THE GOVERNMENT OF THE FLEMISH COMMUNITY
	H.E. Hubert Cooreman FOR THE GOVERNMENT OF THE FRENCH COMMUNITY
	H.E. Hubert Cooreman FOR THE GOVERNMENT OF THE GERMAN-SPEAKING COMMUNITY
	Dr. Geraldine Reymenants FOR THE GOVERNMENT OF THE FLEMISH REGION
	H.E. Hubert Cooreman FOR THE GOVERNMENT OF THE WALLOON REGION
	H.E. Hubert Cooreman FOR THE GOVERNMENT OF THE BRUSSELS-CAPITAL REGION

PROTOCOL

At the moment of signing the Agreement between the Government of the Republic of Botswana and the Government of the Kingdom of Belgium for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital, the undersigned have agreed upon the following provisions which shall form an integral part of the Agreement.

1. Ad Article 3, paragraph 2:

In the interpretation of the provisions of the Agreement which are identical or in substance similar to the provisions of the OECD Model Tax Convention, the tax administrations of the Contracting States shall follow the general principles of the commentary of the Model Convention provided the Contracting States did not include in that commentary any observations expressing a disagreement with those principles and to the extent the Contracting States do not agree on a divergent interpretation in the framework of paragraph 3 of Article 25.

2. Ad Article 14, paragraphs 1 and 2:

It is understood that an employment is exercised in a Contracting State when the activity in respect of which the salaries, wages and other similar remuneration are paid, is effectively carried on in that State. The activity is effectively carried on in that State where the employee is physically present in that State for carrying on the activity, irrespective of the residence of the payer, the place in which the contract of employment was made, the residence of the employer, the place or time of payment, or the place where the results of the work are exploited. If an activity is effectively carried on in a Contracting State, only that part of the remuneration that is attributable to such activity may be taxed in that State.

3. Ad Article 23, sub-paragraph 2, a):

For the application of sub-paragraph 2, a) of Article 23:

(i) an item of income is taxed in Botswana where such item of income is subjected in Botswana to the tax regime that is normally applicable to such item of income according to Botswana Tax Laws.

(ii) an item of income is effectively taxed in Botswana where such item of income is subjected to tax in Botswana and does not benefit as such from an exemption from tax therein.

IN WITNESS WHEREOF the undersigned, being duly authorised thereto by their respective Governments, have signed this Protocol.

DONE in duplicate at Pretoria, this 30th day of November, 2017, in the English language.

H.E. Zenene Sinombe FOR THE GOVERNMENT OF THE REPUBLIC OF BOTSWANA	H.E. Hubert Cooreman FOR THE GOVERNMENT OF THE KINGDOM OF BELGIUM
	Dr. Geraldine Reymenants FOR THE GOVERNMENT OF THE FLEMISH COMMUNITY
	H.E. Hubert Cooreman FOR THE GOVERNMENT OF THE FRENCH COMMUNITY
	H.E. Hubert Cooreman FOR THE GOVERNMENT OF THE GERMAN-SPEAKING COMMUNITY
	Dr. Geraldine Reymenants FOR THE GOVERNMENT OF THE FLEMISH REGION
	H.E. Hubert Cooreman FOR THE GOVERNMENT OF THE WALLOON REGION
	H.E. Hubert Cooreman FOR THE GOVERNMENT OF THE BRUSSELS-CAPITAL REGION

BOTSWANA-UNITED ARAB EMIRATES DOUBLE TAXATION AVOIDANCE AGREEMENT ORDER

(section 53(2))

(21st December, 2018)

ARRANGEMENT OF PARAGRAPHS

PARAGRAPH

1. Citation

2. Approval and effective date of commencement

Schedule

S.I. 195, 2018.

1. Citation

This Order may be cited as the Botswana-United Arab Emirates Double Taxation Avoidance Agreement Order.

2. Approval and effective date of commencement

The Double Taxation Avoidance Agreement set out in the effective Schedule hereto between the Government of the Republic of Botswana and the Government of United Arab Emirates is presented to the National Assembly for approval and shall, upon approval, take effect from the date specified in the agreement.

SCHEDULE

The Government of the Republic of Botswana and the United Arab Emirates desiring to conclude an agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, have agreed as follows:

ARTICLE 1
Persons Covered

1. This Agreement shall apply to persons who are residents of one or both of the Contracting States.

2. For the purposes of this Agreement, income derived by or through an entity or arrangement that is treated as wholly or partly fiscally transparent under the tax law of either Contracting State shall be considered to be income of a resident of a Contracting State but only to the extent that the income is treated, for purposes of taxation by that State, as the income of a resident of that State.

ARTICLE 2
Taxes Covered

1. This Agreement shall apply to taxes on income imposed on behalf of a Contracting State or of its political subdivisions or local authorities, irrespective of the manner in which they are levied.

2. There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property as well as taxes on the total amounts of wages or salaries paid by enterprises.

3. The existing taxes to which this Agreement shall apply are:

(a) In the case of the Republic of Botswana:

(i) the income tax; and

(ii) the capital gains tax charged under the Income Tax Act.

(hereinafter referred to as “Botswana tax”).

(b) In the case of United Arab Emirates:

(i) the income tax;

(ii) the corporate tax,

(hereinafter referred to as “United Arab Emirates tax”);

4. This Agreement shall apply also to any identical or substantially similar taxes, which are imposed under the laws of a Contracting State after the date of signature of this Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes, which have been made in their respective taxation laws.

ARTICLE 3
Income from Hydrocarbons and Mineral resources

Notwithstanding any other provision of this Agreement nothing shall affect the right of either of the Contracting States, or of any of their local Governments or local authorities thereof to apply their domestic laws and regulations related to the taxation of income and profits derived from hydrocarbons and mineral resources situated in the territory of the respective Contracting State, as the case may be.

ARTICLE 4
General definitions

1. For the purposes of this Agreement, unless the context otherwise requires:

(a) The terms “a Contracting State” and “the other Contracting State” mean Botswana or the United Arab Emirates as the context requires;

(b) The term “Botswana” means the Republic of Botswana including its territorial waters and air space;

(c) The term “the United Arab Emirates” when used in a geographical sense, means the territory of the United Arab Emirates which is under its sovereignty as well as the area outside the territorial water, airspace and submarine areas over which the United Arab Emirates exercises sovereign and jurisdictional rights in respect of any activity carried on in its water, sea bed, subsoil, in connection with the exploration for or the exploitation of natural resources by virtue of its law and international law;

(d) The term “person” includes an individual, an estate, a trust, a company or any other entity which is treated as a person for tax purposes according to the laws and regulations of either Contracting State;

(e) The term “national” means:

(i) any individual possessing the nationality of a Contracting State:

(ii) any legal person, association or other entity deriving its status as such from the laws in force in a Contracting State or of a political subdivision or a local government thereof;

(f) The term “company” means any body corporate or any entity that is treated as a body corporate for tax purposes;

(g) The term “recognised pension fund” of a State means an entity or arrangement established in that State that is treated as a separate person under the taxation laws of that State and:

(i) that is established and operated exclusively or almost exclusively to administer or provide retirement benefits and ancillary or incidental benefits to individuals and that is regulated as such by that State or one of its political subdivisions or local authorities; or

(ii) that is established and operated exclusively or almost exclusively to invest funds for the benefit of entities or arrangements referred to in subdivision (i).

(h) The terms “enterprise of a Contracting State” and “enterprise of the other Contracting State” mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;

(i) The term “enterprise” applies to the carrying on of any business;

(j) The term “international traffic” means any transport by aircraft operated by an enterprise of a Contracting State, except when the aircraft is operated solely between places in the other Contracting State;

(k) The term “business” includes the performance of professional services and of other activities of an independent character;

(l) The term “qualified government entity” means the Central bank of a Contracting State and any person, agency, institution, authority, fund, enterprise, organisation or any other entity owned or controlled directly or indirectly by a Contracting State or political subdivision or local government thereof.

(m) The term “tax” means Botswana tax or the United Arab Emirates tax, as the context requires;

(n) The term “competent authority” means:

(i) in the case of Botswana, the Minister responsible for finance represented by the Commissioner General of the Botswana Unified Revenue Service or an authorised representative of the Commissioner General; and

(ii) in the case of the United Arab Emirates, the Minister of Finance or an authorised representative of the Minister of Finance.

2. As regards the application of the provisions of this Agreement at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, or the competent authorities agree to a different meaning pursuant to the provisions of Article 26, have the meaning which it has at that time under the law of that State for the purposes of the taxes to which this Agreement applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.

ARTICLE 5
Resident

1. For the purposes of this Agreement, the term “resident of a Contracting State” means:

(a) in the case of Botswana, the term ‘resident of a Contracting State’ means any person who, under the laws of Botswana, is liable to tax therein by reason of that person’s domicile, residence, place of incorporation, place of management or any other criterion of a similar nature, and also includes Botswana or any political subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in Botswana in respect only of income from sources in Botswana.

(b) in the case of the United Arab Emirates:

(i) an individual who is a United Arab Emirates national and other individuals liable for tax by reason of his domicile and residence under the laws of the United Arab Emirates;

(ii) any person other than an individual that is incorporated or otherwise recognised under the laws of the United Arab Emirates or any political subdivision or local government thereof.

2. For the purposes of paragraph 1, a resident of a Contracting State includes:

(a) the Government of that Contracting State and any political subdivision or local Government or local authority thereof;

(b) any person other than an individual owned or controlled directly or indirectly by that State or any political subdivision or local government or local authority thereof;

(d) a recognised pension fund; and

(e) charities or religious, educational and cultural organisations.

3. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:

(a) he shall be deemed to be a resident only of the Contracting State in which he has a permanent home available to him; if he has a permanent home available to him in both Contracting States, he shall be deemed to be a resident only of the Contracting State with which his personal and economic relations are closer (center of vital interests);

(b) if the Contracting State in which he has his center of vital interests cannot be determined, or if he has not a permanent home available to him in either Contracting State, he shall be deemed to be a resident only of the Contracting State in which he has an habitual abode;

(c) if he has a habitual abode in both Contracting States or in neither of them, he shall be deemed to be a resident only of the Contracting State of which he is a national;

(d) If his status cannot be determined under the provisions of subparagraph (c), the competent authorities of the Contracting States shall settle the question by mutual agreement.

4. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, the competent authorities of the Contracting States shall endeavour to determine by mutual agreement the Contracting State of which such person shall be deemed to be a resident for the purposes of the Agreement, having regard to its place of effective management, the place where it is incorporated or otherwise constituted and any other relevant factors. In the absence of such agreement, such person shall not be entitled to any relief or exemption from tax provided by this Agreement except to the extent and in such manner as may be agreed upon by the competent authorities of the Contracting State.

ARTICLE 6
Permanent Establishment

1. For the purposes of this Agreement, the term “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

2. The term “permanent establishment” includes especially:

(a) a place of management;

(b) a branch;

(d) a factory;

(e) a workshop;

(f) A mine, an oil or gas well, a quarry or any other place of extraction or exploitation of natural resources or any activities related thereof.

3. The term “permanent establishment” shall be deemed to include:

(b) the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by an enterprise for such purpose, but only where activities of that nature continue (for the same or a connected project) within the Contracting State for a period or periods aggregating more than 183 days within any twelve-month period; and

(c) for an individual, the performing of services in a Contracting State by that individual, but only if the individual’s stay in that State, for the purpose of performing those services, is for a period or periods aggregating more than 183 days;

(d) an installation or structure used in connection with the exploration of natural resources provided that the installation or structure continues for a period of not less than ninety days.

4. Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not to include:

(a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;

(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;

(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise;

(e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise any other activity of a preparatory or auxiliary character;

5. Notwithstanding the provisions of paragraphs 1 and 2, where a person – other than an agent of an independent status to whom paragraph 9 applies – is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned Contracting State in respect of any activities which that person undertakes for the enterprise, if such a person:

(a) has, and habitually exercises in the first-mentioned Contracting State, an authority to conclude contracts in the name of such enterprise, unless the activities of such person are limited to those mentioned in paragraph 6 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph;

(b) has no such authority, but habitually maintains in the first-mentioned Contracting State a stock of goods or merchandise belonging to such enterprise from which he regularly delivers goods or merchandise on behalf of such enterprise;

(c) habitually secures orders in the first-mentioned Contracting State, exclusively or almost exclusively for the enterprise itself or for such enterprise and other enterprises, which are controlled by it or have a controlling interest in it;

(d) in so acting, he manufactures or processes in that Contracting State for the enterprise goods or merchandise belonging to the enterprise.

6. Notwithstanding the preceding provisions of this Article, an insurance enterprise of a Contracting State shall, except in regard to re-insurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums in the territory of that other State or insures risks situated therein through an employee or through a person other than an agent of an independent status to whom paragraph 9 applies.

7. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other Contracting State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise and other enterprises, which are controlled by it or have a controlling interest in it, he will not be considered an agent of an independent status within the meaning of this paragraph.

8. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other Contracting State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.

ARTICLE 7
Income from Immovable Property

1. Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other Contracting State. The tax so charged shall be reduced to 50% if beneficiary owner of the income derived from immovable property is the State itself or local authorities, political subdivision, local Governments or local financial institutions belong to the Contracting State.

2. The term “immovable property” shall have the meaning, which it has under the national laws of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general laws respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right of work, mineral deposits, sources and other natural resources. Aircraft shall not be regarded as immovable property.

3. The provisions of paragraph 1 of this Article shall apply to income derived from the direct use, letting, or use in any other form of immovable property.

4. The provisions of paragraphs 1 and 3 of this Article shall also apply to income from immovable property of an enterprise.

ARTICLE 8
Business Profits

1. The profits of an enterprise of a Contracting State shall be taxable only in that Contracting State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated in that other Contracting State. If the enterprise carries on or has carried on business in that manner, the profits of the enterprise may be taxed in the other Contracting State but only so much of them as is attributable to that permanent establishment.

3. In determining the profits of a permanent establishment, there shall be allowed as deductions those deductible expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the Contracting State in which the permanent establishment is situated or elsewhere, taking into consideration any applicable law or regulations in the concerned Contracting State. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the head office of the enterprise or any of its other offices.

4. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

5. Insofar as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary; the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.

ARTICLE 9
Air Transport

1. Profits of an enterprise of a Contracting State from the operation of aircraft in international traffic shall be taxable only in that Contracting State.

2. For the purposes of this Article profits from the operation of aircraft in international traffic include profits from the rental on a bareboat basis of aircraft.

3. The provisions of paragraph 1 shall also apply to profits derived from:

(a) the participation in a pool, a joint business or an international operating agency;

(b) selling of tickets on behalf of another enterprise; and

4. For greater certainty Article 8 shall not be applied on the operation of aircrafts in international traffic.

ARTICLE 10
Associated Enterprises

1. Where

(a) An enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or

(b) The same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,

2. Where a Contracting State includes in the profits of an enterprise of that Contracting State -and taxes accordingly -profits on which an enterprise of the other Contracting State has been charged to tax in that other Contracting State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned Contracting State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other Contracting State shall make an appropriate adjustment to the amount of the profits subjected to tax. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall, if necessary, consult each other.

3. The provisions of paragraph 2 shall not apply where judicial, administrative or other legal proceedings have resulted in a final ruling that by actions giving rise to an adjustment of profits under paragraph 1, one of the enterprises concerned is liable to penalty with respect to fraud, gross negligence or wilful default.

ARTICLE 11
Dividends

1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in the other State.

(a) 5 per cent of the gross amount of the dividends if the beneficial owner is a company the capital of which is wholly or partly divided into shares which holds directly at least 10 per cent of the capital of the company paying the dividends;

(b) 7.5 per cent of the gross amount of the dividends in all other cases.

The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of these limitations.

This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

3. The term “dividends” as used in this Article means income from shares, “jouissance” shares or “jouissance” rights, mining shares, founders’ shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the taxation laws of the Contracting State of which the company making the distribution is a resident.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated in that other Contracting State and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case the provisions of Article 8 shall apply.

5. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other Contracting State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other Contracting State who is the beneficial owner of the dividends or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment situated in that other Contracting State, nor subject the company’s undistributed profits to a tax on the company’s undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other Contracting State.

6. The provision of paragraphs 4 and 5 shall not apply if the beneficial owner of the dividends is the State itself, local government, local authority or their financial institutions. Such income shall be subject to tax at the State of residence.

ARTICLE 12
Interest

1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.

3. The term “interest” as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures, as well as income which is subjected to the same taxation treatment as income from money lent by the taxation laws of the Contracting State in which the income arises. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated in that other Contracting State, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment. In such case the provisions of Article 8 shall apply.

5. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that Contracting State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment is situated.

6. Where, by reason of a special relationship between the payer and the beneficial owner of the interest, or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

7. The provisions of paragraph 4, 5 and 6 shall not be applied if the beneficial owner of the interest being the state itself, political subdivision, local Government or local authority or their financial institutions. Such income shall be taxable only at the state of residence.

ARTICLE 13
Royalties

1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, such royalties may also be taxed in the Contracting State in which they arise, and according to the laws of that State, but if the beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed 7.5 per cent of the gross amount of the royalties.

The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.

3. The term “royalties” as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright (including the copyright of literary, artistic, scientific work, broadcasts or cinematograph films, motion pictures or movies), any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, industrial, commercial or scientific equipment or for information concerning industrial, commercial or scientific experience.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated in that other Contracting State, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment. In such case the provisions of Article 8 shall apply.

5. Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that Contracting State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the right or property in respect of which the royalties are paid is effectively connected, and such royalties are borne by such permanent establishment, then such royalties shall be deemed to arise in the Contracting State in which the permanent establishment is situated.

6. Where, by reason of a special relationship between the payer and the beneficial owner of the royalties or between both of them and some other person, the amount of the royalties, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

ARTICLE 14
Capital Gains

1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 7 and situated in the other Contracting State may be taxed in that other Contracting State.

2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise), may be taxed in that other Contracting State.

3. Gains derived by an enterprise of a Contracting State from the alienation of aircrafts operated in international traffic or movable property pertaining to the operation of such aircrafts shall be taxable only in that Contracting State.

4. Gains derived by a resident of a Contracting State from the alienation of shares or comparable interests, such as interests in a partnership or trust, may be taxed in the other Contracting State if, at any time during the 365 days preceding the alienation, these shares or comparable interests derived more than 50 per cent of their value directly or indirectly from immovable property, as defined in Article 7, situated in that other State, unless it is listed in a recognised stock market.

5. Gains from the alienation of any property other than that referred to in paragraphs 1, 2 and 3 shall be taxable only in the Contracting State of which the alienator is a resident.

6. For the purpose of the interpretation of this Article, it is understood that property referred to in paragraph 5 shall mean bonds, debentures and other comparable interest in a company and such like property shall be taxable only at the State where the alienator is resident.

ARTICLE 15
Fees for Technical Services

1. Fees for technical services arising in a Contracting State which are derived by a resident of the other Contracting State may be taxed in that other State.

2. However, subject to the provisions of Articles 9, 17 and 18, fees for technical services arising in a Contracting State may also be taxed in the Contracting State in which they arise and subject to the laws of that State, but if the beneficial owner of the fees is a resident of the other Contracting State, the tax so charged shall not exceed 5 per cent of the gross amount of the fees.

3. The term “fees for technical services” as used in this Article means any payment in consideration for any service of a managerial, technical or consultancy nature, unless the payment is made:

(a) to an employee of the person making the payment;

(b) for teaching in an educational institution or for teaching by an educational institution; or

4. The provisions of paragraphs 1 and 2 of this Article shall not apply if the beneficial owner of the fees for technical services, being a resident of a Contracting State, carries on business in the other Contracting State in which the fees for technical services arise, through a permanent establishment situated therein and the technical fees are effectively connected with such permanent establishment. In such case, the provisions of Article 8 shall apply.

5. For the purposes of this Article, subject to paragraph 6, fees for technical services shall be deemed to arise in a Contracting State if the payer is a resident of that State or if the person paying the fees, whether that person is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the obligations to pay the fees was incurred, and such fees are borne by the permanent establishment.

6. For the purposes of this Article, fees for technical services shall be deemed not to arise in a Contracting State if the payer is a resident of that State and carries on business in the other Contracting State or a third State through a permanent establishment situated in that other State or the third State and such fees are borne by that permanent establishment.

ARTICLE 16
Income from Employment

1. Subject to the provisions of Articles 17, 19 and 20, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that Contracting State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived there from may be taxed in that other Contracting State.

2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State shall be taxable only in the first-mentioned Contracting State if all the following conditions are met:

(a) The recipient is present in the other Contracting State for a period or periods not exceeding in the aggregate 183 days in 12 month period commencing or ending in the fiscal year concerned;

(b) The remuneration is paid by, or on behalf of, an employer who is not a resident of the other Contracting State; and

(c) The remuneration is not borne by a permanent establishment or a fixed base, which the employer has in the other Contracting State.

3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard an aircraft operated in international traffic by an enterprise of a Contracting State shall be taxable only in that Contracting State.

4. An individual who is both a national of a Contracting State and an employee of an enterprise of that Contracting State the principal business of which consists of the operation of aircraft in international traffic and who derives remuneration in respect of duties performed in the other Contracting State shall be taxable only in that Contracting State on remuneration derived from his employment with that enterprise.

5. The provisions of paragraphs 1, 2 and 3 of this Article shall likewise apply in respect of salaries, wages and other similar remuneration and pensions paid by a government owned institution performing functions of a governmental nature which:

(a) in the case of Botswana:

(i) Bank of Botswana;

(ii) Botswana Investment and Trade Centre;

(iii) National Development Bank;

(iv) Botswana Development Corporation; and

(v) any other statutory body or institution or instrumentality wholly owned by the Government of the Republic of Botswana, that should be communicated through diplomatic channels.

(b) in the case of the United Arab Emirates:

(i) the Government of the United Arab Emirates;

(ii) a local government of the United Arab Emirates (Abu Dhabi, Dubai, Sharjah, Ras al Khaima, Fujairah, Umm al Quwain and Ajman);

(iii) the following financial institutions particularly but not exclusively:

a. the Abu Dhabi Investment Council;

b. Abu Dhabi Investment Authority;

c. Emirates Investment Authority;

d. Dubai Investment Corporation;

e. Mubadala Investment Company; and

f. any other statutory body or institution or instrumentality wholly owned by the Government of the United Arab Emirates, at the federal or local level, that should be communicated through diplomatic channels.

ARTICLE 17
Directors’ Fees

Directors’ fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors or other similar organ of a company, which is a resident of the other Contracting State, shall be taxable only in the first-mentioned Contracting State.

ARTICLE 18
Artistes and Sportsmen

1. Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsman, from his personal activities as such exercised in the other Contracting State, may be taxed in that other Contracting State.

2. Where income in respect of personal activities exercised by an entertainer or a sportsman in his capacity as such accrues not to the entertainer or sportsman himself but to another person, that income may, notwithstanding the provisions of Articles 8 and 16 be taxed in the Contracting State in which the activities of the entertainer or sportsman are exercised.

3. The provisions of paragraphs 1 and 2 shall not apply to income derived by entertainers or sportsmen who are residents of a Contracting State from personal activities as such exercised in the other Contracting State if their visit to that other Contracting State is substantially supported from the public funds of the first-mentioned Contracting State, including those of any political subdivision, a local authority or statutory body thereof, nor to income derived by a non-profit making organisation in respect of such activities provided no part of its income is payable to, or is otherwise available for the personal benefit of its proprietors, founders or members.

ARTICLE 19
Pensions and Annuities

1. Subject to the provisions of paragraph 2 of Article 20, pensions and other similar remuneration and annuities paid to an individual who is a resident of a Contracting State in consideration of past employment shall be taxable only in that Contracting State.

2. As used in this Article:

(a) The terms “pensions and other similar remuneration” mean periodic payments made after retirement in consideration of past employment or by way of compensations for injuries received in connection with past employment;

(b) The term “annuity” means a stated sum payable to an individual periodically at stated times during life, or during a specified or ascertainable period of time, under an obligation to make the payments in return for adequate and full consideration in money or money’s worth.

ARTICLE 20
Government Service

1. a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that Contracting State or subdivision or authority shall be taxable only in that Contracting State.

(b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that Contracting State and the individual is a resident of that Contracting State and has fulfilled one of the following conditions:

(i) is a national of that Contracting State; or

(ii) did not become a resident of that Contracting State solely for rendering the services.

2. a) any pension paid by, or out of funds created by, a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that Contracting State or subdivision or authority shall be taxable only in that Contracting State.

(b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that Contracting State.

3. The provisions of Articles 16, 17, 18 and 19 shall apply to salaries, wages and other similar remuneration and to pensions in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or a local authority thereof.

ARTICLE 21
Teachers and Researchers

An individual who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who at the invitation of the Government of the first-mentioned Contracting State or of a university college, school, museum or other cultural institution in that first-mentioned Contracting State or under an official programme of cultural exchange is present in that Contracting State for a period not exceeding two consecutive years solely for the purpose of teaching giving lectures or carrying out research at such institution shall be exempt from tax in that Contracting State on his remuneration for such activity.

ARTICLE 22
Students and Trainees

1. Payments which a student or business trainee who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first-mentioned Contracting State solely for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that Contracting State, provided that such payments arise from sources outside that Contracting State.

2. In respect of grants, scholarships and remuneration from employment not covered by paragraph 1, a student or business trainee described in paragraph 1 shall, in addition, be entitled during such education or training to the same exemptions, relief’s or reductions in respect of taxes available to residents of the Contracting State which he is visiting.

ARTICLE 23
Other Income

1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that Contracting State.

2. Notwithstanding the provisions of paragraph 1, items of income of a resident of a Contracting State not dealt with in the foregoing Articles of this Agreement and arising in the other Contracting State may also be taxed in that other State.

ARTICLE 24
Entitlement to Benefits

Notwithstanding the other provisions of this Agreement, a benefit under this Agreement shall not be granted in respect of an item of income if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit in these circumstances would be in accordance with the object and purpose of the relevant provisions of this Agreement.

ARTICLE 25
Elimination of Double Taxation

1. Double taxation shall be eliminated as follows:

(a) in Botswana, subject to the provisions of the laws of Botswana regarding the allowance of a credit against Botswana tax of tax payable under the laws of a country outside Botswana which shall not affect the general principle hereof, United Arab Emirates tax payable under the laws of United Arab Emirates and in accordance with this Agreement, whether directly or by deduction, on profits or income liable to tax in United Arab Emirates shall be allowed as a credit against any Botswana tax payable in respect of the same profits or income by reference to which the United Arab Emirates tax is computed. However, the amount of such credit shall not exceed the amount of the Botswana tax payable on that income in accordance with the laws of Botswana;

(b) in the United Arab Emirates, tax paid by residents of the United Arab Emirates in respect of income taxable in Botswana in accordance with the provisions of this Agreement, shall be deducted from the taxes due according to the United Arab Emirates tax law. Such deduction shall not, however, exceed that part of the United Arab Emirates tax, as computed before the deduction is given, which is attributable to the income which, in accordance with the provisions of this Agreement, may be taxed in Botswana.

2. For the purposes of paragraph 1 of this Article, the terms “Botswana tax payable” and “United Arab Emirates tax paid” shall be deemed to include the amount of tax which would have been paid in Botswana or in the United Arab Emirates as the case may be, but for an exemption or reduction granted in accordance with laws designed to promote economic development in that Contracting State.

ARTICLE 26
Mutual Agreement Procedure

1. Where a person considers that the actions of one or both of the Contracting State result or will result for him in taxation not in accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the domestic law of those Contracting State, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 28, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provision of this Agreement.

2. The competent authority shall endeavor, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting State.

3. The competent authorities of the Contracting State shall endeavor to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of this Agreement. They may also consult together for the elimination of double taxation in cases not provided for in this Agreement.

4. The competent authorities of the Contracting State may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs.

ARTICLE 27
Exchange of Information

1. The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions in particular for the prevention of fraud or evasion of such taxes, in so far as the taxation thereunder is not contrary to the Agreement. The exchange of information is not restricted by Articles 1 and 2.

3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:

(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

(b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State; or

ARTICLE 28
Non-Discrimination

1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of article 1, also apply to persons who are not residents of one or both of the Contracting States.

2. The taxation on a permanent establishment, which an enterprise of a Contracting State has in the other Contracting State, shall not be less favorably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, relieves and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.

4. Nothing in this Agreement shall prevent a Contracting State from granting exemption from tax or reduction to its own national companies in accordance to its domestic laws and regulations

5. In this Article the term “taxation” means taxes which are the subject of this Agreement.

ARTICLE 29
Miscellaneous Rules

1. Notwithstanding the provisions of paragraph 2 of Article 10 and paragraph 2 of Article 11, and paragraph 2 of Article 14, dividends, interest or capital gains paid by a resident of a Contracting State to the Government of the other Contracting State or political subdivision or local authority thereof shall be exempt from tax in the first-mentioned State.

2. For the purposes of paragraph 1, the term “Government” shall include:

(a) in the case of Botswana:

(a) Bank of Botswana;

(b) Botswana Investment and Trade Centre;

(d) Botswana Development Corporation.

(e) any other statutory body or institution or instrumentality wholly owned by the Government of the Republic of Botswana, that should be communicated through diplomatic channels.

(b) in the case of the United Arab Emirates:

(i) the Government of the United Arab Emirates;

(ii) a local government of the United Arab Emirates (Abu Dhabi, Dubai, Sharjah, Ras al Khaima, Fujairah, Umm al Quwain and Ajman);

(iii) the following financial institutions particularly but not exclusively:

a. the Abu Dhabi Investment Council;

b. Abu Dhabi Investment Authority;

c. Emirates Investment Authority;

d. Dubai Investment Corporation;

e. Mubadala Investment Company;

ARTICLE 30
Members of Diplomatic Missions and Consular Posts

Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missions or consular posts or employees of international organisations under the general rules of international law or under the provisions of special agreements.

ARTICLE 31
Entry into Force

Each of the Contracting States shall notify to the other in writing the completion of its constitutional procedures for the entry into force of this Agreement. This agreement shall enter into force on the date of receipt of the latter of these notifications and its provisions shall thereupon have effect in both Contracting States:

(a) in respect of taxes withheld at source, for amounts paid or credited on or after the first day of July of the year in which this Agreement is signed; and

(b) in respect of other taxes, for taxable periods beginning on or after the first day of July of the year in which this Agreement is signed.

ARTICLE 32
Duration and Termination

This Agreement shall remain in force for a period of ten years and shall continue in force thereafter for a similar period or periods unless either Contracting State notifies the other in writing, at least six months before the expiry of the initial or any subsequent period, of its intention to terminate this Agreement. In such event, this Agreement shall cease to have effect in both Contracting States:

(a) in respect of taxes withheld at source, for amounts paid or credited on or after the first day of July of the year next following that in which the notice of termination is given; and

(b) in respect of other taxes, for taxable periods beginning on or after the first day of July of the year next following that in which the notice of termination is given.

IN WITNESS WHEREOF, the undersigned, duly authorised thereto by their respective Governments, have signed this Agreement.

DONE at Denpasar, Bali on 12th day of October, 2018, in two originals the English and the Arabic languages. In case of divergence between the two texts the English text shall prevail.

HON. O. K. MATAMBO,
For the Government of the
Republic of Botswana.

HON. OBAID HUMAID AL-TAYER,
For the Government of the
United Arab Emirates.

BOTSWANA-LUXEMBOURG DOUBLE TAXATION AVOIDANCE AGREEMENT ORDER

(section 53(1))

(8th March, 2019)

ARRANGEMENT OF PARAGRAPHS

PARAGRAPH

1. Citation

2. Approval and effective date of commencement

SCHEDULE

S.I. 24, 2019.

1. Citation

This Order may be cited as the Botswana-Luxembourg Double Taxation Avoidance Agreement Order.

2. Approval and effective date of commencement

The Double Taxation Avoidance Agreement set out in the effective Schedule hereto between the Government of the Republic of Botswana and the Government of the Grand Duchy of Luxembourg is presented to the National Assembly for approval and shall, upon approval, take effect from the date specified in the agreement.

SCHEDULE

The Government of the Republic of Botswana and the Government of the Grand Duchy of Luxembourg

Desiring to further develop their economic relationship and to enhance their co-operation in tax matters,

Intending to conclude an Agreement for the elimination of double taxation with respect to taxes on income and on capital without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance (including through treaty-shopping arrangements aimed at obtaining reliefs provided in this Agreement for the indirect benefit of residents of third States),

Have agreed as follows:

Article 1
Persons Covered

This Agreement shall apply to persons who are residents of one or both of the Contracting States.

Article 2
Taxes Covered

(1) This Agreement shall apply to taxes on income and on capital imposed on behalf of a Contracting State or of its local authorities, irrespective of the manner in which they are levied.

(2) There shall be regarded as taxes on income and on capital all taxes imposed on total income, on total capital, or on elements of income or of capital, including taxes on gains from the alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation.

(3) The existing taxes to which the Agreement shall apply are in particular:

(a) in Botswana:

(i) the income tax including any withholding tax, prepayment or advance tax payment with respect to aforesaid tax; and

(ii) the capital gains tax;

(hereinafter referred to as “Botswana tax”);

(b) in Luxembourg:

(i) the income tax on individuals (I’impôt sure le revenu des personnes physiques);

(ii) the corporation tax (I’impôt sure le revenu des collectivités);

(iii) the capital tax (I’impôt sur la fortune); and

(iv) the communal trade tax (I’impôt commercial communal);

(hereinafter referred to as “Luxembourg tax”).

(4) Nothing in this Agreement shall limit the right of either Contracting State to charge tax on the profits of a mineral enterprise at an effective rate different from that charged on the profits of any other enterprise. The term “a mineral enterprise” means an enterprise carrying on the business of mining.

(5) The Agreement shall apply also to any identical or substantially similar taxes that are imposed by either Contracting State after the date of signature of the Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes that have been made in their taxation laws.

Article 3
General Definitions

(1) For the purposes of this Agreement, unless the context otherwise requires:

(a) the term “Botswana” means the Republic of Botswana;

(b) the term “Luxembourg” means the Grand Duchy of Luxembourg and, when used in a geographical sense, means the territory of the Grand Duchy of Luxembourg;

(d) the term “person” includes an individual, a company, a trust, an estate, a collective investment vehicle or undertaking and any other body of persons;

(e) the term “company” means any body corporate or any entity that is treated as a body corporate for tax purposes;

(f) the term “enterprise” applies to the carrying on of any business;

(h) the term “international traffic” means any transport by a ship, aircraft, rail or road vehicle operated by an enterprise that has its place of effective management in a Contracting State, except when the ship, aircraft, rail or road vehicle is operated solely between places in the other Contracting State;

(i) the term “competent authority” means:

(i) in Botswana, the Minister responsible for finance, represented by the Commissioner General of the Botswana Unified Revenue Service or an authorised representative of the Commissioner General;

(ii) in Luxembourg, the Minister of Finance or his authorised representative;

(j) the term “national” means:

(i) any individual possessing the nationality of a Contracting State;

(ii) any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State;

(k) the term “business” includes the performance of professional services and of other activities of an independent character.

(2) As regards the application of the Agreement at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which the Agreement applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.

Article 4
Resident

(1) For the purposes of this Agreement, the term “resident of a Contracting State” means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature, and also includes that State and any local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State or capital situated therein.

(2) Where by reason of the provisions of paragraph (1) an individual is a resident of both Contracting States, then his status shall be determined as follows:

(c) if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national;

(d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.

(3) Where by reason of the provisions of paragraph (1) a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the State in which its place of effective management is situated.

Article 5
Permanent Establishment

(1) For the purposes of this Agreement, the term “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

(2) The term “permanent establishment” includes especially:

(a) a place of management;

(b) a branch;

(d) a factory;

(e) a workshop;

(f) a mine, an oil or gas well, a quarry or any other place of extraction or exploitation of natural resources; and

(g) an installation or structure used for the exploration of natural resources, provided that the installation or structure continues for a period or periods aggregating more than 183 days in any twelve-month period commencing or ending in the fiscal year concerned.

(3) The term “permanent establishment” likewise encompasses:

(a) a building site, a construction, assembly or installation project or supervisory activities in connection with such site or activities, but only where such site, project or activities continue for a period of more than six months;

(b) the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by the enterprise for such purpose, but only where activities of that nature continue (for the same or connected project) within a Contracting State for a period or periods aggregating more than 183 days in any twelve-month period commencing or ending in the fiscal year concerned.

(4) Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not to include:

(a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;

(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;

(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information for the enterprise;

(e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character;

(f) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.

(5) Notwithstanding the provisions of paragraphs (1) and (2), where a person – other than an agent of an independent status to whom paragraph (6) applies – is acting on behalf of an enterprise and has, and habitually exercises, in a Contracting State an authority to conclude contracts in the name of the enterprise, that enterprise shall be deemed to have a permanent establishment in that State in respect of any activities which that person undertakes for the enterprise, unless the activities of such person are limited to those mentioned in paragraph (4) which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph.

(8) The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.

Article 6
Income from Immovable Property

(1) Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.

(2) The term “immovable property” shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships, boats and aircraft shall not be regarded as immovable property.

(3) The provisions of paragraph (1) shall apply to income derived from the direct use, letting, or use in any other form of immovable property.

(4) The provisions of paragraphs (1) and (3) shall also apply to the income from immovable property of an enterprise.

Article 7
Business Profits

(3) In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or, except in the case of a banking enterprise by way of interest on moneys lent to the permanent establishment. Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged (otherwise than towards reimbursement of actual expenses), by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission for specific services performed or for management, or, except in the case of a banking enterprise by way of interest on moneys lent to the head office of the enterprise or any of its other offices.

(4) No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

(6) Where profits include items of income which are dealt with separately in other Articles of this Agreement, then the provisions of those Articles shall not be affected by the provisions of this Article.

Article 8
International Transport

(1) Profits from the operation of ships, aircraft, rail or road vehicle in international traffic shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

(2) Profits from the operation of boats engaged in inland waterways transport shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

(3) If the place of effective management of a shipping enterprise or of an inland waterways transport enterprise is aboard a ship or boat, then it shall be deemed to be situated in the Contracting State in which the home harbour of the ship or boat is situated, or, if there is no such home harbour, in the Contracting State of which the operator of the ship or boat is a resident.

(4) The provisions of paragraph (1) shall also apply to profits from the participation in a pool, a joint business or an international operating agency.

Article 9
Associated Enterprises

(1) Where:

(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or

(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,

(2) Where a Contracting State includes in the profits of an enterprise of that State – and taxes accordingly – profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall if necessary consult each other.

Article 10
Dividends

(1) Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.

(2) However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:

(a) 5 per cent of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which holds directly at least 25 per cent of the capital of the company paying the dividends;

(b) 10 per cent of the gross amount of the dividends in all other cases.

This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

(3) The term “dividends” as used in this Article means income from shares, “jouissance” shares or “jouissance” rights, mining shares, founders’ shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident.

(5) Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment situated in that other State, nor subject the company’s undistributed profits to a tax on the company’s undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.

Article 11
Interest

(1) Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

(2) However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 7.5 per cent of the gross amount of the interest.

(3) Notwithstanding the provisions of paragraph (2), interest referred to in paragraph (1) shall be taxable only in the Contracting State of which the recipient is a resident if the beneficial owner of the interest is a resident of that State, and:

(a) is that State or the Central Bank or a local authority thereof;

(b) if the interest is paid by the State in which the interest arises or by a local authority or statutory body thereof;

(c) if the interest is paid in respect of a loan, debt-claim or credit that is owed to, or made, provided, guaranteed or insured by, that State or a local authority or export financing agency thereof.

(5) The provisions of paragraph (1), (2) and (3) shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.

(6) Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment, then such interest shall be deemed to arise in the State in which the permanent establishment is situated.

(7) Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

Article 12
Royalties

(1) Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

(2) However, such royalties may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the beneficial owner of the royalties is a resident of the other Contracting State, the tax so charged shall not exceed 7.5 per cent of the gross amount of the royalties.

(3) The term “royalties” as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films and films, tapes or discs for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for the use of or the right to use industrial, commercial or scientific equipment or for information concerning industrial, commercial or scientific experience.

(4) The provisions of paragraphs (1) and (2) shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.

(5) Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment, then such royalties shall be deemed to arise in the Contracting State in which the permanent establishment is situated.

(6) Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

Article 13
Fees for Technical Services

(1) Fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

(2) However, such fees for technical services may also be taxed in the Contracting State in which they arise and according to the laws of that State, but where the beneficial owner of the fees for technical services is a resident of the other Contracting State, the tax so charged shall not exceed 7.5 per cent of the gross amount of the fees for technical services.

(3) The term “fees for technical services” as used in this Article means payments of any kind to any person, other than to an employee of the person making the payments, in consideration for any services of a technical, managerial or consultancy nature.

(4) The provisions of paragraphs (1) and (2) shall not apply if the beneficial owner of the fees for technical services, being a resident of a Contracting State, carries on business in the other Contracting State in which the fees for technical services arise through a permanent establishment situated therein, and the fees for technical services are effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.

(5) Fees for technical services shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the fees for technical services, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the obligation to pay the fees for technical services was incurred, and such fees for technical services are borne by such permanent establishment, then such fees for technical services shall be deemed to arise in the Contracting State in which the permanent establishment is situated.

(6) Where by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the fees for technical services paid exceeds, for whatever reason, the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such a relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

Article 14
Capital Gains

(1) Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.

(3) Gains from the alienation of ships, aircraft, rail or road vehicles operated in international traffic, boats engaged in inland waterways transport or movable property pertaining to the operation of such ships, aircraft, rail or road vehicles, or boats, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

(4) Gains from the alienation of any property other than that referred to in paragraphs (1), (2) and (3), shall be taxable only in the Contracting State of which the alienator is a resident.

Article 15
Income from Employment

(1) Subject to the provisions of Articles 16, 18, 19 and 20, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.

(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned; and

(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and

(3) Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship, aircraft, rail or road vehicles operated in international traffic, or aboard a boat engaged in inland waterways transport, may be taxed in the Contracting State in which the place of effective management of the enterprise is situated.

Article 16
Directors’ Fees

Article 17
Artistes and Sportspersons

(1) Notwithstanding the provisions of Articles 7 and 15, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State.

(2) Where income in respect of personal activities exercised by an entertainer or a sportsperson in his capacity as such accrues not to the entertainer or sportsperson himself but to another person, that income may, notwithstanding the provisions of Articles 7 and 15, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised.

(3) The provisions of paragraphs (1) and (2) of this Article shall not apply to income derived from activities performed in a Contracting State by entertainers or sportspersons if the visit to that State is wholly or substantially supported by public funds. In such case, the income shall be taxable only in the Contracting State of which the entertainer or sportsperson is a resident.

Article 18
Pensions

(1) Subject to the provisions of paragraph (2) of Article 19, pensions and other similar remuneration and annuities arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in the first-mentioned Contracting State.

(2) Notwithstanding the provisions of paragraph (1), pensions and other payments made under the social security legislation of a Contracting State shall be taxable only in that State.

(3) Notwithstanding the provisions of paragraph (1), pensions and other similar remuneration (including lump-sum payments) arising in a Contracting State and paid to a resident of the other Contracting State shall be taxable only in the first-mentioned State, provided that such payments derive from contributions paid to or from provisions made under a pension scheme by the recipient or on his behalf and that these contributions, provisions or the pensions or other similar remuneration have been subjected to tax in the first-mentioned State under the ordinary rules of its tax laws.

(4) The term “annuity” means a stated sum payable periodically at stated times during life or during a specified or ascertainable period of time under an obligation to make the payments in return for adequate and full consideration in money or money’s worth.

Article 19
Government Service

(1)(a) Salaries, wages and other similar remuneration paid by a Contracting State or a local authority thereof to an individual in respect of services rendered to that State or authority shall be taxable only in that State.

(i) is a national of that State; or

(ii) did not become a resident of that State solely for the purpose of rendering the services.

(2) (a) Notwithstanding the provisions of paragraph (1), pensions and other similar remuneration paid by, or out of funds created by, a Contracting State or a local authority thereof to an individual in respect of services rendered to that State or authority shall be taxable only in that State.

(b) However, such pensions and other similar remuneration shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that State.

(3) The provisions of Articles 15, 16, 17 and 18 shall apply to salaries, wages, pensions, and other similar remuneration in respect of services rendered in connection with a business carried on by a Contracting State or a local authority thereof.

Article 20
Professors, Teachers and Researchers

(1) A professor, teacher or researcher who is or was a resident of one of the Contracting States immediately before visiting the other Contracting State for the purpose of teaching or engaging in research, or both, at a university, college or other similar institution in that other Contracting State, shall be exempt from tax in that other State on any remuneration for such teaching or research for a period not exceeding two years from the date of his first arrival in that other State.

(2) This Article shall apply to income from research only if such research is undertaken in the public interest and not primarily for the benefit of some private person or persons.

Article 21
Students

Payments which a student, apprentice or business trainee who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that State, provided that such payments arise from sources outside that State.

Article 22
Other Income

(1) Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.

(2) The provisions of paragraph (1) shall not apply to income, other than income from immovable property as defined in paragraph (2) of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.

Article 23
Capital

(1) Capital represented by immovable property referred to in Article 6, owned by a resident of a Contracting State and situated in the other Contracting State, may be taxed in that other State.

(2) Capital represented by movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State may be taxed in that other State.

(3) Capital represented by ships, aircraft, rail or road vehicles operated in international traffic and by boats engaged in inland waterways transport, and by movable property pertaining to the operation of such ships, aircraft, rail or road vehicles and boats, shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.

(4) All other elements of capital of a resident of a Contracting State shall be taxable only in that State.

Article 24
Elimination of Double Taxation

Double taxation shall be eliminated as follows:

(1) Subject to the provisions of the law of Botswana regarding the allowance of a credit against Botswana tax of tax payable under the laws of a country outside Botswana, Luxembourg tax payable under the laws of Luxembourg and in accordance with this Agreement, whether directly or by deduction, on profits or income liable to tax in Luxembourg shall be allowed as a credit against any Botswana tax payable in respect of the same profits or income by reference to which the Luxembourg tax is computed. However, the amount of such credit shall not exceed the amount of the Botswana tax payable on that income in accordance with the laws of Botswana.

(2) Subject to the provisions of the law of Luxembourg regarding the elimination of double taxation which shall not affect the general principle hereof, double taxation shall be eliminated as follows:

(a) Where a resident of Luxembourg derives income or owns capital which, in accordance with the provisions of this Agreement, may be taxed in Botswana, Luxembourg shall, subject to the provisions of sub-paragraphs (b) and (c), exempt such income or capital from tax, but may, in order to calculate the amount of tax on the remaining income or capital of the resident, apply the same rates of tax as if the income or capital had not been exempted.

(b) Where a resident of Luxembourg derives income which, in accordance with the provisions of Articles 10, 11, 12, 13 and 17 may be taxed in Botswana, Luxembourg shall allow as a deduction from the income tax on individuals or from the corporation tax of that resident an amount equal to the tax paid in Botswana. Such deduction shall not, however, exceed that part of the tax, as computed before the deduction is given, which is attributable to such items of income derived from Botswana.

(c) The provisions of sub-paragraph (a) shall not apply to income derived or capital owned by a resident of Luxembourg where Botswana applies the provisions of this Agreement to exempt such income or capital from tax or applies the provisions of paragraph (2) of Articles 10, 11, 12 or 13 to such income.

(d) Where by reason of the relief given under the provisions of Botswana laws for the purpose of encouraging investment in Botswana, the Botswana tax actually levied on dividends, interest, royalties or fees for technical services arising in Botswana is lower than the respective rate referred to in Articles 10, 11, 12 and 13, then the amount of the tax paid in Botswana on such dividends, interest, royalties and fees for technical services shall be deemed to have been paid at the respective rates referred to in Articles 10, 11,12 and 13.

Article 25
Non-Discrimination

(1) Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.

(3) Except where the provisions of paragraph (1) of Article 9, paragraph (7) of Article 11, paragraph (6) of Article 12, or paragraph (6) of Article 13, apply, interest, royalties, fees for technical services and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State. Similarly, any debts of an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable capital of such enterprise, be deductible under the same conditions as if they had been contracted to a resident of the first-mentioned State.

(4) Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected.

(5) The provisions of this Article shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.

(6) The provisions of this Article shall apply to taxes covered by this Agreement.

Article 26
Mutual Agreement Procedure

(1) Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of either Contracting State. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Agreement.

(2) The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the Agreement. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.

(3) The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Agreement. They may also consult together for the elimination of double taxation in cases not provided for in the Agreement.

(4) The competent authorities of the Contracting States may communicate with each other directly, including through a joint commission consisting of themselves or their representatives, for the purpose of reaching an agreement in the sense of the preceding paragraphs.

Article 27
Exchange of Information

(1) The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or local authorities, insofar as the taxation thereunder is not contrary to the Agreement. The exchange of information is not restricted by Articles 1 and 2.

(2) Any information received under paragraph (1) by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to the taxes referred to in paragraph (1), or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions.

(3) In no case shall the provisions of paragraphs (1) and (2) be construed so as to impose on a Contracting State the obligation:

(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

(b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;

(c) to supply information which would disclose any trade, business, industrial, commercial, or professional secret or trade process, or information the disclosure of which would be contrary to public policy (ordre public).

(4) If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph (3) but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.

(5) In no case shall the provisions of paragraph (3) be construed to permit a Contracting State to decline to supply information upon request solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.

Article 28
Assistance in Collection

(1) The Contracting States undertake to lend assistance and support to each other in the collection of the taxes to which this Agreement relates, together with the interest, costs, and additions to the taxes and fines not being of a penal character.

(2) Such application must be accompanied by such documents as are required by the laws of the State making the application to establish that the taxes being collected are due.

(3) At the request of the competent authority of a Contracting State, the competent authority of the other Contracting State will ensure, according to the provisions of laws and regulations applied to collection of the above-mentioned taxes in the last State, collection of fiscal claims covered by the first paragraph, which are recoverable in the first State. These claims shall not enjoy any privilege in the requested State and the latter is not obliged to apply means of execution which are not authorised by the provisions of laws and regulations of the requested State.

(4) The provisions of paragraph (1) of Article 27, shall apply equally to all information brought, for the application of the preceding paragraphs of the present Article, to the knowledge of the competent authority of the requested State.

Article 29
Members of Diplomatic Missions and Consular Posts

Article 30
Entitlement to Benefits

(1) Notwithstanding the other provisions of this Agreement, a benefit under this Agreement shall not be granted in respect of an item of income or capital if it is reasonable to conclude, having regard to all relevant facts and circumstances that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that the granting that benefit in these circumstances would be in accordance with the object of the relevant provisions of Agreement.

(2) Where a benefit under this Agreement is denied to a person under paragraph (1), the competent authority of the Contracting State that would otherwise have granted this benefit shall nevertheless treat that person as being entitled to this benefit, or to different benefits with respect to a specific item of income or capital, if such competent authority, upon request from that person and after consideration of the relevant facts and circumstances, determines that such benefits would have been granted to that person in the absence of the transaction or arrangement referred to in paragraph (1). The competent authority of the Contracting State to which the request has been made will consult with the competent authority of the other State before rejecting a request made under this paragraph by a resident of the other State.

Article 31
Entry Into Force

(1) The Contracting States shall notify each other in writing, through diplomatic channels, that the procedures required by its law for the entry into force of this Agreement have been satisfied. The Agreement shall enter into force on the date of receipt of the last notification.

(2) The provisions of the Agreement shall have effect:

(a) in Botswana;

(i) with regard to taxes withheld at source, in respect of amounts paid or credited on or after the thirtieth day following the date upon which the Agreement enters into force; and

(ii) with regard to other taxes, in respect of tax years or years of assessment beginning on or after the thirtieth day following the date upon which the Agreement enters into force;

(b) in Luxembourg:

(i) in respect of taxes withheld at source, to income derived on or after 1st January of the calendar year next following the year in which the Agreement enters into force; and

(ii) in respect of other taxes on income, and taxes on capital, to taxes chargeable for any taxable year beginning on or after 1st January of the calendar year next following the year in which the Agreement enters into force.

Article 32
Termination

(1) This Agreement shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Agreement, through diplomatic channels, by giving written notice of termination at least six months before the end of any calendar year beginning after the expiration of a period of five years from the date of its entry into force.

(2) The Agreement shall cease to have effect:

(a) in Botswana:

(i) with regard to taxes withheld at source, in respect of amounts paid or credited on or after the end of the calendar year in which such notice is given; and

(ii) with regard to other taxes, in respect of tax years or years of assessment beginning after the end of the calendar year in which such notice is given;

(b) in Luxembourg:

(i) in respect of taxes withheld at source, to income derived on or after 1st January of the calendar year next following the year in which the notice is given; and

In witness whereof the undersigned, duly authorised thereto, have signed this Agreement.

Done in duplicate at Luxembourg this 19th day of September, 2018, in the English language.

H. E. SAMUEL O. OUTLULE,
for the Government of the
Republic of Botswana.

PIERRE GRAMEGNA,
Minister of Finance
for the Government of the
Grand Duchy of Luxembourg.

PROTOCOL

At the moment of the signing of the Agreement between the Government of the Republic of Botswana and the Government of the Grand Duchy of Luxembourg for the elimination of double taxation with respect to taxes on income and on capital and the prevention of tax evasion and avoidance, both sides have agreed upon the following provisions, which shall form an integral part of the Agreement:

I. With reference to Article 4:

A trust, an estate, a collective investment vehicle or undertaking which is established in a Contracting State shall be considered as a resident of the Contracting State in which it is established and as the beneficial owner of the income it receives.

II. With reference to Article 24:

The provisions of paragraph (2)(d) shall apply for a period of 10 years beginning on 1st January of the calendar year next following the year in which the Agreement enters into force. This period may be extended by mutual agreement between the competent authorities.

III. With reference to Article 27:

The competent authority of the requesting State shall provide the following information to the competent authority of the requested State when making a request for information under the Agreement to demonstrate the foreseeable relevance of the information to the request:

(a) the identity of the person under examination or investigation;

(b) a statement of the information sought including its nature and the form in which the requesting State wishes to receive the information from the requested State;

(d) grounds for believing that the information requested is held in the requested State or is in the possession or control of a person within the jurisdiction of the requested State;

(e) to the extent known, the name and address of any person believed to be in possession of the requested information;

(f) a statement that the requesting State has pursued all means available in its own territory to obtain the information, except those that would give rise to disproportionate difficulties.

In witness whereof the undersigned, duly authorised thereto, have signed this Protocol.

Done in duplicate at Luxembourg this 19th day of September 2018, in the English language.

H. E. SAMUEL O. OUTLULE,
for the Government of the
Republic of Botswana.

PIERRE GRAMEGNA,
Minister of Finance
for the Government of the
Grand Duchy of Luxembourg.

INCOME TAX (TRANSFER PRICING) REGULATIONS

(section 145)

(12th July, 2019)

ARRANGEMENT OF REGULATIONS

REGULATION

1. Citation

2. Interpretation

3. Arm’s length principle

4. Comparability

5. Transfer pricing methods

6. Evaluation of combined controlled transactions

7. Arm’s length range

8. Sources of information on comparable uncontrolled transactions

9. Services between connected enterprises

10. Transactions involving intangible property

11. Corresponding adjustments for domestic transactions

12. Application of section 36A to domestic transactions

13. Corresponding adjustments for international transactions

14. Required documents for transfer pricing

15. Language of documentation

16. Time limit for submission of documentation

17. Power to request additional information

18. Application of OECD Transfer Pricing Guidelines

S.I. 80, 2019.

1. Citation

These Regulations may be cited as the Income Tax (Transfer Pricing) Regulations.

2. Interpretation

In these Regulations, unless the context otherwise requires—

“comparable transaction” means any transaction that is comparable to another transaction in accordance with regulation 4;

“contemporaneous documentation” means documentation for a relevant tax year which is in place at the prescribed date for filing a tax return;

“controlled transaction” means any transaction between connected persons;

“financial indicator” means, in relation to the—

(i) comparable uncontrolled price method, the price;

(ii) cost plus method, the mark up on costs;

(iii) resale price method, the resale margin;

(iv) transaction net margin method, the net profit margin; and

(v) transactional profit split method, the division of the operating profit and loss;

“multi-national enterprise group”, hereinafter referred to as “MNE group” means—

(i) a group of two or more persons, whose tax residencies are in different jurisdictions; or

(ii) any group that includes a person who, for tax purposes, is a resident in one jurisdiction and is also subject to tax in another jurisdiction as a result of having a Permanent Establishment in that jurisdiction; and

“uncontrolled transaction” means any transaction between independent persons.

3. Arm’s length principle

The determination of whether the conditions of a controlled transaction are consistent with the arm’s length principle under section 36A of the Act and of the quantum of any adjustment made under section 36A(3) of the Act, shall be made in accordance with the provisions of these Regulations.

4. Comparability

(1) An uncontrolled transaction is comparable to a controlled transaction within the meaning of section 36A(2) of the Act where—

(a) there are no differences between the transactions that could materially affect the financial indicator being examined under the appropriate transfer pricing method; or

(b) such differences exist, a reasonably accurate comparability adjustment is made to the relevant financial indicator of the uncontrolled transaction in order to eliminate the effects of such differences on the comparison.

(2) To determine whether two or more transactions are comparable, the following factors shall be considered to the extent that they are economically relevant to the facts and circumstances of the transactions—

(a) the characteristics of the property or a service transferred;

(b) the function undertaken by each person with respect to the transactions, taking into account assets used and risks assumed;

(d) the economic circumstances in which a transaction takes place; and

(e) the business strategies pursued by each of the connected persons in relation to the transactions.

5. Transfer pricing methods

(1) The arm’s length price of a controlled transaction shall be determined by applying the most appropriate transfer pricing method to the circumstances of the transaction.

(2) The most appropriate transfer pricing method shall be selected from among the approved transfer pricing methods set out in subregulation (5), taking into consideration the following criteria—

(a) the respective strength and weakness of the approved method;

(b) the appropriateness of an approved method in view of the nature of the controlled transaction, determined in particular, through an analysis of the functions undertaken by each person in the controlled transaction, taking into account assets used and risks assumed;

(d) the degree of comparability between the controlled and uncontrolled transactions, including the reliability of comparability adjustments, if any, that may be required to eliminate differences between them.

(3) Where the circumstances of the transaction require more than one appropriate transfer pricing method, a person may apply more than one method to determine whether the conditions of a given controlled transaction are consistent with the arm’s length principle.

(4) Where a person has used an approved transfer pricing method and the selection of that method is consistent with this regulation, the determination by the Commissioner General of whether the conditions of the person’s controlled transactions are consistent with the arm’s length principle shall be based on that transfer pricing method applied by the person.

(5)(a) The following shall be the approved transfer pricing methods for purposes of subregulation (1)—

(i) the comparable uncontrolled price method, which is a method consisting of comparing the price charged for property or a service transferred in a controlled transaction to the price charged for property or a service transferred in a comparable uncontrolled transaction;

(ii) the resale price method, which is a method consisting of comparing the resale margin that a purchaser of property in a controlled transaction earns from reselling that property in an uncontrolled transaction with the resale margin that is earned in comparable uncontrolled purchase and resale transactions;

(iii) the cost plus method, which is a method consisting of comparing the mark up on the costs directly and indirectly incurred in the supply of property or a service in a controlled transaction with the mark up on those costs directly and indirectly incurred in the supply of property or a service in a comparable uncontrolled transaction;

(iv) the transactional net margin method, which is a method consisting of comparing the net profit margin relative to an appropriate base, such as costs, sales or assets, that a person achieves in a controlled transaction with the net profit margin relative to the same base achieved in comparable uncontrolled transactions;

(v) the transactional profit split method, which is a method consisting of allocating to each connected person participating in a controlled transaction the portion of common profit or loss derived from such transaction that an independent person would expect to earn from engaging in a comparable uncontrolled transaction; and

(b) the approved transfer methods under paragraphs (i) to (iii) shall be classified as traditional methods and the methods under paragraphs (iv) to (v) shall be classified as transactional methods.

(6) Where it is possible to determine an arm’s length price for some of the functions performed by the connected persons in connection with the transaction using one of the approved methods described in subregulation (5)(a)(i) to (iv), the transactional profit split method shall be applied based on the common residual profit that results once such functions are so priced.

(7) Where—

(a) taking account of the criteria described in subregulation (3); and

(b) an approved method described in subregulation (5)(a)(i) to (v) can be applied with equal reliability,

the determination of arm’s length conditions shall be made using the comparable uncontrolled price method.

(8) Where, taking account of the criteria described in subregulation (3) and where a traditional method or transactional method can be applied with equal reliability, the determination of arm’s length conditions shall be made using the traditional method.

(9) Subject to subregulation (3) it shall not be necessary to apply more than one method to determine the arm’s length price for a given controlled transaction.

(10) A transfer pricing method other than the approved methods contained in subregulation (5) may be applied where the Commissioner General is satisfied that—

(a) none of the approved methods can be reasonably applied to determine arm’s length conditions for the controlled transaction; and

(b) such other method yields a result consistent with that which would be achieved by independent persons engaging in comparable uncontrolled transactions under comparable circumstances.

(11) When applying a cost plus, resale price or transactional net margin method, provided under subregulation (5) it shall be necessary to select the party, hereinafter referred to as the “tested party”, to the transaction for which a financial indicator, mark-up on costs, gross margin, or net profit indicator, is tested under the applicable transfer pricing method.

(12) The selection of the tested party should be consistent with the functional analysis of the transaction.

(13) Where a person uses a transfer pricing method to establish the payment of a controlled transaction and that transfer pricing method is consistent with the provisions of subregulation (2), then the Commissioner General’s determination of whether the conditions of the taxpayer’s controlled transactions are consistent with the arm’s length principle shall be based on the transfer pricing method applied by the person.

6. Evaluation of combined controlled transactions

Where a person liable to tax carries out, under the same or similar circumstances, two or more controlled transactions that are economically closely linked to one another or that form a continuum such that they cannot reliably be analysed separately, those transactions may be combined to—

(a) perform the comparability analysis set out in regulation 4; and

(b) apply any transfer pricing method set out in regulation 5.

7. Arm’s length range

(1) An arm’s length range is a range of relevant financial indicator figures such prices, margins or profit shares produced by the application of the most appropriate transfer pricing method as set out in regulation 5 to a number of uncontrolled transactions, each of which is relatively equally comparable to the controlled transaction based on a comparability analysis conducted in accordance with regulation 4.

(2) A controlled transaction, or a set of transactions that are combined according to regulation 6 shall not be subject to an adjustment under section 36A of the Act where, the relevant financial indicator being tested under the appropriate transfer pricing method is within the arm’s length range.

(3) Where the relevant financial indicator derived from a controlled transaction, or from a set of transactions that are combined according to regulation 6, falls outside the arm’s length range, the Commissioner General may adjust it pursuant to section 36A(3) of the Act, and any such adjustment shall be to the median in the arm’s length range.

(4) For the purposes of regulation 5(3), the median of the arm’s length range shall be the 50th percentile of the financial indicator figures derived from the comparable uncontrolled transactions forming the arm’s length range.

(5) For purposes of subregulation (4), a 50th percentile is the lowest financial indicator figure such that at least 50 per cent of the financial indicator figures are at or below the value of that figure:

Provided that, if exactly 50 per cent of the results are at or below a financial indicator figure, then the 50th percentile is equal to the arithmetic mean of that figure and the next highest figure.

8. Sources of information on comparable uncontrolled transactions

(1) The following shall be possible sources of information on comparable uncontrolled transactions—

(a) internal uncontrolled transactions, which are uncontrolled transactions where one of the parties to the controlled transaction is also a party to the uncontrolled transaction;

(b) external uncontrolled transactions, which are uncontrolled transactions to which neither of the parties to the controlled transaction is a party.

(2) The Commissioner General may not rely upon information concerning a comparable external uncontrolled transaction for the purposes of making an adjustment under section 36A of the Act where the information concerning the transaction is not available to a person liable to tax.

(3) A person shall not rely upon information concerning a comparable uncontrolled transaction for the purposes of demonstrating the consistency of a transaction with section 36A of the Act, where the information on the transaction is not available to the Commissioner General.

(4) The Commissioner General may, in the absence of information on an uncontrolled transaction from the same geographic market as a controlled transaction, accept a comparable uncontrolled transaction from other geographic market.

(5) A determination of whether comparables from other geographic markets are reliable shall be made on a case-by-case basis, and by reference to the extent to which they satisfy subregulations (2) and (3).

(6) A person using comparables in subregulation (5) shall assess the expected impact of geographic differences and other factors on the price and profitability.

9. Services between connected enterprises

(1) A charge for a service between a person liable to tax and a connected person shall be considered consistent with the arm’s length principle where—

(a) the charge is for a service that is actually rendered;

(b) the service provides, or where rendered, was expected to provide, the person with economic or commercial value to enhance its commercial position;

(c) the charge is for a service that an independent enterprise in comparable circumstances would have been willing to pay for, if performed for it by an independent enterprise, or would have performed in-house for itself; and

(d) the amount charged corresponds to an amount which would have been agreed between independent enterprises for comparable services in comparable circumstances.

(2) A charge for a service made to a person liable to tax shall not be consistent with the arm’s length principle where it is made by a connected person solely because of the person’s shareholder’s ownership interest in one or more other group members, including a service for any of the following costs incurred or activities undertaken by such connected person—

(a) a cost or an activity relating to the juridical structure of the parent company of the person liable to tax, such as meetings of shareholders of the parent company, issuing of shares in the parent company and costs of the parent company’s supervisory board;

(b) a cost or an activity relating to reporting requirements of the parent company of the person liable to tax, including the consolidation of reports; and

(c) a cost or an activity related to raising funds for the acquisition of participations, unless those participations are directly or indirectly acquired by the person liable to tax and the acquisition benefits or is expected to benefit that person.

(3) Where it is possible to identify a specific service provided by a person liable to tax to a connected person, the determination whether the service charge is consistent with the arm’s length principle shall be made for each specific service, subject to the provisions of subregulation (1).

(4) Where services are rendered by a person liable to tax to various connected persons and it is not possible to identify a specific service provided to each of them, the total service charge shall be allocated among the connected persons that benefit or expect to benefit from the service according to a reasonable allocation criteria.

(5) For the purposes of subregulation (4), an allocation criteria shall be viewed as reasonable where it is based on a variable that—

(a) takes into account the nature of the service, the circumstances under which the service is provided and the benefits obtained or that were expected to be obtained by the persons for which the service is intended;

(b) relates exclusively to uncontrolled transactions, rather than controlled transactions; and

10. Transactions involving intangible property

(1) The determination of arm’s length conditions for controlled transactions involving a licence, a sale or any transfer of intangible property between connected persons shall take into account—

(a) the perspective of both the transferor of the property and the transferee;

(b) the pricing at which a comparable independent enterprise would be willing to transfer the property; and

(2) In applying the provisions of subregulation (2) to a transaction involving the licence, sale or other transfer of intangible property, consideration shall be given to any special factors relevant to the comparability of the controlled and uncontrolled transactions, including—

(a) the expected benefits from the intangible property;

(b) any geographic limitations on the exercise of rights to the intangible property;

(d) whether the transferee has the right to participate in further developments of the intangible property by the transferor.

11. Corresponding adjustments for domestic transactions

Where an adjustment is made by the Commissioner General under section 36A of the Act to the taxable income of a person liable to tax in relation to a domestic transaction, then the Commissioner General shall make an appropriate adjustment to the taxable income of the other party to the transaction.

12. Application of section 36A to domestic transactions

Section 36A of the Act shall not apply where a person resident in Botswana engages directly or indirectly in any transaction, operation or scheme with a connected person resident in Botswana except where Part XVI of the Act applies to one or both persons.

13. Corresponding adjustments for international transactions

(1) Where—

(a) an adjustment to the conditions of transactions between a person resident in Botswana and a connected person is made or proposed by a tax administration in a country other than Botswana;

(b) the adjustment results in the taxation in that other country of an amount of income on which the person resident in Botswana has already been charged to tax in Botswana; and

(c) the country making or proposing the adjustment has a treaty with Botswana that reflects an intention to provide for the relief of economic double taxation,

the Commissioner General shall after a request is made by the person resident in Botswana, examine the consistency of that adjustment with the arm’s length principle provided for under section 36A of the Act, consulting as necessary with the competent authority of the other country.

(2) If the adjustment proposed or made by the other country is consistent with the arm’s length principle both in principle and as regards the amount, the Commissioner General shall make a corresponding adjustment to the amount of the tax charged in Botswana to that person on those profits, in order to eliminate the economic double taxation that would result from the inclusion of the same profits in the taxable income of both that person and the connected person.

(3) A request under subregulation (1) shall contain the information necessary for the Commissioner General to examine the consistency of the adjustment made by the tax administration of the other country with the arm’s length principle, including—

(a) the name, registered address and, where applicable, trading name of the related person;

(b) evidence of the tax residence of the related person;

(d) the amount of the requested corresponding adjustment and the amount of the adjustment made by the tax administration of the other country;

(e) evidence of the adjustment made by the tax administration of the other country and the basis for the adjustment, including details of comparability analysis relied upon and the transfer pricing method applied;

(f) confirmation that the related person will not, or is unable to, pursue any further recourse under the domestic law of the other country that may result in the adjustment made by the tax administration of the other country being reduced or reversed; and

(g) any other information that may be relevant for examining the consistency of the adjustment with the arm’s length principle.

(4) The request shall be made within the applicable time period for making a request for the case to be resolved by way of mutual agreement procedure under the applicable tax treaty.

14. Required documents for transfer pricing

(1) A person who engages in a transaction under section 36A of the Act shall keep documentation which is essential for explaining any transaction, including contemporaneous documentation that verifies that the conditions in the person’s controlled transactions for the relevant tax year are consistent with the arm’s length principle.

(2) A person who keeps documentation required under subregulation (1) shall when filing a tax return, submit the documentation with the tax return.

(3) The documentation that is required to be kept under subregulation (1) and submitted with a tax return as provided under subregulation (2) shall include the following—

(a) an overview of the person’s business operations, which includes—

(i) the history,

(ii) recent evolution,

(iii) general overview of the relevant markets of reference, and

(iv) an organisational chart with details of business units or departments in the organisation’s structure;

(b) a description of the organisational structure of the group that the person is a member of, including details of all group members, their legal form, and their shareholding percentages;

(c) a description of the group’s operational structure including a general description of the role that each of the group members carries out with respect to the group’s activities, which are relevant to the controlled transaction;

(d) a description of the general business and business strategy pursued by the person, which includes an indication of whether the person has been involved in a business restructuring or intangible transfer in the present or immediate past year and an explanation of the effects of such transaction;

(e) a description of the person’s key competitors;

(f) a description of the controlled transaction, including analysis of the comparability factors in regulation 4;

(g) the amount of intra-group payments and receipts for each category of controlled transactions involving the person and the payments and receipts are broken down according to the tax jurisdiction of the foreign payer or recipient;

(h) an identification of connected persons involved in each category of controlled transactions and the relationship between them;

(i) copies of all material inter-company agreements concluded by the person;

(j) a detailed comparability and functional analysis of the person and relevant connected persons with respect to each documented category of controlled transactions, including any changes compared to prior years;

(k) an indication of which connected persons was selected as the tested party, if applicable, and an explanation of the reasons for the selection;

(l) financial statements for the parties to the controlled transaction including where the tested party has been selected as a party outside Botswana;

(m) a summary of the important assumptions made in applying the transfer pricing methodology;

(n) where relevant, an explanation of the reasons for performing a multi-year analysis;

(o) a list and description of selected internal or external comparable uncontrolled transactions, if any, and information on relevant financial indicators for independent persons relied on in the transfer pricing analysis, including a description of the comparable search methodology and the source of such information;

(p) a description of the reasons for concluding that relevant transactions were priced on an arm’s length basis based on the application of the selected transfer pricing method;

(q) a summary of financial information used in applying the transfer pricing methodology;

(r) information and allocation schedules showing how the financial data used in applying the transfer pricing method may be tied to the annual financial statements;

(s) summary schedules of relevant financial data for comparables used in the analysis and the sources from which that data was obtained;

(t) explanation of the selection of the most appropriate transfer pricing method and where relevant, the selection of the tested party and the financial indicator;

(u) comparability analysis, including—

(i) description of the process undertaken to identify comparable uncontrolled transactions,

(ii) explanation of the basis for the rejection of any potential internal comparable uncontrolled transactions, where applicable,

(iii) description of the comparable uncontrolled transactions,

(iv) analysis of comparability of the controlled transaction and the comparable uncontrolled transactions taking into account the comparability factors in regulation 4, and

(v) details and explanation of any comparability adjustments made;

(v) details of any industry analysis, economic analysis, budgets or projections relied on;

(w) details of any advance pricing agreements or similar arrangements in other countries that are applicable to the controlled transactions;

(x) a conclusion as to consistency of the conditions of the controlled transactions with the arm’s length principle, including details of any adjustment made to ensure compliance; and

(y) any other information that may have a material impact on the determination of the person’s compliance with the arm’s length principle with respect to the controlled transactions.

(4) A person whose transaction or transactions, in a tax year with a connected person, within a MNE group exceeds P5 000 000 shall, upon a written request by the Commissioner General, furnish the Commissioner General with the following information—

(a) a chart illustrating the MNE group’s legal and ownership structure and geographical location of operating entities;

(b) a description of the MNE group’s business, including—

(i) important drivers of business profit,

(ii) a description of the supply chain for the group’s five largest products or service offerings by turnover and any other products or services amounting to more than 5 percent of group turnover,

(iii) a list and brief description of important service arrangements between members of the MNE group, other than research and development services, including a description of the capabilities of the principal locations providing important services and transfer pricing policies for allocating services costs and determining prices to be paid for intra-group services,

(iv) a description of the main geographic markets for the group’s products and services,

(v) a brief written functional analysis describing the principal contributions to value creation by individual entities within the group, such as key functions performed, important risks assumed and important assets used, and

(vi) a description of important business restructuring transactions, acquisitions and divestitures occurring during the tax year.

15. Language of documentation

Any documentation required to be kept under these Regulations shall be submitted in Setswana or English language.

16. Time limit for submission of documentation

A person shall, upon a notice in writing from the Commissioner General requesting the person to provide the Commissioner General with any documentation required to be kept under these Regulations, provide the Commissioner General with such documentation at such a time and place as may be specified in the notice.

17. Power to request additional information

Notwithstanding the requirements under regulations 14 and 16, the Commissioner General shall have the power to request additional information which the Commissioner General considers necessary to carry out his or her functions in the course of conducting audit procedures.

18. Relevance of OECD Transfer Pricing Guidelines

The Organisation for Economic Co-operation and Development (“OECD”) “Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations” are a relevant source of interpretation for these Regulations.

BOTSWANA-CZECH REPUBLIC DOUBLE TAXATION AVOIDANCE AGREEMENT ORDER

(section 53(1))

(28th February, 2020)

ARRANGEMENT OF PARAGRAPHS

PARAGRAPH

1. Citation

2. Approval and effective date of commencement

Schedule

S.I. 22, 2020.

1. Citation

This Order may be cited as Botswana–Czech Republic Double Taxation Avoidance Agreement Order.

2. Approval and effective date of commencement

The Double Taxation Avoidance Agreement set out in the Schedule hereto between the Government of the Republic of Botswana and the Government of Czech Republic is presented to the National Assembly for approval and shall, upon take effect from the date specified in the Agreement.

SCHEDULE

The Government of the Republic of Botswana and the Government of the Czech Republic, desiring to further develop economic relations between both States and to enhance co-operation in tax matters by way of concluding an Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance have agreed as follows:

ARTICLE 1
PERSONS COVERED

1. This Agreement shall apply to persons who are residents of one or both of the Contracting States.

ARTICLE 2
TAXES COVERED

1. This Agreement shall apply to taxes on income imposed on behalf of a Contracting State or of its political subdivisions or local authorities, irrespective of the manner in which they are levied.

2. There shall be regarded as taxes on income all taxes imposed on total income or on elements of income, including taxes on gains from the alienation of movable or immovable property.

3. The existing taxes to which this Agreement shall apply are in particular:

(a) in Botswana:

(i) the income tax; and

(ii) the capital gains tax;

(hereinafter referred to as “Botswana tax”); and

(b) in the Czech Republic:

(i) the tax on income of individuals; and

(ii) the tax on income of legal persons;

(hereinafter referred to as “Czech tax”).

ARTICLE 3
GENERAL DEFINITIONS

1. For purposes of this Agreement, unless the context otherwise requires:

(a) the term “Botswana” means the Republic of Botswana;

(b) the term “the Czech Republic” means the territory of the Czech Republic over which, under the Czech legislation and in accordance with international law, the sovereign rights of the Czech Republic are exercised;

(c) the terms “a Contracting State” and “the other Contracting State” mean the Czech Republic or Botswana, as the context requires;

(d) the term “company” means any body corporate or any entity that is treated as a body corporate for tax purposes;

(e) the term “competent authority” means:

(i) in Botswana, the Minister of Finance and Economic Development, represented by the Commissioner General of the Botswana Unified Revenue Service or his authorised representative; and

(ii) in the Czech Republic, the Minister of Finance or his authorised representative;

(f) the term “enterprise” applies to the carrying on of any business;

(i) the term “national” means:

(i) any individual possessing the nationality of a Contracting State; and

(ii) any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State;

(j) the term “person” includes an individual, a company and any other body of persons; and

(k) the term “business” includes the performance of professional services and of other activities of an independent character.

2. As regards the application of the provisions of this Agreement at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which this Agreement applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that Contracting State.

ARTICLE 4
RESIDENT

1. For purposes of this Agreement, the term “resident of a Contracting State” means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of effective management or any other criterion of a similar nature, and also includes that State and any political subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State.

2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:

(c) if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national;

(d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.

ARTICLE 5
PERMANENT ESTABLISHMENT

1. For purposes of this Agreement, the term “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

2. The term “permanent establishment” includes especially:

(a) a place of management;

(b) a branch;

(d) a factory;

(e) a workshop;

(f) a mine, an oil or gas well, a quarry or any other place of extraction or exploration of natural resources; and

(g) a refinery or any other place where natural resources are processed.

3. The term “permanent establishment” likewise encompasses:

(b) the furnishing of services, including consultancy or managerial services, by an enterprise of a Contracting State or through employees or other personnel engaged by the enterprise for such purpose, but only where activities of that nature continue in the territory of the other Contracting State for a period or periods exceeding in the aggregate six months within any twelve month period.

4. Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not to include:

(a) the use of facilities solely for the purpose of storage or display of goods or merchandise belonging to the enterprise;

(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage or display;

(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise;

(e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity;

(f) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub-paragraphs (a) to (e), provided that such activity or, in the case of sub-paragraph (f), the overall activity of the fixed place of business, is of a preparatory or auxiliary character.

5. Notwithstanding the provisions of paragraphs 1 and 2, where a person – other than an agent of an independent status to whom paragraph 7 applies – is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned Contracting State in respect of any activities which that person undertakes for the enterprise, if such a person:

(a) has and habitually exercises in that State an authority to conclude contracts in the name of the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph; or

(b) has no such authority, but habitually maintains in the first-mentioned State a stock of goods or merchandise from which he regularly delivers goods or merchandise on behalf of the enterprise.

6. Notwithstanding the preceding provisions of this Article, an insurance enterprise of a Contracting State shall, except in regard to re-insurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums in the territory of that other State or insures risks situated therein through a person other than an agent of an independent status to whom paragraph 7 applies.

7. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, when the activities of such an agent are devoted wholly or almost wholly on behalf of that enterprise, and conditions are made or imposed between that enterprise and the agent in their commercial and financial relations which differ from those which would have been made between independent enterprises, he will not be considered an agent of an independent status within the meaning of this paragraph.

ARTICLE 6
INCOME FROM IMMOVABLE PROPERTY

2. The term “immovable property” shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources. Ships and aircraft shall not be regarded as immovable property.

3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property.

4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise.

ARTICLE 7
BUSINESS PROFITS

1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.

3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the business of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the permanent establishment. Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the head office of the enterprise or any of its other offices.

5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

ARTICLE 8
INTERNATIONAL TRAFFIC

1. Profits of an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State.

2. For the purposes of this Article and notwithstanding the provisions of Article 12, profits from the operation of ships or aircraft in international traffic include:

(a) profits from the rental on a bare boat basis of ships or aircraft; and

(b) profits from the use, maintenance or rental of containers (including trailers and related equipment for the transport of containers) used for the transport of goods,

where such rental or such use, maintenance or rental, as the case may be, is incidental to the operation of ships or aircraft in international traffic.

3. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.

ARTICLE 9
ASSOCIATED ENTERPRISES

1. Where:

(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or

(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,

2. Where a Contracting State includes in the profits of an enterprise of that State – and taxes accordingly – profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall if necessary consult each other.

3. The provisions of paragraph 2 shall not apply in the case of fraud, gross negligence or willful default.

ARTICLE 10
DIVIDENDS

1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.

The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.

This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

3. The term “dividends” as used in this Article means income from shares, “jouissance” shares or “jouissance” rights, mining shares, founders’ shares or other rights, not being debt-claims, participating in profits, as well as other income which is subjected to the same taxation treatment as income from shares by the laws of the Contracting State of which the company making the payment is a resident.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident through a permanent establishment situated therein and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.

5. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except in so far as such dividends are paid to a resident of that other State or in so far as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment situated in that other State, nor subject the company’s undistributed profits to a tax on undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.

ARTICLE 11
INTEREST

1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

3. Notwithstanding the provisions of paragraph 2, interest arising in a Contracting State and beneficially owned by a resident of the other Contracting State shall be taxable only in that other State if such interest is paid:

(a) in connection with the sale on credit of any merchandise or equipment;

(b) on any loan or credit of whatever kind granted by a bank;

(d) to the Central Bank of the other Contracting State;

(e) to any institution owned or controlled by the Government of the other Contracting State if the purpose of the existence of such an institution is the promotion of export; or

(f) in connection with any loan or credit guaranteed:

(i) by the Government of the other Contracting State, including any political subdivision or local authority thereof, or

(ii) by the Central Bank of the other Contracting State, or

(iii) by any institution owned or controlled by the Government of the other Contracting State if the purpose of the existence of such an institution is the promotion of export.

The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of the limitations mentioned in paragraphs 2 and 3.

5. The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises through a permanent establishment situated therein and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.

ARTICLE 12
ROYALTIES AND FEES FOR TECHNICAL SERVICES

1. Royalties and fees for technical services arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.

2. However, such royalties and fees for technical services may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the beneficial owner of the royalties or fees is a resident of the other Contracting State, the tax so charged shall not exceed 7.5 per cent of the gross amount of the royalties or fees.

The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of this limitation.

3. (a) The term “royalties” as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films, and films, tapes or other means of image or sound reproduction, any patent, trade mark, design or model, plan, secret formula or process, or for the use of, or the right to use, any industrial, commercial or scientific equipment, or for information concerning industrial, commercial or scientific experience.

(b) The term “fees for technical services” as used in this Article means any payment in consideration for any service of a technical, consultancy or managerial nature, but does not include payments for services mentioned in sub-paragraph (a) of paragraph 3 of Article 5 and in Articles 8, 14, 15, 16 and 18. The term does not include also payments made by an individual for services furnished for the purpose of the personal use of the individual and payments for teaching made to or by educational institutions.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties or fees for technical services, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties or fees arise through a permanent establishment situated therein and the right, property or service in respect of which the royalties or fees are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.

5. Royalties and fees for technical services shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the royalties or fees, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the liability to pay the royalties or fees was incurred, and such royalties or fees are borne by such permanent establishment, then such royalties or fees shall be deemed to arise in the State in which the permanent establishment is situated.

6. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties or fees for technical services, having regard to the use, right, information or service for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Agreement.

ARTICLE 13
CAPITAL GAINS

1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.

2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise), may be taxed in that other State.

3. Gains of an enterprise of a Contracting State from the alienation of ships or aircraft operated in international traffic or of movable property pertaining to the operation of such ships or aircraft, shall be taxable only in that State.

4. Gains derived by a resident of a Contracting State from the alienation of shares or other interests in a company which is a resident of the other Contracting State may be taxed in that other State.

5. Gains from the alienation of any property, other than that referred to in paragraphs 1, 2, 3 and 4, shall be taxable only in the Contracting State of which the alienator is a resident.

ARTICLE 14
INCOME FROM EMPLOYMENT

(a) the recipient exercises the employment in the other Contracting State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned; and

(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and

3. In the computation of the periods mentioned in sub-paragraph (a) of paragraph 2, the following days shall be included:

(a) all days of physical presence including days of arrivals and departures; and

(b) days spent outside the State of activity such as Saturdays and Sundays, national holidays, holidays, and business trips directly connected with the employment of the recipient in that State, after which the activity was resumed in the territory of that State.

4. The term “employer” mentioned in sub-paragraph (b) of paragraph 2 means the person having right on the work produced and bearing the responsibility and risk connected with the performance of the work.

5. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State, may be taxed in that State.

ARTICLE 15
DIRECTORS’ FEES

1. Directors’ fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors or any other similar organ of a company which is a resident of the other Contracting State may be taxed in that other State.

ARTICLE 16
ENTERTAINERS AND SPORTSPERSONS

2. Where income in respect of personal activities exercised by an entertainer or a sportsperson in his capacity as such accrues not to the entertainer or sportsperson himself but to another person, that income may, notwithstanding the provisions of Articles 7 and 14, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised.

3. The provisions of paragraphs 1 and 2 shall not apply to income derived from activities performed in a Contracting State by an entertainer or a sportsperson who is a resident of the other Contracting State if the visit to the first-mentioned State is wholly supported by public funds of the other State or political subdivisions or local authorities thereof. In such case the income shall be taxable only in the State of which the entertainer or sportsperson is a resident.

ARTICLE 17
PENSIONS

1. Pensions and other similar remuneration (including Government service pensions and payments made under social security legislation) arising in a Contracting State and paid to a resident of the other Contracting State shall be taxable only in the first-mentioned State.

2. The provisions of paragraph 1 shall apply regardless of whether the payments mentioned therein are paid in consideration of past employment and regardless of whether they are paid periodically or as a lump sum payment.

ARTICLE 18
GOVERNMENT SERVICE

1. (a) Salaries, wages and other similar remuneration, other than pensions, paid by a Contracting State or a political subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.

(i) is a national of that State; or

(ii) did not become a resident of that State solely for the purpose of rendering the services.

2. The provisions of Articles 14, 15 and 16 shall apply to salaries, wages and other similar remuneration in respect of services rendered in connection with a business carried on by a Contracting State or a political subdivision or a local authority thereof.

ARTICLE 19
STUDENTS AND BUSINESS APPRENTICES

1. Payments which a student or business apprentice who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that State, provided that such payments arise from sources outside that State.

ARTICLE 20
OTHER INCOME

1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that State.

2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.

ARTICLE 21
ELIMINATION OF DOUBLE TAXATION

1. In Botswana double taxation shall be eliminated as follows:

Subject to the provisions of the laws of Botswana regarding the allowance of a credit against the Botswana tax of a tax paid abroad under the laws of any other country, the Czech tax paid under the laws of the Czech Republic and in accordance with this Agreement, whether directly or by deduction, on profit or income liable to tax in the Czech Republic shall be allowed as a credit against any Botswana tax payable in respect of the same profit or income. However, the amount of such credit shall not exceed the amount of the Botswana tax payable on that profit or income in accordance with the laws of Botswana.

2. Subject to the provisions of the laws of the Czech Republic regarding the elimination of double taxation, in the case of a resident of the Czech Republic double taxation shall be eliminated as follows:

The Czech Republic, when imposing taxes on its residents, may include in the tax base upon which such taxes are imposed the items of income which according to the provisions of the Agreement may also be taxed in Botswana, but shall allow as a deduction from the amount of tax computed on such a base an amount equal to the tax paid in Botswana. Such deduction shall not, however, exceed that part of the Czech tax, as computed before the deduction is given, which is attributable to the income which, in accordance with the provisions of this Agreement, may be taxed in Botswana.

3. Where in accordance with any provision of the Agreement income derived by a resident of a Contracting State is exempt from tax in that State, such State may nevertheless, in calculating the amount of tax on the remaining income of such resident, take into account the exempted income.

ARTICLE 22
NON-DISCRIMINATION

3. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, or paragraph 6 of Article 12 apply, interest, royalties, fees for technical services and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State.

ARTICLE 23
MUTUAL AGREEMENT PROCEDURE

1. Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the domestic laws of those States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 22, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of this Agreement.

3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of this Agreement. They may also consult together for the elimination of double taxation in cases not provided for in this Agreement.

4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs.

ARTICLE 24
EXCHANGE OF INFORMATION

1. The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions or local authorities, in so far as the taxation thereunder is not contrary to the Agreement. The exchange of information is not restricted by Articles 1 and 2.

They may disclose the information in public court proceedings or in judicial decisions. Notwithstanding the foregoing, information received by a Contracting State may be used for other purposes when such information may be used for such other purposes under the laws of both States and the competent authority of the supplying State authorises such use.

3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:

(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

(b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;

ARTICLE 25
MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS

1. Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements.

ARTICLE 26
MISCELLANEOUS PROVISIONS

1. It is understood for the purposes of the Agreement that the competent authority of a Contracting State may, after consultation with the competent authority of the other Contracting State, deny the benefits of the Agreement to any person, or with respect to any transaction, if in its opinion the granting of those benefits would constitute an abuse of this Agreement.

2. The provisions of the Agreement shall in no case prevent either Contracting State from applying the provisions of its domestic laws that are aimed at prevention of fiscal avoidance or evasion.

ARTICLE 27
ENTRY INTO FORCE

1. Each of the Contracting States shall notify to the other, through diplomatic channels, the completion of the procedures required by its domestic law for the bringing into force of this Agreement. This Agreement shall enter into force on the date of the later of these notifications.

2. The provisions of the Agreement shall have effect:

(a) in Botswana:

(i) in respect of taxes withheld at source, to income paid or credited on or after 1st July next following the date on which the Agreement enters into force;

(ii) in respect of other taxes on income, to income in any tax year beginning on or after 1st July next following the date on which the Agreement enters into force;

(b) in the Czech Republic:

(i) in respect of taxes withheld at source, to income paid or credited on or after 1st January in the calendar year next following that in which the Agreement enters into force;

(ii) in respect of other taxes on income, to income in any tax year beginning on or after 1st January in the calendar year next following that in which the Agreement enters into force.

ARTICLE 28
TERMINATION

1. This Agreement shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Agreement, through diplomatic channels, by giving notice of termination at least six months before the end of any calendar year following after the period of five years from the date on which the Agreement enters into force. In such event, the Agreement shall cease to have effect:

(a) in Botswana:

(i) in respect of taxes withheld at source, to income paid or credited on or after 1st July next following the date on which the notice of termination is given;

(ii) in respect of other taxes on income, to income in any tax year beginning on or after 1st July next following the date on which the notice of termination is given;

(b) in the Czech Republic:

(i) in respect of taxes withheld at source, to income paid or credited on or after 1st January in the calendar year next following that in which the notice of termination is given;

(ii) in respect of other taxes on income, to income in any tax year beginning on or after 1st January in the calendar year next following that in which the notice of termination is given.

IN WITNESS WHEREOF the undersigned, being duly authorised thereto, have signed this Agreement.

DONE in duplicate at Pretoria this 29th day of October, 2019 in the English and Czech languages, both texts being equally authentic.

FOR THE GOVERNMENT OF
THE REPUBLIC OF BOTSWANA

FOR THE GOVERNMENT OF
THE CZECH REPUBLIC

BOTSWANA–KENYA DOUBLE TAXATION AVOIDANCE AGREEMENT ORDER

(section 53(1))

(17th April, 2020)

ARRANGEMENT OF PARAGRAPHS

PARAGRAPH

1. Citation

2. Approval and effective date of commencement

SCHEDULE

S.I. 65, 2020.

1. Citation

This Order may be cited as Botswana–Kenya Double Taxation Avoidance Agreement Order.

2. Approval and effective date of commencement

The Double Taxation Avoidance Agreement set out in the Schedule hereto between the Government of the Republic of Botswana and the Government of Kenya is presented to the National Assembly for approval and shall, upon approval take effect from the date specified in the Agreement.

SCHEDULE

Preamble

The Government of the Republic of Botswana and the Government of the Republic of Kenya;

INTENDING to conclude an Agreement for the avoidance or elimination of double taxation with respect to taxes on income without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance, including through treaty-shopping arrangements aimed at obtaining reliefs provided in this Agreement;

DESIRING to further develop their economic relationship and to enhance their co-operation in tax matters;

HAVE AGREED AS FOLLOWS:

Article 1
PERSONS COVERED

This Agreement shall apply to persons who are residents of one or both of the Contracting States.

Article 2
TAXES COVERED

1. This Agreement shall apply to taxes on income imposed on behalf of a Contracting State or of its local authorities or political subdivisions, irrespective of the manner in which they are levied.

2. There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property.

3. The existing taxes to which this Agreement shall apply are:

(a) in Botswana:

(i) the income tax; and

(ii) the capital gains tax;

(hereinafter referred to as “Botswana tax”);

(b) in Kenya, the income tax chargeable in accordance with the provisions of the Income Tax Act;

(hereinafter referred to as “Kenyan tax”).

4. This Agreement shall apply also to any identical or substantially similar taxes which are imposed by either Contracting State after the date of signature of the Agreement in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any significant changes which have been made in their respective taxation laws.

Article 3
GENERAL DEFINITIONS

1. For the purpose of this Agreement, unless the context otherwise requires:

(a) —

(i) the term “Botswana” means the Republic of Botswana including its territorial waters and air space;

(ii) the term “Kenya” means all territory of the Republic of Kenya in Contracting State boundaries, including internal territory and territorial waters and also the exclusive economic zone, maritime zones, and all installations erected thereon, as defined in its national law, in accordance with international law, over which Kenya exercises its sovereign rights with respect to exploration, exploitation, conservation and management of natural resources of the seabed, its subsoil and the superjacent waters;

(b) the terms “a Contracting State” and “the other Contracting State” mean Botswana or Kenya as the context requires;

(d) the term “competent authority” means:

(i) in the case of Botswana, the Minister responsible for finance, represented by the Commissioner General of the Botswana Unified Revenue Service or an authorised representative of the Commissioner General; and

(ii) in the case of Kenya, the Cabinet Secretary responsible for finance or his authorised representative;

(e) the term “enterprise” applies to the carrying on of any business;

(g) the term “international traffic” means any transport by a ship, aircraft or rail or road transport vehicle operated by an enterprise that has its place of effective management in a Contracting State, except when the ship, aircraft or rail or road transport vehicle is operated solely between places in the other Contracting State;

(h) the term “national” means:

(i) any individual possessing the nationality or citizenship of a Contracting State; or

(ii) any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State;

(i) the term “person” includes an individual, a partnership, an estate, a trust, a company and any other body of persons which is treated as an entity for tax purposes;

(j) the term “business” includes the performance of professional services and of other activities of an independent character;

(k) the term “place of effective management” means the place where the decision-making at the highest level on the important policies essential for the management of the company take place, the place that plays a leading part in the management of a company from an economic and functional point of view and, where strategic management and commercial decisions that are necessary for the conduct of the entity’s business as a whole are in substance made; and

(l) the term “professional services” includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities or physicians, lawyers, engineers, architects, dentists and accountants.

2. As regards the application of the provisions of this Agreement at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning which it has at that time under the law of that Contracting State for the purposes of the taxes to which this Agreement applies, any meaning under the applicable tax laws of that Contracting State prevailing over a meaning given to the term under laws of that Contracting State.

Article 4
RESIDENT

1. For the purposes of this Agreement, the term “resident of a Contracting State” means any person who, under the laws of that Contracting State, is liable to tax therein by reason of his domicile, residence, place of effective management, place of incorporation or any other criterion of a similar nature, and also includes that Contracting State and any political subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in respect only of income from sources in that Contracting State.

2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:

(b) if the Contracting State in which he has his centre of vital interests cannot be determined, or if he has no permanent home available to him in either Contracting State, he shall be deemed to be a resident only of the Contracting State in which he has an habitual abode;

(c) if he has an habitual abode in both Contracting States or in neither of them, he shall be deemed to be a resident only of the Contracting State of which he is a national; and

(d) if he is a national of both Contracting States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.

3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident only of the Contracting State in which its place of effective management is situated.

Article 5
PERMANENT ESTABLISHMENT

1. For the purposes of this Agreement, the term “permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on.

2. The term “permanent establishment” includes especially:

(a) a place of management;

(b) a branch;

(d) a factory;

(e) a workshop;

(f) a mine, an oil or gas well, a quarry or any other place of extraction or exploitation of natural resources; and

(g) an installation or structure used for the exploration of natural resources.

3. The term “permanent establishment” likewise encompasses:

(b) the furnishing of services, including consultancy services, by an enterprise through employees or other personnel engaged by an enterprise for such purpose, but only where activities of that nature continue (for the same or a connected project) within the Contracting State for a period or periods aggregating more than six months within any twelve-month period; and

(c) the performance of professional services or other activities of an independent character by an individual, but only where those services or activities continue within a Contracting State for a period or periods amounting to or exceeding in the aggregate one hundred and eighty three days in any twelve-month period commencing or ending in the fiscal year concerned.

4. Notwithstanding the preceding provisions of this Article, the term “permanent establishment” shall be deemed not to include:

(a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;

(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

(c) the maintenance of stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;

(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or for collecting information, for the enterprise;

(e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character; and

(a) has, and habitually exercises in that Contracting State an authority to conclude contracts in the name of the enterprise;

6. An enterprise shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other Contracting State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business.

7. Notwithstanding the preceding provisions of this Article, an insurance enterprise of a Contracting State shall, except in regard to reinsurance, be deemed to have a permanent establishment in the other Contracting State if it collects premiums in the territory of that Contracting State or insures risks situated therein through an employee or through a person other than an agent of an independent status to whom paragraph 6 applies.

8. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other Contracting State (whether through a permanent establishment or otherwise), shall not of itself constitute either company a permanent establishment of the other.

Article 6
INCOME FROM IMMOVABLE PROPERTY

1. Income derived by a resident of a Contracting State from immovable property, (including income from agriculture or forestry), situated in the other Contracting State may be taxed in that other Contracting State.

2. The term “immovable property” shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources. Ships, boats, aircraft, rail and road transport vehicles shall not be regarded as immovable property.

3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting or use in any other form of immovable property.

4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise.

Article 7
BUSINESS PROFITS

1. The profits of an enterprise of a Contracting State shall be taxable only in that Contracting State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other Contracting State but only so much of them as are attributed to that permanent establishment.

3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred for the purposes of the business of the permanent establishment including executive and general administrative expenses so incurred, whether in the Contracting State in which the permanent establishment is situated or elsewhere. However, no such deduction shall be allowed in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for the use of patents or other rights, or by way of commission, for specific services performed or for management, or, except in the case of a banking enterprise, by way of interest on moneys lent to the permanent establishment. Likewise, no account shall be taken, in the determination of the profits of a permanent establishment, for amounts charged (otherwise than towards reimbursement of actual expenses) by the permanent establishment to the head office of the enterprise or any of its other offices, by way of royalties, fees or other similar payments in return for use of patents or other rights, or by way of commission for specific services performed or for management, or except in the case of a banking enterprise by way of interest on moneys lent to the head office of the enterprise or any of its other offices.

5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.

Article 8
INTERNATIONAL TRANSPORT

1. Profits of an enterprise of a Contracting State from the operation of ships, aircraft or rail or road transport vehicles in international traffic shall be taxable in the Contracting State in which the place of effective management of the enterprise is situated.

2. If the place of effective management of a shipping enterprise is aboard a ship, then it shall be deemed to be situated in the Contracting State in which the home harbor of the ship is situated, or, if there is no such home harbor, in the Contracting State of which the operator of the ship is a resident.

3. For the purposes of this Article, profits from the operation of ships, aircraft or rail or road transport vehicles in international traffic shall include:

(a) in the case of ships or aircraft, profits derived from the rental on a bare boat basis of ships or aircraft used in international traffic; and

(b) in the case of rail or road transport vehicles, profits derived from the rental of rail or road transport vehicles used in international traffic,

if such profits are incidental to the profits to which the provisions of paragraph 1 apply.

4. Profits of an enterprise of a Contracting State from the use or rental of containers (including trailers, barges, and related equipment for the transport of containers) used for the transport in international traffic of goods or merchandise shall be taxable only in that Contracting State.

5. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.

Article 9
ASSOCIATED ENTERPRISES

1. Where:

(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State; or

(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,

2. Where a Contracting State includes in the profits of an enterprise of that Contracting State – and taxes accordingly – profits on which an enterprise of the other Contracting State has been charged to tax in that other Contracting State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned Contracting State if the conditions made between the two enterprises had been those which would have been made between independent enterprises, then that other Contracting State may make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Agreement and the competent authorities of the Contracting States shall if necessary consult each other.

4. A Contracting State shall not make adjustments to the profits of an enterprise in the circumstances referred to in paragraph 1 of this Article after the expiry of the time limits provided in its national laws.

5. The provisions of paragraph 4 of this Article shall not apply in the case of fraud, willful default or neglect.

Article 10
DIVIDENDS

1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other Contracting State.

2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that Contracting State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed 7.5 percent of the gross amount of the dividends.

This paragraph shall not affect taxation of the company in respect of the profits out of which the dividends were distributed.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.

5. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other Contracting State may not impose any tax on the dividends paid by the company, except in so far as such dividends are paid to a resident of that other Contracting State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment situated in that other Contracting State, nor subject the company’s undistributed profits to a tax on the undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other Contracting State.

Article 11
INTEREST

1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other Contracting State.

2. However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that Contracting State, but if the recipient is the beneficial owner of the interest, the tax so charged shall not exceed 12.5 per cent of the gross amount of the interest.

3. —

(a) Notwithstanding the provisions of paragraph 2, interest mentioned in paragraph 1 shall not be taxable in the Contracting State where the interest arises if:

(i) the recipient thereof is the government of the other Contracting State; and

(ii) the interest is paid in respect of a loan granted or guaranteed by a financial institution wholly owned or controlled by the Government with the objective of promoting exports and development, if the credit granted or guaranteed contains an element of subsidy.

(b) For the purpose of sub-paragraph (a), the term “Government” means the Government of either Contracting State and shall include: a local authority, a political subdivision, a Central Bank, a statutory body; and any institution wholly owned or controlled by the Government of either Contracting State as may be agreed from time to time between the competent authorities of the Contracting States.

6. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that Contracting State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment, then such interest shall be deemed to arise in the Contracting State in which the permanent establishment is situated.

Article 12
ROYALTIES

1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other Contracting State.

2. However, such royalties may also be taxed in the Contracting State in which they arise, and according to the laws of that Contracting State, but if the recipient is the beneficial owner of the royalties, the tax so charged shall not exceed 12.5 percent of the gross amount of the royalties.

3. The term “royalties” as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work (including cinematography films and films, tapes or discs for radio or television broadcasting), any patent, trade mark, design or model, plan, secret formula or process, or for the use of or the right to use industrial, commercial, or scientific equipment or for information concerning industrial, commercial or scientific experience.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.

Article 13
TECHNICAL FEES

1. Technical fees arising in a Contracting State which are derived by a resident of the other Contracting State may be taxed in that other Contracting State.

2. However, such technical fees may also be taxed in the Contracting State in which they arise, and according to the law of that Contracting State; but where such technical fees are derived by a resident of the other Contracting State who is subject to tax in that Contracting State in respect thereof, the tax charged in the Contracting State in which the technical fees arise shall not exceed 10 percent of the gross amount of such fees.

3. The term “technical fees” as used in this Article means payments of any kind to any person, other than to an employee of the person making the payments, in consideration for any services of an administrative, technical, managerial, consultancy or professional nature performed outside that Contracting State.

5. Technical fees shall be deemed to arise in a Contracting State when the payer is that Contracting State, a local authority, political subdivision or a resident of that Contracting State. Where, however, the person paying the technical fees, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment in connection with which the obligation to pay the technical fees was incurred, and such technical fees are borne by that permanent establishment, then such technical fees shall be deemed to arise in the Contracting State in which the permanent establishment is situated.

Article 14
CAPITAL GAINS

1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State, may be taxed in that other Contracting State.

2. Gains from the alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise), may be taxed in that other Contracting State.

5. Gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3 and 4, shall be taxable only in the Contracting State of which the alienator is a resident.

Article 15
DEPENDENT PERSONAL SERVICES

1. Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that Contracting State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other Contracting State.

(a) the recipient is present in the other Contracting State for a period or periods not exceeding in the aggregate one hundred and eighty three days in any twelve-month period commencing or ending in the fiscal year concerned;

(b) the remuneration is paid by or on behalf of an employer who is not a resident of the other Contracting State; and

3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship, aircraft or rail or road transport vehicle operated in international traffic by an enterprise of a Contracting State may be taxed in the Contracting State in which the place of effective management of the enterprise is situated.

Article 16
DIRECTORS’ FEES

Article 17
ENTERTAINERS AND SPORTSPERSONS

1. Notwithstanding the provisions of Articles 7 and 15, income derived by a resident of a Contracting State as an entertainer such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsperson, from his personal activities as such exercised in the other Contracting State, may be taxed in that other Contracting State.

2. Where income in respect of personal activities exercised by an entertainer or a sportsperson in his capacity as such accrues not to the entertainer or sportsperson himself but to another person, that income may, notwithstanding the provisions of Articles 7 and 15, be taxed in the Contracting State in which the activities of the entertainer or sportsperson are exercised.

3. Income derived by a resident of a Contracting State from activities exercised in the other Contracting State as envisaged in paragraphs 1 and 2, shall be exempt from tax in that other Contracting State if the visit to that other Contracting State is supported wholly or mainly by public funds of the first-mentioned Contracting State, a political subdivision or a local authority thereof, or takes place under a cultural agreement or arrangement between the Governments of the Contracting States.

Article 18
PENSIONS AND ANNUITIES

3. Notwithstanding the provisions of paragraph 1, pensions paid and other similar payments made under a public scheme which is part of the social security system of a Contracting State, a political subdivision or a local authority thereof shall be taxable only in that Contracting State.

Article 19
GOVERNMENT SERVICE

(a) Salaries, wages and other similar remuneration, other than pension, paid by a Contracting State, a political subdivision or a local authority thereof to an individual in respect of services rendered to that Contracting State or authority shall be taxable only in that Contracting State.

(i) is a national of that Contracting State; or

(ii) did not become a resident of that Contracting State solely for the purpose of rendering the services.

(a) Any pension paid by, or out of funds created by, a Contracting State or a local authority thereof to an individual in respect of services rendered to that Contracting State or authority shall be taxable only in that Contracting State.

(b) However, such pension shall be taxable only in the other Contracting State if the individual is a resident of, and a national of, that Contracting State.

3. The provisions of Articles 15, 16, 17 and 18 shall apply to salaries, wages, and other similar remuneration, and to pensions, in respect of services rendered in connection with a business carried on by a Contracting State or a local authority.

Article 20
STUDENTS, APPRENTICES AND BUSINESS TRAINEES

A student, apprentice or business trainee who is present in a Contracting State solely for the purpose of his education or training and who is, or immediately before being so present was, a resident of the other Contracting State, shall be exempt from tax in the first mentioned Contracting State on payments received from outside that first-mentioned Contracting State for the purposes of his maintenance, education or training.

Article 21
PROFESSORS AND TEACHERS

An individual who visits a Contracting State for the purpose of teaching or carrying out research at a university, college, school, or other similar educational institution recognised as non-profit organisation by the Government of that Contracting State and who is or was immediately before that visit a resident of the other Contracting State shall be exempted from taxation in the first-mentioned Contracting State on any remuneration for such teaching or research for a period not exceeding 2 years from the date of his first visit for that purpose, provided that such remuneration is derived by him from outside that Contracting State and such remuneration is subject to tax in the other Contracting State.

Article 22
OTHER INCOME

1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Agreement shall be taxable only in that Contracting State.

2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent establishment. In such case, the provisions of Article 7 shall apply.

Article 23
ELIMINATION OF DOUBLE TAXATION

Where a resident of a Contracting State derives income which, in accordance with the provisions of this Agreement, may be taxed in the other Contracting State, the first-mentioned Contracting State shall allow as a deduction from the tax on the income of that resident, an amount equal to the income tax paid in that other Contracting State. Such deduction shall not, however, exceed that part of the income tax, as computed before the deduction is given, which is attributable to the income which may be taxed in that other Contracting State.

Article 24
NON-DISCRIMINATION

1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which nationals of that other Contracting State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.

2. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other Contracting State than the taxation levied on enterprises of that other Contracting State carrying on the same activities. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.

3. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first-mentioned Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of that first-mentioned Contracting State are or may be subjected.

4. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, paragraph 6 of Article 12 and paragraph 6 of Article 13 apply, interest, royalties, technical fees and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned Contracting State.

5. The provisions of this Article shall not be construed as preventing a Contracting State from charging the profits of a permanent establishment which a company of the other Contracting State has in the first mentioned Contracting State at a rate of tax which is higher than that imposed on the profits of a similar company of the first mentioned Contracting State, nor as being in conflict with the provisions of paragraph 3 of Article 7.

Article 25
MUTUAL AGREEMENT PROCEDURE

1. Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Agreement, he may, irrespective of the remedies provided by the domestic laws of those Contracting States, present his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 24, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of this Agreement.

3. The competent authorities of the Contracting States shall endeavor to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of this Agreement. They may also consult together for the elimination of double taxation in cases not provided for in this Agreement.

4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs.

Article 26
EXCHANGE OF INFORMATION

1. The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Agreement or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their political subdivisions in particular for the prevention of fraud or evasion of such taxes, in so far as the taxation thereunder is not contrary to the Agreement. The exchange of information is not restricted by Articles 1 and 2.

2. Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that Contracting State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, the determination of appeals in relation to the taxes referred to in paragraph 1, or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. Notwithstanding the foregoing, information received by Contracting States may be used for other purposes when such information may be used for such other purposes under the laws of both Contracting States and the competent authority of the supplying Contracting State authorises such use.

3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the obligation:

(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

(b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State; and

4. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other Contracting State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.

Article 27
ASSISTANCE IN THE COLLECTION OF TAXES

3. When a revenue claim of a Contracting State is enforceable under the laws of that Contracting State and is owed by a person who, at that time, cannot, under the laws of that Contracting State, prevent its collection, that revenue claim shall, at the request of the competent authority of that Contracting State, be accepted for purposes of collection by the competent authority of the other Contracting State. That revenue claim shall be collected by that other Contracting State in accordance with the provisions of its laws applicable to the enforcement and collection of its own taxes as if the revenue claim were a revenue claim of that other Contracting State.

4. When a revenue claim of a Contracting State is a claim in respect of which that Contracting State may, under its law, take measures of conservancy with a view to ensure its collection, that revenue claim shall, at the request of the competent authority of that Contracting State, be accepted for purposes of taking measures of conservancy by the competent authority of the other Contracting State. That other Contracting State shall take measures of conservancy in respect of that revenue claim in accordance with the provisions of its laws as if the revenue claim were a revenue claim of that other Contracting State even if, at the time when such measures are applied, the revenue claim is not enforceable in the first-mentioned Contracting State or is owed by a person who has a right to prevent its collection.

5. Notwithstanding the provisions of paragraphs 3 and 4, a revenue claim accepted by a Contracting State for purposes of paragraph 3 or 4 shall not, in that Contracting State, be subject to the time limits or accorded any priority applicable to a revenue claim under the laws of that Contracting State by reason of its nature as such. In addition, a revenue claim accepted by a Contracting State for the purposes of paragraph 3 or 4 shall not, in that Contracting State, have any priority applicable to that revenue claim under the laws of the other Contracting State.

6. Proceedings with respect to the existence, validity or the amount of a revenue claim of a Contracting State shall only be brought before the courts or administrative bodies of that Contracting State. Nothing in this Article shall be construed as creating or providing any right to such proceedings before any court or administrative body of the other Contracting State.

(a) in the case of a request under paragraph 3, a revenue claim of the first-mentioned Contracting State that is enforceable under the laws of that Contracting State and is owed by a person who, at that time, cannot, under the laws of that Contracting State, prevent its collection, or

the competent authority of the first-mentioned Contracting State shall promptly notify the competent authority of the other Contracting State of that fact and, at the option of the other Contracting State, the first-mentioned Contracting State shall either suspend or withdraw its request.

8. In no case shall the provisions of this Article be construed so as to impose on a Contracting State the obligation:

(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;

(b) to carry out measures which would be contrary to public policy (ordre public);

(c) to provide assistance if the other Contracting State has not pursued all reasonable measures of collection or conservancy, as the case may be, available under its laws or administrative practice; and

(d) to provide assistance in those cases where the administrative burden for that Contracting State is clearly disproportionate to the benefit to be derived by the other Contracting State.

Article 28
MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS

Article 29
LIMITATION OF BENEFITS

1. In respect of Articles 10, 11, 12, 13, 14 and 22 a resident of a Contracting State shall not be entitled to benefits otherwise accorded to residents of a Contracting State by this Agreement, if:

(a) the resident is controlled directly or indirectly by one or more persons who are not residents of that Contracting State; and

(b) the main purpose or one of the main purposes of any person concerned with the creation or assignment of a share, a debt claim, or a right in respect of which the income is paid is to take advantage of these articles by means of that creation or assignment.

2. Nothing in this Article shall be construed as restricting, in any manner, the application of any provisions of the law of a Contracting State, which are designed to prevent the avoidance or evasion of taxes.

Article 30
ENTRY INTO FORCE

1. Each of the Contracting States shall notify to the other the completion of the procedures required by its laws for the bringing into force of this Agreement. This Agreement shall enter into force on the date of receipt of the latter of these notifications.

2. The provisions of the Agreement shall apply:

(a) in Botswana:

(i) with regard to taxes withheld at source, in respect to amounts paid or credited on or after the thirtieth day following the date upon which this Agreement enters into force; and

(ii) with regard to other taxes, on taxable income derived on or after the first day of July of the year next following that of entry into force of this Agreement;

(b) in Kenya:

(i) with regard to taxes withheld at source, in respect to amounts paid or credited on or after the first day of January next following the date upon which this Agreement enters into force; and

(ii) with regard to other taxes, in respect of taxable years beginning on or after the first day of January next following the date upon which this Agreement enters into force.

Article 31
TERMINATION

1. This Agreement shall remain in force indefinitely until terminated by a Contracting State. A Contracting State may terminate the Agreement, after the expiration of five years from the date of entry into force of the Agreement, through diplomatic channels, by giving notice of termination at least six months before the end of any:

(a) tax year, in the case of termination by Botswana; or

(b) year of income, in the case of termination by Kenya.

2. In such event, the Agreement shall cease to apply:

(a) in Botswana:

(i) with regard to taxes withheld at source, in respect to amounts paid or credited on or after the first day of July of the year next following that in which the notice is given; and

(ii) with regard to other taxes, on taxable income derived on or after the first day of July of the year next following that in which the notice is given,

(b) in Kenya:

(i) with regard to taxes withheld at source, in respect of amounts paid or credited after the end of year of income in which such notice is given; and

(ii) with regard to other taxes, in respect of taxable years beginning after the end of year of income in which such notice is given.

IN WITNESS WHEREOF the undersigned, being duly authorised thereto, have signed this Agreement.

Done at Nairobi, Kenya this 23rd day of July, 2019 in duplicate, in the English language.

For the Government of the Republic of Botswana.

For the Government of the
Republic of Kenya.

DR. UNITY DOW,
Minister of International Affairs and Co-operation.

AMB. MONICA JUMA, DPHIL, CBS,
Cabinet Secretary for Foreign Affairs.

INCOME TAX (COVID-19) (DEFERMENT OF SELF-ASSESSMENT TAX) ORDER

(regulation 30F)

(4th May, 2020)

ARRANGEMENT OF PARAGRAPHS

PARAGRAPH

1. Citation

2. Deferment of tax payments

3. Requirements for eligibility

4. Time for payment of deferred payments

5. Interest on payment of deferred payments

S.I. 73, 2020.

1. Citation

This Order may be cited as the Income Tax (COVID-19) (Deferment of Self-Assessment Tax) Order.

2. Deferment of tax payments

(1) Where a taxpayer is required to pay tax under section 95 of the Income Tax Act (Cap. 52:01), the taxpayer may—

(a) for any two quarters in the period between 1st March, 2020 and 30th September, 2020—

(i) make a payment of quarterly instalments equal to 25 per cent of such instalment, and

(ii) the remaining 75 per cent of the instalment shall be deferred to be paid during a period provided under paragraph 4;

(b) for the balance of the tax payable—

(i) make a payment equal to 25 per cent of the balance due, and

(ii) the remaining 75 per cent of the balance due shall be deferred to be paid during a period provided under paragraph 4;

(i) make a payment equal to 25 per cent for any two quarters or 25 per cent of the lump sum payable, and

(ii) the remaining 75 per cent payable shall be deferred to be paid during the period provided under paragraph 4;

(d) where a taxpayer is not a company, for tax payable as estimated tax under section 78(2A) of the Income Tax Act—

(i) make a payment equal to 25 per cent of the lump sum payable, and

(ii) the remaining 75 per cent of the lump sum payable shall be deferred to be paid during a period provided under paragraph 4.

(2) Where a taxpayer is required to pay the balance of tax payable under section 95 of the Income Tax Act, the balance shall only be deferred, if it was due and payable during the period of the COVID-19 pandemic between 1st March, 2020 and 30th September, 2020.

(3) A taxpayer shall only have the option to defer—

(a) the payment for any two quarters under section 95 of the Income Tax Act; or

(b) the payment for any one quarter and payment for the balance of tax payable under section 95 of the Income Tax Act.

(4) The deferment accorded to a taxpayer under this paragraph is to provide temporary relief from payment of tax to taxpayers adversely affected by the COVID-19 pandemic.

3. Requirements for eligibility

(1) A taxpayer eligible for the deferment of the amount of tax payable in paragraph 2 shall be a person—

(a) with an annual turnover of P250 000 000 or less; and

(b) with a valid tax clearance certificate.

(2) A taxpayer who is eligible for deferment under paragraph 2 shall, within 60 days after publication of this Order, make an application in an electronic format to the Commissioner General requesting for deferment of amounts as specified in paragraph 2.

(3) A taxpayer with an annual turnover of more than P250 000 000 and a valid tax clearance certificate may, within 30 days of the publication of this Order, make an application to the Minister in an electronic format provided by the Commissioner General for deferment of amounts as specified in paragraph 2.

(4) Where the Minister receives an application under subparagraph (3), the Minister shall—

(a) consider the taxpayer’s valid tax clearance certificate;

(b) consider the adverse impact the COVID-19 pandemic has on the taxpayer’s business; and

(5) The applications made under subparagraphs (2) and (3) shall indicate—

(a) whether the taxpayer shall defer the payments due for any two quarters or shall defer the balance or lump sum of the tax payable together with any one quarter;

(b) where the taxpayer opts to defer payments of any two quarters, the application shall indicate the quarters that the taxpayer will be utilizing to defer the instalments; and

(c) where the taxpayer opts to defer the payment of any one quarter together with the balance, or lump sum of tax payable, the application shall indicate the quarter that the taxpayer shall utilise to defer the instalment.

4. Time for payment of deferred payments

Where a taxpayer has an amount deferred under paragraph 2, the deferred amount shall be due and payable from 1st March, 2021 to 31st December, 2021.

5. Interest on payment of deferred payments

(1) An amount that is due and payable in accordance with paragraph 4, shall not be charged interest.

(2) Notwithstanding the provisions of subparagraph (1) any deferred amount that remains unpaid after the time of payment specified in paragraph 4, shall be charged interest at the rate of one and a half per cent for each month or part of a month during which the amount remains unpaid, compounded monthly.

INCOME TAX (SIDILEGA GABORONE (PROPRIETARY) LIMITED) (DEVELOPMENT APPROVAL) ORDER

(section 52)

(1st July, 2020)

ARRANGEMENT OF PARAGRAPHS

PARAGRAPH

1. Citation and commencement

2. Interpretation

3. Prescription

4. Additional tax relief

5. Withdrawal of tax relief

S.I. 126, 2020.

1. Citation and commencement

This Order may be cited as the Income Tax (Sidilega Gaborone (Proprietary) Limited) (Development Approval) Order, and shall come into operation on the 1st July, 2020, for a period of five consecutive tax years.

2. Interpretation

In this Order—

“Sidilega Gaborone (Proprietary) Limited” means a private limited company registered as such under the Companies Act (Cap. 42:01).

3. Prescription

Sidilega Gaborone (Proprietary) Limited shall be prescribed as a health facility in the form of a hospital in Gaborone, which provides ambulatory care services, diagnostic services, operation theatres, procedure rooms and pharmacy.

4. Additional tax relief

Sidilega Gaborone (Proprietary) Limited may be granted additional tax relief in the form of total exemption from payment of income tax on its profits for any of the five consecutive tax years commencing on 1st July, 2020 on condition that it—

(a) shall fill in and submit annual tax returns along with audited financial statements of its income to the Botswana Unified Revenue Service in accordance with section 65 of the Act during the exemption period;

(b) shall for each year, compute the taxable income which shall be exempted from taxation under this Order, to be submitted together with the tax returns under subparagraph (a);

(i) 200 people in the first year of its operation,

(ii) 150 more people in the second year of its operation, and

(iii) 50 more people in the third year of its operation,

93 per cent of whom shall be citizens of Botswana;

(d) shall ensure the proper completion of all processes, including the deduction of taxes pursuant to the provisions pertaining to withholding taxes and the filing of relevant tax returns;

(e) is not exempt from any final taxes to be deducted from source that are due to it; and

(f) shall upon the commencement of this Order, have paid all taxes that are due and have satisfied all other obligations under the Act.

5. Withdrawal of tax relief

(1) The Minister may withdraw a tax relief granted under this Order, where Sidilega Gaborone (Proprietary) Limited—

(a) ceases to operate the project for which the tax relief was granted; or

(b) fails to meet any of the conditions under paragraph 3.

(2) Where the Minister withdraws a tax relief in accordance with subparagraph (1), this Order shall cease to have effect.

INCOME TAX (REMISSION OF PENALTIES AND INTEREST) AMNESTY REGULATIONS

(section 145 read with section 112(1))

(1st July, 2021)

ARRANGEMENT OF REGULATIONS

REGULATION

1. Citation

2. Interpretation

3. Tax amnesty

4. Scope of tax amnesty

5. Tax years covered by tax amnesty

6. Tax amnesty period

7. Persons eligible for tax amnesty

8. Persons not eligible for tax amnesty

9. Notification to Commissioner General of payment of principal tax debt

S.I. 53, 2021,
S.I. 114, 2021.

1. Citation

These Regulations may be cited as the Income Tax (Remission of Penalties and Interest) Amnesty Regulations.

2. Interpretation

In these Regulations, unless the context otherwise requires—

“principal tax debt” means the primary tax liability that is due and payable under the Act but does not include penalties or interest; and

“tax amnesty” means a limited-time opportunity for taxpayers to pay the principal tax debt in exchange for the forgiveness of interest and penalties.

3. Tax amnesty

(1) Where a taxpayer is required to pay interest on a principal tax debt in accordance with sections 97 and 101 of the Act, the Minister shall in accordance with these Regulations and pursuant to section 112(1) of the Act, grant tax amnesty from the payment of interest charged on an unpaid principal tax debt.

(2) Where a taxpayer is required to pay any penalty charged in accordance with sections 116, 117, 118, 119 or 119A of the Act, the Minister shall in accordance with these Regulations and pursuant to section 112(1) of the Act, grant tax amnesty from the payment of penalties charged under the aforementioned sections.

4. Scope of tax amnesty

(1) In accordance with section 112(1) of the Act, the scope of the tax amnesty which the Minister shall grant shall be—

(a) on penalty or interest that has remained due and unpaid or has accrued during the period provided for under regulation 6; and

(b) to provide all eligible taxpayers with an opportunity to be granted tax amnesty in accordance with these Regulations:

Provided that where there is a principal tax debt, the tax amnesty shall only be granted where the taxpayer has paid the principal tax debt in full.

(2) The tax amnesty shall not cover any fines charged under Part XIV in Division II of the Act.

5. Tax years covered by tax amnesty

The tax amnesty shall cover tax liabilities for all tax years prior to and including the tax year 2020/2021.

6. Tax amnesty period

The tax amnesty shall become available from 1st January, 2022 to 30th June, 2022.

7. Persons eligible for tax amnesty

A person shall be eligible for tax amnesty where the person—

(a) has an outstanding principal tax debt that has a penalty or interest liability;

(b) has filed a tax return but has not paid the whole or part of the tax due under the tax return;

(d) only has an outstanding penalty, interest or both;

(e) has not filed a tax return that is due to be filed or should have been filed;

(f) is eligible or was eligible to register for a taxpayer identification number in accordance with section 64A of the Act but has not registered;

(g) has filed an objection with the Commissioner General; or

(h) has a pending appeal case before the Board of Adjudicators, the High Court or Court of Appeal.

8. Persons not eligible for tax amnesty

A person shall not be eligible for the granting of a tax amnesty where the person—

(a) has paid the principal tax debt, penalty and interest prior to the commencement of the tax amnesty period;

(b) has previously been convicted of a criminal offence under the Act; or

(c) has been convicted of organised crime, including money laundering, human trafficking, poaching, economic sabotage, corruption, drug trafficking or involvement in terrorism or any transnational crime.

9. Notification to Commissioner General of payment of principal tax debt

(1) Where a taxpayer has paid the principal tax debt in order for tax amnesty to be granted for any penalty or interest, the taxpayer shall notify the Commissioner General, in an electronic format provided by the Commissioner General, within seven days of payment; provided that the notification shall be made on or before 30th June, 2022.

(2) Upon receipt of the notification of payment under subregulation (1), the Commissioner General shall effect the remission of the penalty or interest, where applicable, and shall notify the taxpayer of such remission within 21 days.

INCOME TAX (SPECIAL ECONOMIC ZONES DEVELOPMENT APPROVAL) ORDER

(section 52)

(22nd October 2021)

ARRANGEMENT OF PARAGRAPHS

PARAGRAPH

1. Citation

2. Interpretation

3. Application of Order

4. Tax relief tax rate

5. Eligibility criteria

6. Application for tax relief certificate

7. Issuance of tax relief certificate

SCHEDULE

S.I. 89, 2021.

1. Citation

This Order may be cited as the Income Tax (Special Economic Zones Development Approval) Order.

2. Interpretation

In this Order, unless the context otherwise requires—

“Commissioner General” has the same meaning assigned to the term under the Botswana Unified Revenue Service Act (Cap. 53:03);

“developer” means an investor—

(a) with right over land in a special economic zone, held for purpose of development of special economic zones infrastructure through privately obtained funding of his or her own;

(b) who draws from his or her networks to bring in other investors to be licensed to locate in and operate their businesses from the special economic zone which he or she shall also be responsible for managing; and

“investor” means a person who—

(a) has been licensed by the relevant licensing authority to carry on business in a special economic zone;

(b) exports 100 per cent of his or her goods or services, or has been exempted from the 100 per cent requirement by the Minister responsible for trade and industry in accordance with the Special Economic Zones Regulations (Cap. 43:13 (Sub. Leg.));

(c) undertakes within a special economic zone, any development project or activity listed in paragraph 5 of this Order; and

(d) has been granted tax relief by the Minister;

“manufacturing” means the subjection of a raw material to a process that will result in the product having new and distinctive characteristics from the raw material from which it is made, and includes the process for—

(a) cutting, polishing and refining of minerals; or

(b) tanning of leather:

Provided that the following processes shall not on their own qualify as manufacturing—

(i) packaging and bottling,

(ii) diluting, mixing or blending of ingredients which does not result in the formation of a different product,

(iii) printing, marking and labelling,

(iv) washing, painting, dyeing, bleaching, texturing of textile goods and impregnating of mercerising operations,

(v) etching, decorating, calibration, polishing, cutting up and re-enforcing of an otherwise finished article,

(vi) simple assembly operations,

(vii) baking, or

(viii) simple operations consisting of removal of dust, sifting or screening, sorting, grading, classifying and matching including the making up of sets of goods; and

“special economic zone” means an area of land established as such under section 29 of the Special Economic Zones Act being a geographical demarcation with special regulatory provisions applicable to such an area, and where the legal, regulatory and fiscal and custom schemes applicable to business differ, generally in a more liberal way, from those in application in the rest of the national territory.

3. Application of Order

(1) For purposes of section 52(1)(d) of the Act, this Order shall apply to development projects or activities carried out by investors or developers in an area which has been declared as a Special Economic Zone in accordance with section 29(6) of the Special Economic Zones Act (Cap. 43:13).

(2) This Order shall also apply to any development projects or activities carried out by investors or developers in any area which may be declared as a special economic zone or any single factory special economic zone established as such by any outside party in terms of section 30(2)(e) of the Special Economic Zones Act.

4. Tax relief tax rate

(1) The income of an investor or a developer, which has been approved as a special economic zone area licensed business arising from its operations in any special economic zone shall be taxable at a special rate of 5 per cent for the first 10 years of the operation of the business in the special economic zone.

(2) The income of an investor or developer referred to under subparagraph (1) shall, after the first 10 years of operation within the special economic zone, be taxable at a special rate of 10 per cent for operations in the special economic zone.

5. Eligibility criteria

Notwithstanding paragraph 6, the tax relief granted under paragraph 4 shall only be applicable to an applicant who—

(a) has been licensed to operate in a special economic zone to undertake the following business activity or service—

(i) an agrobusiness activity,

(ii) a manufacturing activity,

(iii) a warehousing, distribution or logistics service, or

(iv) an internationally traded service;

(b) intends to export 100 per cent of its annual production or sales, except in cases where an exemption from the 100 per cent requirement has been granted by the Minister responsible for trade and industry in accordance with the Special Economic Zones Regulations; and

(c) sets up a new business within a special economic zone or expands or relocates an existing business from a customs territory to a special economic zone, or expands or relocates an existing business from one special economic zone to another:

Provided that—

(i) no part of the operations of the existing business is moved to the special economic zone,

(ii) the investment in the special economic zone will be incremental and will generate new employment, products and services in addition to those provided by the operations of the existing business, and

(iii) no reduction in employment in the existing business will occur as a result of the expansion or relocation to the special economic zone.

6. Application for tax relief certificate

(1) A business which wishes to be granted tax relief under paragraph 4 shall apply to the Minister in accordance with Form A set out in the Schedule.

(2) An application made under subparagraph (1) shall be accompanied—

(a) by an assessment report and a recommendation letter from the Special Economic Zones Authority;

(b) for a new business, an approved registration for tax;

(d) an investor or developer licence to operate within a special economic zone issued by the Special Economic Zones Authority; and

(e) any other documentation that the Minister may require.

(3) The Minister shall, for the purpose of granting tax relief, consider a recommendation from the Special Economic Zones Authority on whether a proposed project or activity would be beneficial to the development of the economy in accordance with section 52 of the Act.

7. Issuance of tax relief certificate

SCHEDULE

FORM A
APPLICATION FOR A DEVELOPMENT APPROVAL ORDER IN RESPECT OF SPECIAL ECONOMIC ZONE LICENSED BUSINESSES

(para 6(1))

To:    Permanent Secretary
        Ministry of Finance and Economic Development
        Private Bag 008
        Gaborone

Application for approval is hereby made in terms of section 52 of the Income Tax Act, for the issue of a development approval order in respect of a special economic zone licensed business.

1. Name of applicant:

…………………………………………………………………………………………………………………………

2. Postal address:

…………………………………………………………………………………………………………………………

3. Physical address:

…………………………………………………………………………………………………………………………

4. Contact telephone:

…………………………………………………………………………………………………………………………

5. Tax Identification Number (if applicable)

…………………………………………………………………………………………………………………………

6. Date of commencement of business:

…………………………………………………………………………………………………………………………

7. Existing business:

…………………………………………………………………………………………………………………………

8. New business proposed date of commencement:

…………………………………………………………………………………………………………………………

9. Capital investment:

…………………………………………………………………………………………………………………………

10. Number of people employed or to be employed by the company:
Citizen	Non-citizen	Total
………………………	………………………	………………………

11. Particulars of facilities, if any, for training and imparting skills to Botswana citizens:

…………………………………………………………………………………………………………………………

12. Any other relevant information relating to your business:

…………………………………………………………………………………………………………………………

13. The effects your activity is likely to have on the development of the economy or the economic advancement of citizens:

(a) in what way will your business stimulate other economic, industrial or commercial activities, whether of the business or otherwise?

…………………………………………………………………………………………………………………………

(b) is there potential for the business to attract downstream activities in the special economic zone?

…………………………………………………………………………………………………………………………

(c) is there any potential for substitution of materials produced outside Botswana with materials produced in the special economic zone?

…………………………………………………………………………………………………………………………

(d) will your business activity result in the reduction of prices to consumers?

…………………………………………………………………………………………………………………………

DECLARATION

As an officer of

…………………………………………………………………………………………………………………………

(Name of Company)

I ……………………………………………………………………………………………………………………… of

(Full name of Declarant)

…………………………………………………………………………………………………………………………

(Postal Address)

…………………………………………………………………………………………………………………………

Declare that to the best of my knowledge and belief, the information given in this application is true and correct.

Date ………………….

Signature …………………………..
Declarant/Authorised Agent

Authorised Agent’s full name ………………………………………………………………………………………

FORM B
TAX RELIEF CERTIFICATE

(para 7)

Issued under the Income Tax (Special Economic Zones Development Approval) Order Cap. 52:01

1. Name of business

This tax relief is issued to:

…………………………………………………………………………………………………………………………

2. Approved business development project or activity

The following are the development projects or activities for which the tax relief applies:

…………………………………………………………………………………………………………………………

3. Area where development project or activity will be carried out

The business shall operate in the following area or areas-

…………………………………………………………………………………………………………………………

4. Type and rates of tax relief

(a) New company

…………………………………………………………………………………………………………………………

(b) Existing company

…………………………………………………………………………………………………………………………

5. Date of commencement of tax relief

…………………………………………………………………………………………………………………………

6. Terms and conditions of certificate

(a) The development project or activity shall only be carried out in the areas listed hereunder. The applicant shall apply to the Minister for approval to conduct the same or any different development projects or activities in an area not listed in this certificate.

(b) Where the development project or activity is relocated to an area not listed in this certificate without prior approval by the Minister, this shall result in the revocation of this certificate.

7. Revocation

The Minister may upon satisfaction that the applicant has ceased operating in the approved area, revoke the certificate.

8. Certification

I, ………………………………………………………………… Minister of Finance and Economic Development, certify that …………………………………………………………………………………… to which this certificate refers is with effect from …………………………………………………… granted the tax relief in accordance with the purpose of section 52 of the Income Tax Act.

………………………………………………………………
Minister of Finance and Economic Development

……………………………..
Date

Official Stamp

INCOME TAX (SUPERANNUATION FUNDS) REGULATIONS

(section 145)

(11th November, 2022)

ARRANGEMENT OF REGULATIONS

REGULATION

1. Citation

2. Definition of approved superannuation fund

3. Cessation of approval of superannuation fund

4. Revocation of S.I. No. 53 of 2001

S.I. 66, 1995,
S.I. 53, 2001,
Act 14, 2006,
S.I. 147, 2022.

1. Citation

These Regulations may be cited as the Income Tax (Superannuation Funds) Regulations.

2. Definition of approved superannuation fund

An “approved superannuation fund or scheme” means a fund or a scheme, as the case may be, that meets the following criteria and has been approved by the Commissioner General—

(a) the Fund shall be licensed as a retirement fund or retirement annuity fund under the Retirement Funds Act (Cap. 27:03) and shall be a legal person whose assets are separate from the assets of any employer or any member of the Fund;

(b) the scheme shall be established as a retirement annuity or deferred annuity scheme, established and administered by an insurer in terms of the Insurance Industry Act (Cap. 46:01);

(c) any annuities purchased by a retirement annuity fund shall, unless it is purchased from itself or from a pension fund registered under the Retirement Funds Act, be purchased from an insurer under the Insurance Industry Act;

(d) subject to paragraph (f), the rules of a fund or scheme shall not, except in cases of proven ill health, permit the retirement of a member before he or she has reached the age of 55;

(e) the rules for a fund or scheme may—

(i) allow a member to commute up to 50 per cent of his or her pension on retirement,

(ii) provide for the payment of the total death benefit in cash (inclusive of any funeral benefit) to the dependants or estate of a member in the proportions specified under subparagraph (iv),

(iii) permit the payment to the dependants or the estate of a deceased member, other than to the dependants or the estate of a deceased pensioner, of all the contributions made by him or her or on his or her behalf together with any return on the investment of such contributions,

(iv) provide for the payment of a widow or widower’s pension of up to 50 per cent, an orphan’s pension of up to 25 per cent per child and a dependant’s pension of up to 10 per cent per dependant of the pension which the deceased member would have been entitled to had he or she retired at the date of his or her death, so however, that the total benefits paid shall not exceed 100 per cent of such deceased member’s pension,

(v) allow a member to withdraw from a fund, for reasons other than retrenchment, to commute the equivalent of 25 per cent of his or her pension entitlement or P 25,000, whichever is the greater, so however, that the total benefits shall not exceed 100 per cent of such member’s entitlement. If the residual amount of the member’s pension entitlement after commutation is less than P20,000, such residual may be encashed in full,

(vi) allow a member on withdrawal from a fund for reasons of retrenchment to commute the equivalent of 33 1/3 per cent of his or her pension entitlement or P25 000.00, whichever is the greater, so however, that the total benefits paid shall not exceed 100 per cent of such member’s entitlement. If the residual amount of the member’s pension entitlement after the commutation is less than P20 000.00, such residual may be encashed in full:

Provided that the withdrawal benefits payable in terms of subparagraph (v) and this subparagraph are applied only to benefits accrued whilst the employee was a member of the fund from which he or she is withdrawing and shall exclude any benefits transferred from other approved funds. This proviso shall apply with the necessary modifications to an employee re-joining a fund of which he or she was previously a member,

(vii) where the pension to a pensioner, a widow, widower, orphan or dependent is less than P20 000.00 per annum, provide for the commutation of the entirety of such pension to a single lump sum payment; and

(f) where the fund or scheme is a fund or scheme created for the provision of pension benefits for the employees of a particular employer, employment under whom is the sole criteria for membership, and the employer contributes a minimum of 51 per cent of the total contributions made to the said fund or scheme (in these Regulations referred to as an “occupational fund or scheme”), the employee may with the consent of the employer, retire at any time after he or she reaches the age of 45:

Provided that the retirement ages for any specific class of employees not included under this provision shall be regulated in terms of the applicable Acts.

3. Cessation of approval of superannuation fund

Botswana Unified Revenue Service shall approve the amendment or replacement of the fund rules, if it is satisfied that the amendment or replacement is consistent with the Income Tax Act and its Regulations and any other laws.

4. Revocation of S.I. No. 53 of 2001

The Income Tax (Superannuation Funds) Regulations, 2001 are hereby revoked.