Business entities in Botswana
Healy Consultants offers our Clients the most favorable corporate structures in Botswana. There are several ways of doing business in Botswana, the most common being the setting up of a limited liability company (LLC). Entrepreneurs also have an option of establishing a public limited company (PLC). Alternatively, foreign companies have the option of setting up a branch or a representative office.
The Botswana limited liability company (LLC)
- This is the most common type of business entity by foreign entrepreneurs when incorporating in Botswana. A Botswana LLC must appoint one director who must be a resident of Botswana, and one shareholder of any nationality. Minimum paid-up capital is not required and it takes approximately 48 days to complete the incorporation process;
- The LLC must have a registered office in Botswana and must submit audited financial statements within five months of the year end and therefore must appoint a qualified company secretary. Healy Consultants will offer these services to our Client if required.
The Botswana public limited company (PLC)
- This entity must appoint at least two directors and seven shareholders of any nationality who must be natural persons for incorporation to be complete. One of the directors must be a resident of Botswana and if required Healy Consultants will offer these services to our Client. Minimum paid up share capital is not required and the incorporation process takes approximately 80 days to complete;
- The PLC must have a registered office in Botswana and must submit audited financial statements within five months of the year end and therefore must appoint an auditor in addition to the statutory company secretary required for all Botswana companies. Healy Consultants will offer these services to our Client if required.
The Botswana offshore company (IFSC company)
- Incorporating an offshore company in Botswana requires i) to setup a Botswana company and then ii) to apply to the International Financial Services Center Authority for an IFSC certificate. Such company can henceforth be created with only i) 1 shareholder of any nationality and ii) 1 resident director. The authority will however ask for i) a documented descriptive of our Client’s current business ii) a business plan for the IFSC company and iii) an amount of share capital sufficient to finance the proposed business in Botswana;
- The IFSC company will only be allowed to conduct commercial operations with non-residents, but may however conduct limited productive operations in Botswana including i) BPO and call centers ii) asset management and iii) bank and insurance activities. It will benefit from incentives including: i) a reduced corporate tax rate of 15% ii) no VAT iii) no capital gains tax and iv) no withholding tax.
The Botswana branch
The Botswana branch may be 100% foreign owned and is allowed to engage in business activities related to the parent company within Botswana. Only one shareholder and one director are required for incorporation of a branch in Botswana. However, the corporate tax rate for the branch is 30% thus making this the least efficient tax option for business incorporation in Botswana.
The Botswana representative office
The Botswana representative office is established solely for market research and promoting business of the parent company and is not allowed to pursue production-related or commercial activities.
Table of comparison between Botswana entities
|LLC||PLC||Offshore company||Branch||Rep Office|
|Also known as:||LLC||PLC||IFSC||Branch||Rep. office|
|How long to set the company up?||10 weeks||14 weeks||16 weeks||16 weeks||16 weeks|
|How long to open company bank account?||4 weeks||4 weeks||4 weeks||5 weeks||5 weeks|
|Wholly foreign owned?||Yes||Yes||Yes||Yes||Yes|
|Minimum paid - up share capital?||US$1||US$1||US$1||US$1||US$1|
|File annual tax return?||Yes||Yes||Yes||Yes||No|
|Tax registration certificate required?||Yes||Yes||Yes||Yes||Yes|
|Recommended corporate bank account?||Standard Chartered Bank||Barclays Bank||First National Bank of Botswana||Stanbic Bank||Bank of Baroda|
|Does our Client need to travel?||No||No||No||No||No|
|Resident director required?||Yes||Yes||Yes||Yes||No|
|Resident shareholder required?||No||No||No||No||No|
|Minimum directors allowed?||1||2||1||1||1|
|Tax identification code needed?||Yes||Yes||Yes||Yes||Yes|
|Botswana resident company secretary required?||Yes||Yes||Yes||Yes||No|
|Corporate shareholders allowed?||Yes||Yes||Yes||Yes||Yes|
|Corporate director(s) allowed?||No||No||No||No||Yes|
|Botswana corporate tax rate?||22%||22%||15%||30%||0%|
|Annual financial statements required?||Yes||Yes||Yes||Yes||Yes|
|Regulated by?||Ministry of Trade and Industry||Ministry of Trade and Industry||International Financial Services Center||Ministry of Trade and Industry||Ministry of Trade and Industry|
|Allowed to issue sales invoices and sign contracts with non-residents?||Yes||Yes||Yes||Yes||No|
|Allowed to issue sales invoices and sign contracts with Botswana residents?||Yes||Yes||No||Yes||No|
|Allowed to import and export goods?||Yes||Yes||Yes||Yes||No|
|Can rent an office space in Botswana?||Yes||Yes||Yes||Yes||Yes|
|Can buy Botswana property?||Yes||Yes||Yes||Yes||No|
|Can own equity in other Botswana companies?||Yes||Yes||No||Yes||No|
|Total Botswana business setup costs in yr. 1?||US$12,405||US$13,505||US$11,405||US$15,600||US$9,850|
|Subsequent annual costs (incl. accounting and tax fee)?||US$3,430||US$5,380||US$3,430||US$4,850||US$3,600|
|Sample engagement invoice?|