The Trust Duty Amendment Act (the “Amendment”) has ushered in a number of far-reaching amendments to the existing transfer duty tax regime.These amendments inter alia; introduce different rates of transfer duty between non-citizens and citizens; widen the scope of transactions now caught by transfer duty including imposing a duty on share transfers in property holding companies; and bring into effect a wider range of exemptions than previously existed..New Rates of Transfer DutyThe rate of transfer duty in the case of a transaction involving any immovable property sold or alienated where the person liable to pay the duty is a citizen of Botswana is now 5 % and where the person liable to pay the duty is not a citizen of Botswana, is now 30 %. This amendment significantly increases the duty that a non-citizen will pay on acquiring immovable property by a whopping 25%.Wider Scope of Transactions Caught by Transfer DutyA wider scope of transactions is subject to Transfer Duty under the Act including an extension of transfer duty to transactions involving leasehold tenure, Fixed Period State Grants, tribal land, and concessions over State Land/Freehold and Long Leases..New Rules on Calculation and Payment of Transfer DutyThe amount of Transfer Duty payable is now calculated by reference to the (i) the purchase price, or (ii) the value (open market value) whichever is greater and in the case of a customary land grant, transfer duty shall be calculated on the aggregate rental payable, or on the value of the immovable property leased, whichever is greater.Transfer duty once calculated must be paid within 60 days from the date of assessment of the duty payable as opposed to previously, when it is required to be paid only within 6 months.The Amendment also changes the responsibility for the collection of transfer duty from the Registrar of Deeds to the Commissioner General and the rate of penalty interest payable. In this latter respect penalty interest has been changed from 12% per annum to 1.5% compounded monthly or a part of the month during which the contravention continues, but shall not be more than the amount of the unpaid duty.The Amendment also makes it mandatory to get valuation reports when making a submission for the assessment of transfer duty to the Commissioner General..Exemptions to the Payment of Transfer DutyThe Amendment increases the threshold amount that is exempt from the payment of transfer duty with respect to citizens of Botswana from P200 000.00 to P1 000 000.00.The Amendment also introduces a new clause which provides for the exemption from payment of transfer duty where (i) the buyer is a citizen of Botswana and a first time home buyer; or (ii) an individual citizen who transfers immovable property from himself to a company owned 100% by that individual, or jointly with his or her spouse provided that they are married in community of property (iii) and a company which transfers immovable property to an individual who owns the company 100% or jointly with his or her spouse if they are married in community of property.ConclusionThe Amendment provides various positive and negative amendments to the Act. Particular emphasis has been given to the increase from 5% to 25% in relation to non-citizens. Akheel Jinabhai & Associates are leading experts on the application of transfer duty under the Act and can assist you to properly structure your transaction to take account of the impact of transfer duty thereon under the Act.
The Trust Duty Amendment Act (the “Amendment”) has ushered in a number of far-reaching amendments to the existing transfer duty tax regime.These amendments inter alia; introduce different rates of transfer duty between non-citizens and citizens; widen the scope of transactions now caught by transfer duty including imposing a duty on share transfers in property holding companies; and bring into effect a wider range of exemptions than previously existed..New Rates of Transfer DutyThe rate of transfer duty in the case of a transaction involving any immovable property sold or alienated where the person liable to pay the duty is a citizen of Botswana is now 5 % and where the person liable to pay the duty is not a citizen of Botswana, is now 30 %. This amendment significantly increases the duty that a non-citizen will pay on acquiring immovable property by a whopping 25%.Wider Scope of Transactions Caught by Transfer DutyA wider scope of transactions is subject to Transfer Duty under the Act including an extension of transfer duty to transactions involving leasehold tenure, Fixed Period State Grants, tribal land, and concessions over State Land/Freehold and Long Leases..New Rules on Calculation and Payment of Transfer DutyThe amount of Transfer Duty payable is now calculated by reference to the (i) the purchase price, or (ii) the value (open market value) whichever is greater and in the case of a customary land grant, transfer duty shall be calculated on the aggregate rental payable, or on the value of the immovable property leased, whichever is greater.Transfer duty once calculated must be paid within 60 days from the date of assessment of the duty payable as opposed to previously, when it is required to be paid only within 6 months.The Amendment also changes the responsibility for the collection of transfer duty from the Registrar of Deeds to the Commissioner General and the rate of penalty interest payable. In this latter respect penalty interest has been changed from 12% per annum to 1.5% compounded monthly or a part of the month during which the contravention continues, but shall not be more than the amount of the unpaid duty.The Amendment also makes it mandatory to get valuation reports when making a submission for the assessment of transfer duty to the Commissioner General..Exemptions to the Payment of Transfer DutyThe Amendment increases the threshold amount that is exempt from the payment of transfer duty with respect to citizens of Botswana from P200 000.00 to P1 000 000.00.The Amendment also introduces a new clause which provides for the exemption from payment of transfer duty where (i) the buyer is a citizen of Botswana and a first time home buyer; or (ii) an individual citizen who transfers immovable property from himself to a company owned 100% by that individual, or jointly with his or her spouse provided that they are married in community of property (iii) and a company which transfers immovable property to an individual who owns the company 100% or jointly with his or her spouse if they are married in community of property.ConclusionThe Amendment provides various positive and negative amendments to the Act. Particular emphasis has been given to the increase from 5% to 25% in relation to non-citizens. Akheel Jinabhai & Associates are leading experts on the application of transfer duty under the Act and can assist you to properly structure your transaction to take account of the impact of transfer duty thereon under the Act.
