GABORONE, Botswana: June 26 (Xinhua) — Botswana is banking on low rates for royalties and a competitive variable rate income tax formula to entice foreign companies to search for non-diamond minerals in the country.
Minerals minister Ponatshego Kedikilwe told delegates on Tuesday at the ongoing resource sector conference that government hope the formula would lead to broadening of the country’s mineral production base.
“In totality our fiscal regime is attractive and it imposes low fiscal burden on the investor,” said the minister. “The Income tax Act and Value Added Tax Act have been amended to make Botswana’s taxation system simpler and more efficient in order to be investor friendly,” added Kedikilwe citing that the recent amendment of the Income Tax Act resulted in the reduction of the company tax from a minimum of 25 percent to 22 percent.
Botswana is heavily dependent on a single commodity –diamonds, accounting for near 50 percent of government revenue and about 30 percent of the gross domestic product (GDP). However, the minister is conscious that not all exploration succeeds in finding minerals deposits that are economic and justify further development into producing mining projects.
“We do recognise that economic diversification is a long term process and in our case, the immediate concern is how to lessen the country’s heavy dependence on diamonds.”
Meanwhile Kedikilwe said government making efforts to avail power and water which are drivers of commerce. The minister said construction of two dams has been completed while the third one is due for completion in April 2013, combined the three facilities has a storage capacity of 530 million cubic meters.
In addition the government has embarked on a strategy to improve the ease of doing business in the country. “A Cabinet Subcommittee has been set up to specifically drive the ease of doing business and improves Botswana’s Global Competitiveness.”
The minister said the Subcommittee will deal with issues related to reducing red tape to improve service delivery. (Xinhua)