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Transfer Duty (Amendment) Bill, 2018

The Transfer Duty Amendment Bill No. 32 of 2018 was published in the Government Gazette on the 2nd November 2018 for consideration and debate by Parliament.

The Bill proposes various amendments to the Transfer Duty Act Cap 53:01 in respect of transfer duty payable on the sale of immovable property and various rights therein.

Below are some of the pertinent changes that will come into effect if the bill becomes law as is:

  1. The definition of a citizen has been changed to include a company the shareholding of which is wholly held by citizens. Currently, a citizen company is regarded as one whose majority shareholding is held by citizens.
  2. Share transfers of companies whereby beneficial ownership of the property is also transferred will attract transfer duty. Under the current law no transfer duty is payable on sale of shares, except where beneficial ownership is transferred in a company owning agricultural land.
  3. The Commissioner General has powers to apply fair market value where there are reasonable grounds to believe that a property has been undervalued. This is due to the occurrence, however rare it may be, of parties colluding to ensure that property is valued at the lowest possible amount to avoid paying hefty transfer duty.
  4. One of the most notable changes that will occur is the shift of responsibility of collecting transfer duty from the Registrar of Deeds to the Commissioner General. As the law stands today, a cheque drawn out to the Government of Botswana is lodged together with transfer documents at the Deeds Registry. If the above change becomes law, the process on the ground would change to lodging proof of payment of transfer duty at the Deeds Registry. We hope that this change will not introduce delays that will affect business efficacy.
  5. The transfer duty rebate for citizens will be increased from P200,000 to P500,000. A new major development is the proposed increase in the rate of transfer duty payable for non-citizens from 5% to 30%.
  6. The long-awaited exemption from paying transfer duty by citizen first time home buyers has been provided for in the bill. This will make property acquisition that much more affordable to the masses especially young people as owning homes has been out of their reach, largely due to the associated costs with transfer duty in the fore.
  7. Another current hurdle is where parties wish to transfer property from themselves to a company which they wholly own or vice versa. The bill has provided for this for and it will be permissible if it is passed into law. Currently, in order for this to happen, where the land attracts transfer duty it is indeed payable in full. Lastly, a divorcee whether having been married in or out of community of property may, according to the bill, acquire property or a half share previously held by his / her former spouse without being required to pay transfer duty.

If the Bill becomes law as it is, it will be a step in the right direction in updating the Transfer Duty Act and addressing various issues of concern relating thereto.