Engaging a contractor in Botswana usually means a sole proprietor with a business name registered at CIPA, who invoices you, files with the Botswana Unified Revenue Service (BURS) and pays their own income tax. Two sets of rules changed in 2026. New income tax, VAT and tax-administration laws took effect on 1 July, and the Employment and Labour Relations Act, 2025 followed on 1 September; the second one reaches how a contractor relationship is classified. This guide covers the contractor’s tax, reclassification, the contract and the payer’s paperwork. The payment side is on our Botswana payouts page. It is general information, not legal advice.
The contractor: sole proprietor or company
Sole proprietor. The usual form for an individual. Deel’s guide, updated 10 June 2026, says a business name is registered with the Companies and Intellectual Property Authority, costs about BWP 360 plus a BWP 20 to 60 name reservation, and takes about 6 to 8 days. It says applicants are citizens and legal residents aged 18 or over with an Omang or residence permit, and that foreign nationals may qualify under certain conditions (Deel, checked 2026-11-04). Remote’s guide adds that foreign contractors may need a work permit or visa (Remote, checked 2026-11-04).
Company. A contractor working through a company pays 24.5% corporate tax, up from 22% before the 2026 Act (Andersen Botswana; RSM Botswana, checked 2026-11-04).
The contractor’s tax
Income tax. A resident individual pays nothing on the first BWP 48,000 of taxable income, then 5% on BWP 48,001 to 84,000, 12.5% to BWP 120,000, 18.75% to BWP 156,000, 25% to BWP 400,000 and 27.5% above it. The 27.5% band is new, 2.5 points above the previous top rate (Andersen Botswana, checked 2026-11-04). The tax year runs from 1 July to 30 June.
Simplified regime. Sole proprietors with supplies under BWP 1,000,000 in 12 months can use a simplified regime with cash-basis accounting, three-year record retention and the first BWP 48,000 of taxable income exempt (RSM Botswana, checked 2026-11-04).
VAT. The standard rate is 14%. PwC listed compulsory registration at BWP 1 million of turnover on a page reviewed 9 January 2026, before the new VAT Act took effect (PwC, checked 2026-11-04); the contractor should confirm today’s threshold.
Social security. Rivermate’s guide says Botswana has no national social security scheme and lists no contributions for contractors (Rivermate, checked 2026-11-04). The contractor arranges their own pension and cover.
Reclassification risk
The Employment and Labour Relations Act, 2025 came into force on 1 September 2026 and consolidates the earlier labour laws; the ILO notes that it addresses the classification of employment relationships (ilo.org, 11 September 2026, checked 2026-11-04). A March 2026 Business Weekly column reads it as presuming that a person who works for or renders a service to another is a worker, unless the other party is a client of a business the individual genuinely runs, and as placing the burden on the engager once control, integration or dependency factors appear (Business Weekly, checked 2026-11-04). We have not read the enacted section text, so ask a Botswana lawyer to confirm it before you rely on a contractor label.
Rivermate’s guide puts the point plainly: the nature of the working relationship matters more than the contract’s wording (Rivermate, checked 2026-11-04). A single client, a fixed monthly fee, your hours and your tools are the facts a claimant would use (contractor misclassification). If the role is a job, hire through an EOR.
What to put in the contract
- A written services agreement scoped to deliverables, with the fee, currency, receiving account and who bears transfer charges.
- An invoice for every payment, matched to the payment reference.
- IP assignment in writing. Assign the rights explicitly and ask a Botswana lawyer about formalities; do not rely on a statutory default.
- Independence markers: the contractor’s own equipment and schedule, the right to work for other clients, and a fee tied to deliverables.
- A pula or dollar fee, stated. The pula follows a managed downward crawl (Daily News, 1 January 2026, checked 2026-11-04), so the currency decides who carries the drift.
Taxes and paperwork
The contractor’s side. Register the business name, register with BURS, invoice, and file and pay income tax under the 2026 Act.
The client’s side. Pay gross against the invoice. The withholding rates listed for residents under the 2026 Income Tax Act cover dividends, interest, directors’ fees, construction, rent and commission, not professional fees paid to an individual (Andersen Botswana, checked 2026-11-04). US payers collect a W-8BEN and file no 1099 (IRS Publication 515, checked 2026-11-04); there is no US–Botswana income tax treaty on the IRS list (IRS, page reviewed 3 January 2026, checked 2026-11-04). The new Act also introduces permanent-establishment rules that weigh how long and how much personnel work in Botswana, so a contractor who acts like your local team can raise permanent establishment questions.
How to pay contractors in Botswana
Wise does not yet send pula to Botswana from the US or UK (wise.com, checked 2026-11-04). A SWIFT wire to a Botswana bank is the alternative, and some platforms settle in pula locally. Botswana abolished its exchange controls on 9 February 1999 (Daily News, 31 March 2022, checked 2026-11-04). Rails, costs and platforms are compared on our Botswana payouts page.
Contractor of Record in Botswana
A Contractor of Record is the contracting party for the contractor and reduces reclassification risk; it does not remove it. In Botswana the work still has to look independent, and the COR also collects the invoice, keeps contracts consistent across a team and flags engagements that look like dependency. Read the liability clause in the contract rather than the product name. Where the role is a job, with your hours, your tools and core work, hire through an EOR instead. Compare providers in our COR rating.