Tuesday, October 3, 2023
  • About
  • Advertise
  • Privacy Policy
  • Cookie Policy
  • Contact
  • Subscribe
  • E-edition
  • Login
  • Register
  • Home
  • News
  • Economy
  • E-Edition
  • Columns
  • Companies & Markets
  • In Business With
  • Lifestyle
    • Motoring
  • Sports
    Tumisang Orebonye: Overcoming Against Adversity to Reach for the Stars

    ‘Winning The CAF Super Cup Is A Dream Come True’ – Orebonye

    BAA Needs Over P3m For World Champs

    Botswana’s Sporting Future in Jeopardy: School Sports Suspension Threatens Athletic Excellence

    No House For Tebogo Despite Astral Performance in Budapest

    “No Pressure for Tebogo at Diamond League Finals”

    BOKA Aims to Host Two Prestigious International Karate Competitions

    BOKA Aims to Host Two Prestigious International Karate Competitions

    FM Botswana 2022 conference: transformation towards a greener FM 

    StanChart CEO Underscores Role of UB Marathon in Boosting Botswana’s Sports Tourism

    No House For Tebogo Despite Astral Performance in Budapest

    No House For Tebogo Despite Astral Performance in Budapest

    Trending Tags

    • Subscribe
    No Result
    View All Result
    • Home
    • News
    • Economy
    • E-Edition
    • Columns
    • Companies & Markets
    • In Business With
    • Lifestyle
      • Motoring
    • Sports
      Tumisang Orebonye: Overcoming Against Adversity to Reach for the Stars

      ‘Winning The CAF Super Cup Is A Dream Come True’ – Orebonye

      BAA Needs Over P3m For World Champs

      Botswana’s Sporting Future in Jeopardy: School Sports Suspension Threatens Athletic Excellence

      No House For Tebogo Despite Astral Performance in Budapest

      “No Pressure for Tebogo at Diamond League Finals”

      BOKA Aims to Host Two Prestigious International Karate Competitions

      BOKA Aims to Host Two Prestigious International Karate Competitions

      FM Botswana 2022 conference: transformation towards a greener FM 

      StanChart CEO Underscores Role of UB Marathon in Boosting Botswana’s Sports Tourism

      No House For Tebogo Despite Astral Performance in Budapest

      No House For Tebogo Despite Astral Performance in Budapest

      Trending Tags

      • Subscribe
      No Result
      View All Result
      The Business Weekly & Review
      No Result
      View All Result
      Home Columns Tax & Your Pockets

      Trusts also Register for VAT and Income Tax

      mm by Jonathan Hore & Gavin Mashiri Jonathan Hore & Gavin Mashiri
      March 15, 2023
      in Tax & Your Pockets
      Reading Time: 3 mins read
      0
      Trusts also Register for VAT and Income Tax
      Share on FacebookShare on Twitter

      Generally, trusts are created to protect income generating assets or to ensure that property or assets are managed for the benefit of heirs.

      In some circumstances, even organisations or corporates may set up a trust that operates a charitable foundation as part of corporate social responsibility (CSR) to help the society and the less privileged.

      In such instances, such trusts may be  construed to be free from any  taxes on the basis that they may be predominately donor-funded, their main activities being for charity and not to earn profit. But it is important to note that such institutions are not exempt from  tax. To be precise, trusts may be required to register for Value Added Tax and income tax.

      In this article, words importing the masculine shall be deemed to include the feminine.

      Trusts

       Basically, a trust is a fiduciary relationship in which an individual or corporate gives another party, the trustee, the right to hold title to property or assets for the benefit of a third party or parties, i.e. the beneficiary. Let us now have a look at what the tax laws say about trusts.

      Enter income tax

       Having regard to the Income Tax Act, it is imperative to note that in terms of the said Act, a trust is neither an exempt person nor is its income exempt from tax save when it is established for public purposes. The Income Tax Act provides that  “amounts included in gross income shall be exempt from tax to the extent indicated…” for “a trust established for public purposes…”

      From the above, it is clear that the exemption is only applicable to a trust that is established for public purposes. Conversely, a trust established for private purposes is required to register for income tax. For avoidance of doubt, a trust’s activities and the beneficiaries, in the event of a dissolution, are key in determining whether it is established for public purposes.

      For clarity,  a foundation that is established through a trust and whose beneficiaries are family members ceases to be for public purposes even though it may perform charitable activities to the general public. This technically means that such a trust should register and account for income tax on any excess income arising from operations that is not utilised towards endeavours of the foundation.

      On the other hand, if such a foundation designates the general public or government as the beneficiaries on dissolution, it will be classified as a established for public purposes, thus its income will be exempt. Let us now turn to VAT.

       Enter VAT

      The VAT Act basically requires any person who carries on a taxable activity continuously in or partly in Botswana and whose annual value of taxable supplies exceeds or is likely to exceed P1m to compulsorily register for VAT. For avoidance of doubt, the term “taxable activity” basically means provision of goods or services, whereas “taxable supplies” are basically those goods or services that are ordinarily chargeable to VAT at 12 percent or 0 percent.

      The critical aspect to note is that any person is required to register for VAT whether the supply of goods or services is conducted to make a pecuniary profit or not. Therefore, a trust being regarded a person for VAT purposes is required to compulsorily register for VAT where the annual value of its goods or services that are ordinarily chargeable to VAT at 12 percent or 0 percent exceeds or is likely to exceed P1 million.

       Well, folks, we hope that was insightful. As us the two Yours Truly say goodbye, remember to pay to Caesar what belongs to Caesar. If you want to consult, join our free Tax WhatsApp group or to know about our 9 tax e-books, send us a text on 71815836. You can read more tax articles on our website, www.aupracontax.co.bw under the ‘Tax articles’ tab.

      Navigation

      • Home
      • News
      • Economy
      • E-Edition
      • Columns
      • Companies & Markets
      • In Business With
      • Lifestyle
        • Motoring
      • Sports
      • Subscribe

      Recent News

      • September 29th Edition
      • FUEL: The Vexing – and Recurring – Question of Security of Supply
      • Hands off Bank of Botswana, IMF Tells Govt
      • BIUST holds 8th Graduation
      • StanChart leverages on its unique position

      Site

      • About
      • Advertise
      • Privacy Policy
      • Cookie Policy
      • Contact
      • Subscribe
      • E-edition

      © 2021 The Business Weekly & Review. All Rights Reserved.

      No Result
      View All Result
      • Home
      • News
      • Economy
      • E-Edition
      • Columns
      • Companies & Markets
      • In Business With
      • Lifestyle
        • Motoring
      • Sports
      • Subscribe

      © 2021 The Business Weekly & Review. All Rights Reserved.

      Welcome Back!

      Login to your account below

      Forgotten Password? Sign Up

      Create New Account!

      Fill the forms below to register

      All fields are required. Log In

      Retrieve your password

      Please enter your username or email address to reset your password.

      Log In
      This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.
      Are you sure want to unlock this post?
      Unlock left : 0
      Are you sure want to cancel subscription?