What is VAT Deferral at Importation

VAT deferral at importation refers to a BURS approved cash flow relief mechanism for compliant businesses that import regularly, under which the Commissioner General of BURS allows import VAT payments to be postponed to a later date subject to conditions mentioned in the VAT Act.

Who Qualifies to have a VAT Deferral Account

A VAT deferral account is generally available to VAT registered businesses that regularly import goods into Botswana and have demonstrated a satisfactory level of tax compliance with Botswana Unified Revenue Service. To qualify, the importer must usually have no outstanding tax arrears, maintain proper accounting and record keeping systems, and be able to provide acceptable security, such as a bank guarantee or bond, to support the approved deferral limit.

In assessing an application, BURS may also consider the importer’s compliance history, import volumes, and ability to meet deferred VAT payment obligations within the prescribed timelines. The VAT deferral facility is therefore intended for compliant importers with consistent import activity and sound administrative controls

What is the Registration Process and Requirements

Businesses seeking approval for a VAT deferral account are required to submit an application to BURS together with supporting information demonstrating their eligibility and compliance status. The approval process also involves engagement with the business’s financial institution. Once approved, the importer is allocated a VAT deferral facility subject to ongoing compliance with the applicable terms and conditions.

How does VAT Deferral Account Work

• Goods are imported and cleared without immediate VAT payment through the use of the VAT deferral Account.
• Import VAT is posted to the Import Tax Deferral Account
• BURS issues a Statement for Deferred VAT
• VAT is settled on or before 25 days from the date of issue of the VAT deferral statement

Who Facilitates the Collection or VAT Deferral

Import VAT deferral accounts are operationalized jointly under The  VAT Act

 And Customs & Excise procedures.

Claiming Input VAT

Input VAT on deferred import VAT may only be claimed after the payment has been made to BURS.

Non Compliance Consequences

Failure to operate the deferral account correctly can lead to the following:

• Suspension or cancellation of the VAT registration;
• Blocking of the VAT deferral account therefore preventing import clearance
• Interest and penalties for late payment
• Increased scrutiny or audits by BURS

Important Practical Takeways

• Always pay the exact amount shown on the BURS statement since under payments can block the account
• Reconcile BURS statements monthly against customs entries and resolve discrepancies promptly
• Closely monitor bank bond expiry dates and ensure the bond remains valid and sufficient at all times to avoid suspension of the account.
• Keep a strict payment calendar, ensuring that all deferred VAT payments are settled on or before the 25th of each month.