How to Run Payroll in Botswana: Employment Taxes & Setup

Milani Notshe

Research Specialist

Last Updated

February 13, 2026

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Running payroll in Botswana involves many moving parts before your team sees money land in their accounts. Each month you need to calculate gross-to-net correctly, apply statutory withholdings and employer contributions, issue compliant payslips, plus file and remit on schedule. If anything slips through the cracks, you could face penalties, back-pay exposure, and unnecessary friction with your people.

If you’re hiring in Botswana, whether you’re building a local presence or expanding your global footprint, this guide is for you. We’ll walk through the choices and compliance requirements that have the biggest impact on your speed and risk, from entity vs. no-entity hiring to worker classification and the statutory bodies you’ll interact with along the way. By the end, you’ll know exactly what to expect and how to keep payroll running smoothly, wherever you’re hiring.

Key Takeaways

Payroll cycle: Payroll in Botswana is generally processed on a monthly basis.

Tax filing: Employers withhold Pay-As-You-Earn (PAYE) tax and remit it along with social security-related contributions through monthly filings.

Employer taxes: Employer obligations mainly include contributions to statutory schemes such as the workers’ compensation fund, with rates varying by industry.

Tax year: Botswana’s tax year runs from July 1 to June 30.

Payroll processing methods: Payroll is commonly managed in-house or outsourced to local providers familiar with Botswana’s PAYE and statutory reporting requirements.

How to Choose Your Payroll Structure in Botswana

Expanding into Botswana? Building a compliant payroll setup involves much more than simply paying salaries. You’ll be responsible for employment compliance, monthly tax and social declarations, and mandatory benefits. Even small delays in filings or payments can lead to real penalties.

You have several operating models to choose from to make this easier. The right one depends on your legal footprint, your appetite for risk, and how quickly you need to start hiring. Let’s break down the main options and when to use each.

1. No Local Entity in Botswana: Use an Employer of Record (EOR)

If you don’t yet have a legal entity in Botswana, an Employer of Record is usually the fastest and lowest-risk way to hire. An EOR becomes the legal employer on paper, provides locally compliant employment contracts, and manages payroll under local regulations, while you continue to direct the work and manage performance.

This model is ideal for:

Testing a new market
Hiring your first team members
Scaling a distributed workforce without building local infrastructure,

Why it’s the fastest and least risky option:

You skip the lengthy process (and cost) of setting up an entity.
All local registrations, monthly declarations, and statutory payments are handled by a provider already set up in-country, dramatically reducing your compliance risk.

2. You Have a Botswana Entity: Run In-Country Payroll

If you already operate a local entity, or you’re planning to establish one, running payroll directly gives you maximum flexibility and control. You can set your own policies, design benefits, and align payroll closely with your finance and internal approval processes. But this also comes with greater operational responsibility.

What you’re responsible for:

Registering with relevant authorities and maintaining compliance with statutory bodies (often involving CSS/IPRES or similar local institutions).
Accurately calculating and remitting payroll taxes and contributions every month – plus handling year-end requirements.
Issuing compliant payslips and maintaining audit-ready payroll documentation.

When this option makes sense:

You’re hiring at scale and want payroll fully “in-house,” even if you partner with a local provider for execution.
You need deeper integration with finance systems or custom benefit structures.

If you want to keep the entity but offload the admin, many employers choose global payroll services to handle calculations, filings, and payments while they remain the legal employer.

3. Contractors Only: Use Contractor Management

Paying independent contractors is often simpler than setting up full payroll, especially for short-term or highly specialized work.

However, you need to watch out for misclassification risk. In Botswana, as in many jurisdictions, someone may legally qualify as an employee based on how they work – not what their contract says. If they’re under your direction, working like an employee, you may be responsible for full employer obligations.

When contractor payments work well:

You need specialised expertise for a defined scope or timeframe
The contractor operates independently, not under your control or supervision

You can also use contractor management services to streamline compliant contracts, invoicing, and payments.

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What To Know About Payroll Processing In Botswana

In Botswana, payroll processing centers on Pay As You Earn (PAYE) income tax withholding, statutory social security-style contributions such as the Botswana Unified Revenue Service (BURS) Skills Development Levy, occupational pension where applicable, and regular payroll reporting to the authorities. You need to manage monthly calculations, submissions, and payments while keeping accurate records that align with the Income Tax Act, Employment Act, and related regulations. Some obligations vary by income thresholds, sector, and whether your headcount crosses certain levy or training-fund triggers.

Non-compliance can lead to penalties, interest, audits by BURS, and reputational damage if employees are underpaid or their taxes are mishandled. Late or incorrect filings can also delay tax clearance certificates, which affects your ability to win tenders or move funds across borders. This guide walks you through the core calculations, deadlines, filing procedures, and setup steps your team needs to run compliant payroll in Botswana in 2026.

Fiscal Year in Botswana

1 July - 30 June is the 12-month accounting period that businesses in Botswana use for financial and tax reporting purposes.

Payroll Cycle in Botswana

The payroll cycle in Botswana is usually monthly, with employees being paid between the 15th and the last day of the month.

Minimum Wage in Botswana

As of January 1, 2026, Botswana has a minimum wage of BWP 9.06 per hour for various sectors including building, construction, wholesale distributive trades, manufacturing, hotel and catering, and security guards. The agricultural and domestic services sectors have a minimum wage of BWP 1,500 per month.

Bonus Payments in Botswana

There's no legal obligation for a 13th or 14th-month payment in Botswana. Employers can decide on such bonuses at their discretion, typically outlined in the employment contract.

Types Of Payroll Taxes In Botswana

Payroll in Botswana primarily involves PAYE income tax, the Skills Development Levy, and any mandatory or quasi-mandatory social security-style contributions such as workers’ compensation and occupational pension where schemes are in place. Each obligation has its own base, rate, and due date, and is enforced by BURS or the relevant statutory body through audits, penalties, and interest on late payments.

Pay As You Earn (PAYE) Income Tax

PAYE is the main payroll tax in Botswana and is withheld from employees’ taxable employment income based on progressive tax brackets ranging from 0% to 25% for resident individuals. Employers calculate PAYE monthly, deduct it from salaries, and remit it to BURS, typically by the 15th of the following month, together with a monthly return.

Employees bear the PAYE cost, but employers are responsible for correct calculation, withholding, and timely remittance. Underpayment or late payment can trigger penalties and interest from BURS, as well as audits that may extend back several years if systemic issues are found.

Skills Development Levy (SDL)

The Skills Development Levy is a statutory levy administered by BURS to fund vocational training and skills development in Botswana. Employers with an annual payroll above the prescribed threshold contribute 0.2% of their total leviable payroll, while employees do not contribute directly.

SDL is calculated monthly on gross remuneration subject to the levy and paid to BURS together with other payroll taxes, usually by the 15th of the following month. Failure to register when required, under-reporting payroll, or paying late can result in penalties and interest, and may affect your eligibility for training grants or government contracts.

Workers’ Compensation And Statutory Insurance

Under Botswana’s workers’ compensation framework, employers must insure employees against workplace injuries, typically through a workers’ compensation policy or statutory fund. Contribution rates vary by industry risk profile but often fall in the range of 1%–3% of insurable earnings, fully funded by the employer with no employee contribution.

Premiums are usually calculated annually based on estimated payroll and adjusted after year-end, while some sectors may remit monthly or quarterly. Non-compliance can expose your company to direct liability for medical costs and compensation awards, as well as regulatory sanctions from the Ministry of Labour and Home Affairs or relevant insurance regulators.

How To Pay Employees In Botswana

Most employers in Botswana pay salaries via electronic bank transfer in Botswana pula (BWP), although cash and cheque payments still occur in smaller or remote operations. The Employment Act requires payment at regular intervals, commonly monthly, and you should define clear pay cycles in employment contracts and internal policies.

If you do not have a local entity, you can use an Employer of Record, a local payroll partner, or register your own company and tax accounts before hiring. Payslips should clearly show gross pay, taxable benefits, PAYE, Skills Development Levy where applicable, pension contributions, other deductions, and net pay, and should be provided in written or electronic form each pay period.

Payment Method: Use electronic bank transfers in BWP as the primary and most efficient salary payment method.
Pay Frequency: Set a consistent monthly or fortnightly pay cycle and document it in employment contracts and HR policies.
Payslip Content: Include gross earnings, allowances, PAYE, levies, pension, other deductions, and net pay on every payslip.
Banking Details: Collect and verify employees’ bank account details and national IDs before the first payroll run.
No-Entity Hiring: Engage an Employer of Record if you want to hire in Botswana without setting up a local company.
Cut-Off Dates: Establish internal cut-off dates for timesheets, overtime, and changes so payroll can be processed accurately and on time.
Record Keeping: Retain payroll records, payslips, and proof of payment for the statutory minimum period in case of audits.

Payroll Set Up Checklist (Entity Vs No-Entity)

Getting payroll set up correctly in Botswana is essential because BURS and labour authorities expect you to withhold and remit taxes accurately from the first salary payment. Your approach will differ depending on whether you establish a local entity or use an Employer of Record to hire on your behalf.

With your own entity, you handle registrations, calculations, filings, and payments directly, while a no-entity model shifts most of that operational and compliance burden to a third-party provider. Either way, you remain responsible for budgeting total employment costs and ensuring employees are paid correctly and on time.

Register Entity: Incorporate your company with the Companies and Intellectual Property Authority and obtain a company registration number.
Obtain Tax Registration: Register with BURS for income tax, PAYE, and Skills Development Levy where applicable.
Set Up Payroll System: Implement payroll software or a provider that supports Botswana tax tables and local reporting formats.
Define Policies: Document pay cycles, overtime rules, allowances, benefits, and leave policies consistent with the Employment Act.
Collect Employee Data: Gather contracts, national IDs, tax numbers, bank details, and any pension or benefit elections before first payroll.
Configure Deductions: Set up PAYE, SDL, pension, loans, and other deductions with correct rates and thresholds.
Choose Operating Model: Decide between running payroll in-house, outsourcing to a local bureau, or using an Employer of Record.
Internal Controls: Establish approval workflows, segregation of duties, and reconciliation processes for each payroll run.
Compliance Calendar: Build a calendar of monthly, quarterly, and annual payroll tax filing and payment deadlines.

Example Of Salary Tax Calculation

Assume an employee earns a monthly gross salary of BWP 20,000 with no additional taxable benefits and is a resident taxpayer. You would apply the Botswana progressive tax brackets to annualised income, convert the annual tax back to a monthly PAYE amount, and then add any employer-side levies such as the 0.2% Skills Development Levy where your payroll exceeds the threshold.

The goal is to ensure that PAYE, SDL, and any pension contributions are calculated consistently each month, with clear documentation so employees understand how their net pay is derived. Using payroll software that embeds Botswana’s 2026 tax tables reduces manual errors and simplifies reconciliations with BURS.

Annualise Income: Multiply the BWP 20,000 monthly salary by 12 to determine annual taxable income.
Apply Tax Brackets: Use the Botswana resident tax brackets to calculate total annual PAYE on the annual income.
Convert To Monthly PAYE: Divide the annual PAYE by 12 to obtain the monthly PAYE deduction.
Calculate Employer Levies: Apply the 0.2% Skills Development Levy to the monthly payroll cost if your organisation meets the levy threshold.
Determine Net Pay: Subtract PAYE and any employee pension or other deductions from gross salary to arrive at net pay.
Reconcile And Record: Reconcile totals with your payroll ledger and store payslips and calculation reports for audit purposes.

Submitting Employee Tax In Botswana

Employers submit PAYE and Skills Development Levy to BURS using the prescribed monthly returns, typically via the BURS online portal or at designated offices, and then pay the amounts due through bank transfer or other approved payment channels. You will need your tax registration number, the payroll period details, employee-level summaries, and confirmation of payment references for proper reconciliation.

Online Portal Filing: Use the BURS e-filing portal to submit monthly PAYE and SDL returns with employee summaries.
Manual Submission: Where e-filing is not used, lodge completed returns at the nearest BURS office before the due date.
Bank Transfer Payment: Pay assessed amounts via bank transfer using the correct BURS account details and reference numbers.
Payroll Software Integration: Leverage payroll systems that generate BURS-compliant reports and import files for faster filing.
Third-Party Provider: Engage a local payroll bureau or Employer of Record to handle filings and payments on your behalf.
Reconciliation: Match BURS statements with your payroll records each month to confirm all liabilities are settled.

Payroll Tax Due Dates In Botswana

Tax Type	Due Dates
PAYE Income Tax Withholding	On or before the 15th day of the month following the month in which salaries are paid.
Skills Development Levy	On or before the 15th day of the month following the month in which leviable remuneration is paid.
Withholding Tax On Certain Payments	On or before the 15th day of the month following the month in which the payment subject to withholding is made.
Annual PAYE Reconciliation	Typically due within three months after the end of the tax year ending 30 June, aligned with BURS guidance.
Corporate Income Tax Provisional Payments	According to BURS-assessed provisional tax schedule, often twice yearly based on year-end.
Workers’ Compensation Premiums	As per policy terms, commonly annually in advance with adjustments after payroll review.

Running Payroll Processing in Botswana

So, what does it actually take to run payroll in Botswana? It involves calculating monthly salaries, applying the right statutory deductions, and making sure your team gets paid accurately and on time, while staying fully compliant with local tax and labour laws.

Let’s walk through what that looks like in practice:

Monthly Payroll Workflow

Gather all the essentials: hours worked, leave taken, new joiners, leavers, and any salary or benefit changes.
Double-check timesheets, leave balances, overtime, and any variable pay to make sure everything is accurate.
Work out gross earnings, including base salary, bonuses, commissions, and allowances.
Apply mandatory and voluntary deductions, like income tax, pension contributions, benefits, and any company-specific deductions. Then, calculate net pay after all deductions.
Run internal reviews, compare with previous payroll cycles, and get the necessary approvals.
Pay employees via bank transfer and share payslips through email or your payroll system.
Send statutory payments and required reports to tax authorities.
Update your records and ensure payroll entries flow correctly into your accounting system.
Share payroll summaries with finance and address any open questions or discrepancies.

How Playroll Streamlines Processing

Keeping track of all these steps, especially in a new market, is no easy task. Regulations change, requirements shift, and it’s easy for things to fall through the cracks. Playroll makes this effortless by managing the entire payroll process for you: onboarding employees, handling calculations and deductions, issuing payslips, transferring funds in Botswana Pula, and taking care of statutory filings and compliance.

Income Tax And Social Security In Botswana

Understanding the tax obligations for both employers and employees is crucial when operating in Botswana's business landscape. This section explains how taxes and statutory fees affect payroll and individual earnings in Botswana.

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 1.5%–4% on top of the employee salary in Botswana. This range reflects the 0.2% Skills Development Levy for qualifying employers plus workers’ compensation and any employer-funded pension or insurance schemes that may apply by policy or collective agreement.

Tax Type	Tax Rate
Skills Development Levy (Employer)	0.2% of leviable payroll for employers above the statutory threshold.
Workers’ Compensation Insurance	Approximately 1%–3% of insurable earnings, depending on industry risk.
Employer Pension Contribution (Typical)	Commonly 5%–10% of pensionable salary where an occupational scheme exists.
Employer Medical Aid Contribution (If Provided)	Plan-specific, often 50% of the medical aid premium as a company policy.
Severance/Gratuity Accrual (Where Applicable)	Varies by contract, often equivalent to several weeks of pay per completed year of service.

Employee Payroll Tax Contributions

In Botswana, the typical estimation for employee payroll contributions cost is around 10%–20%.

Tax Type	Tax Rate
PAYE Income Tax	Progressive rates from 0% to 25% for resident individuals based on annual income.
Employee Pension Contribution (Typical)	Commonly 5%–10% of pensionable salary where an occupational scheme is in place.
Medical Aid Contribution (If Member)	Plan-specific, often 50% of the medical aid premium paid by the employee.
Garnishees And Court-Ordered Deductions	As specified in court or statutory orders, subject to protected minimum net pay.
Union Dues (If Applicable)	Fixed amount or small percentage of salary as per union agreement.

Individual Income Tax Contributions

Individual income tax in Botswana is charged on a progressive scale, with higher earners paying a larger percentage of their income in tax. Residents are taxed on Botswana-source income and certain foreign income, while non-residents are generally taxed on Botswana-source income only.

Income Bracket	Tax Rate
0 – 48,000 BWP	0%
48,001 – 84,000 BWP	5%
84,001 – 120,000 BWP	12.5%
120,001 – 156,000 BWP	18.75%
156,001 – 192,000 BWP	22.5%
Over 192,000 BWP	25%

Pension in Botswana

Pension in Botswana is primarily provided through occupational pension schemes sponsored by employers, with typical combined contribution rates of around 10%–20% of pensionable salary shared between employer and employee. While there is no universal state pension funded directly through payroll, private retirement funds are regulated and tax-incentivised, so you should align your scheme design with both regulatory requirements and market practice.

Managing Common Payroll Challenges in Botswana

Global employers operating in Botswana often encounter unique payroll challenges that can affect compliance and efficiency, like navigating evolving tax laws and managing employee data. With a need for real-time accuracy, modern organizations must develop strategies to overcome these challenges effectively. Below, we explore some of the most common payroll hurdles and provide actionable solutions to streamline payroll processes in Botswana.

Maintaining Accurate And Detailed Payroll Reports

Maintaining accurate global payroll reports is often challenging due to currency exchange complexities, data integration issues, and the need to keep employee information up-to-date –including tax information, hours worked, leave balances, and any changes in salary or job status. Generating accurate reports is easy with a comprehensive payroll automation tool that consolidates fragmented data sources, and can keep track of employee payments and deductions.

Keeping up with ever-changing tax laws & Compliance Laws

In Botswana, tax laws and compliance regulations can change frequently, presenting a significant challenge for global employers. Monitoring updates to federal, state, and local tax codes is crucial to avoid non-compliance and costly penalties, but requires significant time and resources. Partnering with local experts or a reputable global HR platform is an effective way to maintain compliance. These services can help employers stay compliant with evolving regulations while freeing up time for more strategic work.

Consolidating Multi-Vendor Payroll Analytics

Managing payroll across multiple vendors often leads to fragmented data and inefficiencies, making it difficult to consolidate analytics. These challenges can hinder decision-making, especially when trying to gain a clear view of workforce costs and trends. To address this, organizations can invest in a centralized payroll management system that unifies data from multiple vendors. A consolidated platform simplifies payroll tracking, ensures data accuracy, and provides actionable insights into payroll expenditures.

Integrating Multiple HR & Payroll Systems

Global companies are prone to using multiple HR or payroll systems across regions, which can easily lead to fragmented payroll data, increasing the risk of delays and errors in employee compensation. To combat this, seamless integration between payroll and other systems is critical.

Payroll management systems that connect with existing HR and financial platforms can help streamline workflows by reducing manual inputs and ensuring that all departments operate with up-to-date, accurate information. In turn, this helps guarantee on-time, accurate payroll, boosting employee satisfaction.

How Playroll Can Streamline Payroll & Taxes In Botswana

Expanding globally is an exciting milestone for any company, but it comes coupled with complex payroll challenges. It doesn’t have to be complicated. At Playroll, our easy-to-implement global payroll management software combines automation with hands-on support to make global payroll truly simple. Here's how Playroll helps:

Multi-Vendor Integration: Our platform syncs seamlessly with your providers and in-house systems to unify global payroll services in one platform.
Standardize Payroll Processes: Unify your operations in one dashboard to ensure payroll is running smoothly globally, with advanced approval flows and reports.
Improve Governance & Compliance: Improve compliance by centralizing all your compliance tasks and processes. Easily track your payment obligations, with digitized audit trails.
Advanced Reporting: Access and configure your data, your way, with a comprehensive suite of payroll analytics and reporting tools.

Disclaimer

THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). Playroll does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect Playroll’s product delivery in any given jurisdiction. Playroll makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.

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