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Gov’t highly likely to increase TAX

Publishing Date : 27 January, 2020


Persistent failure to provide genuine tax invoice documentations and undervaluing imported goods by business operators could force the Ministry of Finance and Economic Development Planning (MEDP) to increase tax, Botswana Unified Revenue Services (BURS) Acting Commissioner General (CG) Segolo Lekau has told WeekendPost.

This, Lekau says, emanate from the fact that a number of businesses especially those importing goods are trespassing the customs law. “It appears the citizens are working hand in hand with these businessmen and agree to be given falsified payment documents that do not necessarily depict the real price. At the end the government is losing a lot of money because we claim less than we should be from SACU,” said the acting CG.

It is said a car will be registered to enter Botswana at a distorted price of P4, 500 while it’s actual price maybe P45, 000. This then leaves Botswana losing out. This, it is said does not happen in other countries hence most operators opt for Botswana route as it is easy to manipulate prices. Lekau continued; “This now may force the government to increase the tax because she may feel that what she is getting is very low as she will not be getting the actual custom duty and VAT corresponding with the product imported.

Remember tax is a contract between the state and its citizen, it helps to develop the country.” One of BURS’ mandates is to advise the MEDP on matters relating to the administration and collection of tax and perform other functions in relation to tax as the Minister may direct. Already there is a narrative that the government may increase tax as way of cushioning for its ballooning expenditure following impulse increase of public servants wages.

The government conceded through Finance Minister, Dr Thapelo Matsheka last year that the country’s fiscal position is not stable as it was projected and that the growing budget deficits might have to be tackled. This should be through some adjustments as the revenue supported by diamonds fails to keep up with the government increased expenses.

“We have started an exercise similar to post audit clearance, looking at how much these cars are sold and we have found out that law is not being followed, there is lot of undervaluation and we have decided to detain some of the properties,” Commissioner General Lekau revealed. BURS is perturbed by non-compliance such that already they have launched crusades to carry own audit on a number of factories to see if there is undervaluation of goods.

1522 vehicles have been confiscated from 24 car dealerships in Mogoditshane, as the tax man starts to crack the whip. “We are going to plug those inefficiencies by applying stringent measures,” BURS General Manager Investigations Compliance and Enforcement, Kaone Molapo cautioned. Following the seizure of cars in Mogoditshane, Lekau told this publication that they may now start setting prices for ‘Fong-Kong’ cars.

“We are permitted by the law and even the best international practices dictates that, if we don’t agree with the product price on the invoice we can compare and set our own looking at the market comparable. So, it is true, that we may set the price soon that is if the operators do not dust themselves and comply with taxation laws because we want voluntary compliance.”

This has been echoed by Molapo who said; “They are pushing us to determine prices for the products and goods. Compliance should be at maximum.” The extent of the seriousness of the matter is such that if an ordinary person fails to show original tax invoice sheet of any imported product heads will roll which may include repossession of the product.

To those that have circumvented the tax law, the authorities say it is ‘not yet Uhuru’ as the crusade is still on. “There is what we call post clearance audit. We will go to these people to demand genuine statements and carry our own audit because the country has lost a lot of money,” Molapo said at a media briefing this week.

For Botswana to have been grey listed for money laundering and financing terrorism was owing to factors like these.  Botswana is a member of the Eastern and Southern Anti-Money Laundering Group (ESAAMLG) an affiliate of the Financial Action Task Force (FATF) and she is doing everything possible to close any leakages of going back to being grey listed or possibly black listing.  

The tax law has been stiffened and anyone crossing the border should declare any amount from P10, 000 upwards and the goods. “We have reviewed our law and penalties are now hefty for non-declaration. You can be charged P1 million or treble the value of the goods. BURS’ mandate is to perform tax assessment and collection functions on behalf of the government. And to take appropriate measures to counteract tax evasion.

The authority as per its act is mandated to administer and enforce the revenue laws, promote compliance with the revenue laws and to take such measures as may be required to improve services given to taxpayers with view of improving efficiency and maximizing revenue collection.   

BURS remains optimistic   

Meanwhile BURS continues to be optimistic in revenue collection as some strategies had been put in place to turnaround the performance of the organization and meet the target going forward. BURS officials have vowed to intensify debt collection, strengthen the verification of refunds before payment and collect the outstanding withholding tax and VAT from imported service from government projects.

The emergence of new generation tax issues such as transfer pricing also pose a challenge to the BURS. Furthermore unemployment also poses a threat in terms of lowering revenue income because an increase in number of people without income results in the absence of taxation thereby reducing the total tax revenue from employment income. BURS has set a target of P45 billion for the financial year 2019/2020.