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Botswana still nursing tax haven blister

Botswana remains stuck in European Union (EU)’s grey-list of tax havens and it is closely monitored by Brussels as it promised to reform its tax structures since last year. Furthermore, Botswana is still an uncooperative tax territory in France mind as it is placed high on the blacklist of ‘Uncooperative Territories and French Tax Consequences of the Blacklisting.’

Being grey-listed by EU means a country will be under constant monitoring and checkups from Brussels. But it is better than being in the blacklist where a country faces EU sanctions as well as getting a dent in international reputation. The tax haven tag on Botswana was first placed by France President Nicholas Sarkozy in 2011 who then declared that the international community should shun Botswana as it is a tax haven.

The IFSC burden

The Minister of Finance and Economic Development Kenneth Matambo in July this year said government will constantly engage EU to remove the perception of tax haven on its neck. In a commitment letter written by Matambo to EU November last year, the minister suggested that the EU’s Forum on Harmful Tax Practices (FHTP) raised a red flag on this country’s tax regulations, especially the controversial International Financial Services Centre (IFSC) tax incentive framework under which IFSC accredited and qualifying firms enjoy a 15% corporate tax rate while other companies face the normal 22 % tax. Tax experts concluded that IFSC regime is one of the sources of Botswana’s tax haven tag.

The International Monetary Fund (IMF) also warned since last year that Botswana should remove its many tax incentives and IFSC was the main culprit. This prompted Matambo to tell the EU in a recent letter this year that Botswana is working on introducing legislative amendment to address the harmful effects of IFSC. “We undertake to complete the necessary legislative actions to amend the regime by December 2018 as agreed by the Forum on Harmful Tax Practices,” wrote Matambo to EU.

While tax pundits and the IMF advises that IFSC should be abolished, Matambo remains unmoved on the tax initiative, telling reporters July this year that, “the IFSC framework basically provides a lower level of tax to companies under the mandate of the IFSC. For us it is an incentive to grow the financial sector. The purpose of this lower level of tax is to provide an incentive but the OECD countries for their own reasons look at it differently, we disagreed with them that we are not a tax haven. We do tax companies that make an income in this country.”

In the 2018/19 Budget Speech, Matambo promised that government will review IFSC in order to remove any perception that Botswana is a tax haven.  “The review will be undertaken as part of the Income Tax (Amendment) Bill scheduled for presentation to Parliament during 2018,” he said.

Secrecy another source of EU blacklisting

According to Tax Justice Network Africa’s Financial Secrecy Index 2018, Botswana is one of the most secretive tax jurisdictions. It says “information sharing remains limited, enabling companies and wealthy foreigners to get away with tax avoidance and evasion by avoiding detection in their home countries or where business activity takes place.

According to Tax Justice Narrative on Botswana, this country comes in at 103rd place in 2018 Financial Secrecy Index.  It further states that the country has a relatively high secrecy score of 68, but has an insignificant market for offshore financial services. “There may be limited information on the way Botswana’s IFSC is used for illicit and criminal practice,” said the Tax Justice Network.

In February this year in his 2018/19 Budget Speech, Matambo said to deal with issues of secrecy the Financial Intelligence Act and Regulations which will address the shortcomings identified by the Mutual Evaluation Review for Botswana by the Eastern and Southern Africa Anti-Money Laundering Group in May 2017 will be dealt with this year.

Botswana walking at a snail’s pace in tax regime amendments

However the tax structure amendment by Botswana which was promised to be done this year has since been deferred to next year leaving the country’s tax haven label stuck on its neck. In a recent interview Ministry of Finance and Economic Development Spokesperson Fenny Letshwiti revealed that the ministry is working on amending the Income Tax Act and the Value Added Tax Act and to enact a new Tax Administration Act. He further revealed that the Bills will be presented to the February 2019 Parliament for approval.

While Botswana wrote to EU November last year committing to Brussels that it will work on its tax regime or all the tax reforms this year December, it appeared to be a pipeline dream as the ministry recently revealed that the amendments are slated for next year. This means this country will have to wait for a while to be removed from any blacklist or grey-list.

Botswana not a tax haven – just an EU Big Brother perception?

Some pundits and politicians make the tax haven tag on Botswana appear as a mere neocolonial or Western big brother body check on this country. But EU remains the biggest player in the international trade market as it is the major exporter of Botswana’s beef. Botswana also exports diamonds to Europe. On the other hand Botswana imports manufactured goods, transport equipment, machinery, electrical machinery and pharmaceuticals or chemicals.

 Local tax expert Jonathan Hore in an interview with BusinessPost said Botswana is not technically a tax haven but it is just that the EU has strict standards regarding the disclosure and sharing of information with other countries. “The tax haven tag was first placed on the country in 2011 when Nicholas Sarkozy first publicly declared that the international community should shun tax havens. In that year, the country did not have any information disclosure arrangements with other countries. The country has also made many information disclosure agreements with many countries in order to comply with international transparency rules.

Despite Botswana’s bad reputation of being among the bad boys of the international arena, this country has been defensive of its tax administration and dismissed the notion of it being a tax haven.  Last year during the 19th meeting of the African the then Minister of Investment, Trade and Industry Vincent Seretse said Botswana is not a tax haven and does not deserve to be in any blacklist. Seretse attacked France’s constant “unsolicited” blacklisting of this country. He said Botswana complies with all the international tax standards and has a transparent tax jurisdiction.

Minister of Finance and Economic Development Matambo also rejects the tax haven brand on Botswana and in his Budget Speech he suggested calling Botswana a tax haven is just a mere perception by Europe. In the July press conference he said “we disagree with them, that we are not a tax haven.”


 Recently, Minister of Investment, Trade and Industry Bogolo Kenewendo was confident that this country being called a tax haven is a thing of the past. Caribbean Pacific –European Union, the then Minister of Trade Vincent Seretse rejected France’s notion that Botswana is a tax haven. Botswana adopted a seemingly sovereign and bold stance through Seretse who called the EU blacklisting “unsolicited.”

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China’s GDP expands 3% in 2022 despite various pressures

2nd February 2023
China’s Gross Domestic Product (GDP) expanded by 3% year-on-year to 121.02 trillion yuan ($17.93 trillion) in 2022 despite being mired in various growth pressures, according to data from the National Bureau Statistics.

The annual growth rate beat a median economist forecast of 2.8% as polled by Reuters. The country’s fourth-quarter GDP growth of 2.9% also surpassed expectations for a 1.8% increase.

In 2022, the Chinese economy encountered more difficulties and challenges than was expected amid a complex domestic and international situation. However, NBS said economic growth stabilized after various measures were taken to shore up growth.

Industrial output rose 3.6% in 2022 over the previous year, while retail sales slightly shrank by 0.2% data show that fixed-asset investment increased 5.1% over 2021, with a 9.1% hike in manufacturing investment but a 10% fall in property investment.

China created 12.06 million new jobs in urban regions throughout the year, surpassing its annual target of 11 million, and officials have stressed the importance of continuing an employment-first policy in 2023.

Meanwhile, China tourism market is a step closer to robust recovery. Tourism operators are in high spirits because the market saw a good chance of a robust recovery during the Spring Festival holiday amid relaxed COVID-19 travel policies.

On January 27, the last day of the seven-day break, the Ministry of Culture and Tourism published an encouraging performance report of the tourism market. It said that domestic destinations and attractions received 308 million visits, up 23.1% year-on-year. The number is roughly 88.6% of that in 2019, they year before the pandemic hit.

According to the report, tourism-related revenue generated during the seven-day period was about 375.8 billion yuan ($55.41 billion), a year-on-year rise of 30%. The revenue was about 73% of that in 2019, the Ministry said.

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Jewellery manufacturing plant to create over 100 jobs

30th January 2023

The state of the art jewellery manufacturing plant that has been set up by international diamond and cutting company, KGK Diamonds Botswana will create over 100 jobs, of which 89 percent will be localized.

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Investors inject capital into Tsodilo Resources Company

25th January 2023

Local diamond and metal exploration company Tsodilo Resources Limited has negotiated a non-brokered private placement of 2,200, 914 units of the company at a price per unit of 0.20 US Dollars, which will provide gross proceeds to the company in the amount of C$440, 188. 20.

According to a statement from the group, proceeds from the private placement will be used for the betterment of the Xaudum iron formation project in Botswana and general corporate purposes.

The statement says every unit of the company will consist of a common share in the capital of the company and one Common Share purchase warrant of the company.

Each warrant will enable a holder to make a single purchase for the period of 24 months at an amount of $0.20. As per regularity requirements, the group indicates that the common shares and warrants will be subject to a four month plus a day hold period from date of closure.

Tsodilo is exempt from the formal valuation and minority shareholder approval requirements. This is for the reason that the fair market value of the private placement, insofar as it involves the director, is not more than 25% of the company’s market capitalization.

Tsodilo Resources Limited is an international diamond and metals exploration company engaged in the search for economic diamond and metal deposits at its Bosoto Limited and Gcwihaba Resources projects in Botswana.  The company has a 100% stake in Bosoto which holds the BK16 kimberlite project in the Orapa Kimberlite Field (OKF) in Botswana.

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