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Income Tax Act Amendment: Penalties for non-compliance


There are various ways that BURS encourages tax compliance; some of these methods such as penalties and interest are also used as a way of discouraging non-compliance by taxpayers.

The Act was amended to introduce a section that deals with non-compliance due to tax avoidance and transfer mispricing. The penalties that will be applicable for non-compliance will now be P10, 000 or 200% of the tax that was lost due to the avoidance or mispricing, whichever is greater. This means that if a taxpayer’s avoidance or mispricing had resulted in a tax loss of P1m, they will have to pay P3m. That is the P1m tax liability and P2m as the penalty, these are efforts by the government to deter non-compliance due to aggressive tax planning by taxpayers.

It should be noted that this penalty doesn’t include interest on tax that is outstanding which is normally more than 10o% of the tax liability. Unlike loans issued by banks and other financial institutions, the induplum rule does not apply to interest on tax. The rule states that interest should not exceed the principal amount.

Therefore taxpayers are encouraged to ensure that they conduct their affairs at arm’s length and practice tax avoidance that is within the scope of the law. Another penalty introduced is failure to comply with section 69 which deals with the provision of information to the Commissioner General (CG). Such information ranges from tax returns, books of accounts and any other information that the CG may need to assess a taxpayer.

Failure to provide such information will result in a taxpayer paying a maximum penalty of P10, 000. In relation to failure to provide transfer pricing documentation, taxpayers will be subject to a maximum penalty of P500, 000. This penalty may only be mitigated up to P250, 000 by the CG where there are negotiations between the taxpayer and the CG for recovery of the tax payable. Therefore, this means that a minimum of P250, 000 will be payable when someone fails to furnish the CG with transfer pricing documentation. As for the P10, 000 the mitigation can go up to P0 depending on the reasons advanced by the taxpayer and the assessment by the CG.

Penalties that deal with general non-compliance under section 122 such as failure to submit returns, failure to keep records in English or Setswana, and other provisions of the Income Tax Act have been increased from P1, 000 and P10 to P10, 000 and P100 respectively. The P10, 000 will be once off and P100 will apply per day during the time that the default to pay tax occurs. Taxpayers are encouraged to request for mitigation of waiver of these penalties where they have just cause or a sound business reason that resulted in the non-compliance.

Small Medium Micro Enterprises (SMMEs) can be faced with such due to various challenges that they face and are therefore highly advised to use this provision (section 129) to their advantage to avoid cash flow problems that may besiege them due to non-compliance arising from day to day challenges in their sector.

Furthermore they are advised to maintain their business records as another mitigation strategy as they don’t know what information the CG may require from them and when. Where a taxpayer does not have space, the use of e platforms such as google drive and cloud may be useful to them. Use of tax professionals in drafting pleas for mitigation of penalties may also be helpful as they deal with the matters regularly. As stated above, mitigation of penalties up to P0 does not apply to transfer pricing documentation.
Tumelo Rannau writes in personal capacity

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Export Processing Zones: How to Get SEZA to Sizzle

23rd September 2020
Export Processing Zone (EPZ) factory in Kenya

In 2005, the Business & Economic Advisory Council (BEAC) pitched the idea of the establishment of Special Economic Zones (SEZs) to the Mogae Administration.

It took five years before the SEZ policy was formulated, another five years before the relevant law was enacted, and a full three years before the Special Economic Zones Authority (SEZA) became operational.

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Egypt Bagged Again

23rd September 2020

… courtesy of infiltration stratagem by Jehovah-Enlil’s clan

With the passing of Joshua’s generation, General Atiku, the promised peace and prosperity of a land flowing with milk and honey disappeared, giving way to chaos and confusion.

Maybe Joshua himself was to blame for this shambolic state of affairs. He had failed to mentor a successor in the manner Moses had mentored him. He had left the nation without a central government or a human head of state but as a confederacy of twelve independent tribes without any unifying force except their Anunnaki gods.

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23rd September 2020

If I say the word ‘robot’ to you,  I can guess what would immediately spring to mind –  a cute little Android or animal-like creature with human or pet animal characteristics and a ‘heart’, that is to say to say a battery, of gold, the sort we’ve all seen in various movies and  tv shows.  Think R2D2 or 3CPO in Star Wars, Wall-E in the movie of the same name,  Sonny in I Robot, loveable rogue Bender in Futurama,  Johnny 5 in Short Circuit…

Of course there are the evil ones too, the sort that want to rise up and eliminate us  inferior humans – Roy Batty in Blade Runner, Schwarzenegger’s T-800 in The Terminator,  Box in Logan’s Run,  Police robots in Elysium and  Otomo in Robocop.

And that’s to name but a few.  As a general rule of thumb, the closer the robot is to human form, the more dangerous it is and of course the ultimate threat in any Sci-Fi movie is that the robots will turn the tables and become the masters, not the mechanical slaves.  And whilst we are in reality a long way from robotic domination, there are an increasing number of examples of  robotics in the workplace.

ROBOT BLOODHOUNDS Sometimes by the time that one of us smells something the damage has already begun – the smell of burning rubber or even worse, the smell of deadly gas. Thank goodness for a robot capable of quickly detecting and analyzing a smell from our very own footprint.

A*Library Bot The A*Star (Singapore) developed library bot which when books are equipped with RFID location chips, can scan shelves quickly seeking out-of-place titles.  It manoeuvres with ease around corners, enhances the sorting and searching of books, and can self-navigate the library facility during non-open hours.

DRUG-COMPOUNDING ROBOT Automated medicine distribution system, connected to the hospital prescription system. It’s goal? To manipulate a large variety of objects (i.e.: drug vials, syringes, and IV bags) normally used in the manual process of drugs compounding to facilitate stronger standardisation, create higher levels of patient safety, and lower the risk of hospital staff exposed to toxic substances.

AUTOMOTIVE INDUSTRY ROBOTS Applications include screw-driving, assembling, painting, trimming/cutting, pouring hazardous substances, labelling, welding, handling, quality control applications as well as tasks that require extreme precision,

AGRICULTURAL ROBOTS Ecrobotix, a Swiss technology firm has a solar-controlled ‘bot that not only can identify weeds but thereafter can treat them. Naio Technologies based in southwestern France has developed a robot with the ability to weed, hoe, and assist during harvesting. Energid Technologies has developed a citrus picking system that retrieves one piece of fruit every 2-3 seconds and Spain-based Agrobot has taken the treachery out of strawberry picking. Meanwhile, Blue River Technology has developed the LettuceBot2 that attaches itself to a tractor to thin out lettuce fields as well as prevent herbicide-resistant weeds. And that’s only scratching the finely-tilled soil.

INDUSTRIAL FLOOR SCRUBBERS The Global Automatic Floor Scrubber Machine boasts a 1.6HP motor that offers 113″ water lift, 180 RPM and a coverage rate of 17,000 sq. ft. per hour

These examples all come from the aptly-named site    because while these functions are labour-saving and ripe for automation, the increasing use of artificial intelligence in the workplace will undoubtedly lead to increasing reliance on machines and a resulting swathe of human redundancies in a broad spectrum of industries and services.

This process has been greatly boosted by the global pandemic due to a combination of a workforce on furlough, whether by decree or by choice, and the obvious advantages of using virus-free machines – I don’t think computer viruses count!  For example, it was suggested recently that their use might have a beneficial effect in care homes for the elderly, solving short staffing issues and cheering up the old folks with the novelty of having their tea, coffee and medicines delivered by glorified model cars.  It’s a theory, at any rate.

Already, customers at the South-Korean  fast-food chain No Brand Burger can avoid any interaction with a human server during the pandemic.  The chain is using robots to take orders, prepare food and bring meals out to diners.  Customers order and pay via touchscreen, then their request is sent to the kitchen where a cooking machine heats up the buns and patties. When it’s ready, a robot ‘waiter’ brings out their takeout bag.   

‘This is the first time I’ve actually seen such robots, so they are really amazing and fun,’ Shin Hyun Soo, an office worker at No Brand in Seoul for the first time, told the AP. 

Human workers add toppings to the burgers and wrap them up in takeout bags before passing them over to yellow-and-black serving robots, which have been compared to Minions. 

Also in Korea, the Italian restaurant chain Mad for Garlic is using serving robots even for sit-down customers. Using 3D space mapping and other technology, the electronic ‘waiter,’ known as Aglio Kim, navigates between tables with up to five orders.  Mad for Garlic manager Lee Young-ho said kids especially like the robots, which can carry up to 66lbs in their trays.

These catering robots look nothing like their human counterparts – in fact they are nothing more than glorified food trolleys so using our thumb rule from the movies, mankind is safe from imminent takeover but clearly  Korean hospitality sector workers’ jobs are not.

And right there is the dichotomy – replacement by stealth.  Remote-controlled robotic waiters and waitresses don’t need to be paid, they don’t go on strike and they don’t spread disease so it’s a sure bet their army is already on the march.

But there may be more redundancies on the way as well.  Have you noticed how AI designers have an inability to use words of more than one syllable?  So ‘robot’ has become ‘bot’ and ‘android’ simply ‘droid?  Well, guys, if you continue to build machines ultimately smarter than yourselves you ‘rons  may find yourself surplus to requirements too – that’s ‘moron’ to us polysyllabic humans”!

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