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Some farmers shouldn’t pay tax

LIVESTOCK REARING

It is very rare for the taxman to give away taxes. In fact, it goes against the taxman’s way of thinking to allow any person to conduct any business without him collecting any taxes. I want to discuss the provisions of the Income Tax Act which stipulate that certain farmers should not pay income tax. In other words, such farmers can run profitable businesses and never pay income taxes at all. In this article, words importing the masculine shall be deemed to include the feminine.

The first type of farming activity that is not subjected to income tax, as provided by section 30 of the Income Tax Act, is the rearing of cattle, goats or sheep for slaughter by a Botswana-resident individual. The resident individual should rear not more than 300 cattle or 1800 goats or sheep in order not to pay income tax. Further, such person is not required to keep books of accounts or declare income from the farming activities to BURS. However, if he earns any other income such as rental income, the other income may be subject to income tax.

As stated above, the farmers should be rearing the stated livestock for slaughter. This simply means that the livestock will be reared and for eventual slaughter or sold for slaughter. If the livestock is reared for any other purpose such as dairy, then the tax exemption falls away.
It is also important to point out that this exemption applies to both citizens and non-citizens, as long as they are resident in Botswana. From a tax perspective, a person is considered resident when they spend at least 183 days in Botswana in a tax year or are permanently resident in Botswana during the tax period.

It should also be stated that if the farming activities are conducted through a company or such other vehicle, then the exemption also falls away. In other words, one should never conduct this business through a company if they want to enjoy the above-mentioned income tax exemption. Further, any other livestock farming activities such as the rearing of donkeys, chickens and crocodiles is subject to tax, regardless of the number of the livestock reared.

The only farming activity that is exempt from income tax, as stated above, is the rearing for slaughter of not more than 300 cattle, 1800 goats or 1 800 sheep. This also means that if the livestock exceeds the stated numbers, then the farmer becomes subject to tax. For example, a resident individual who rears 400 cattle for slaughter is subject to income tax, i.e. they should keep books of accounts and file income tax returns on such businesses.

However, whilst I have stated above that the stated farmers do not suffer tax in terms of section 30 of the Income Tax Act, there is another section 58 which was put through in 2011 which imposes a 4% tax on the sale of the livestock to BMC or butcheries. The section appears not to speak to section 30 as it seeks to tax the farmers’ income which is not subject to tax. In other words, such farmers were never meant to be taxed at all, if we are to read the Act correctly.

The 4% tax is deducted from their sales of livestock, regardless of the mentioned exemption. However, whilst the farmers suffer the 4% tax, they are still not required to keep accounts and pay income tax on their profits, provided they meet the criteria stated above. The 4% tax become a final tax, once deducted by the likes of BMC and butcheries.

WHAT ABOUT DRYLAND FARMING?

Any person who conducts dryland farming is also not supposed to suffer income tax. Dryland farming includes crop farming where there is no irrigation and where the exposure of soil is avoided to reduce the loss of water through transpiration. Such farmers engage in a lot of mulching and related activities, to conserve moisture. In other words, it is rather an old way of farming. Persons engaged in such activities are exempt from income tax regardless of how much they earn from such activities provided they don’t farm more than 100 hectares. I must state that this group of farmers must not pay income tax at all.

WHAT ABOUT VAT?

Well, despite the income tax exemption, the above-mentioned farmers would still be required to comply with VAT obligations that arise from their farming activities. In other words, if they exceed P1m in annual turnover, they would need to register for VAT and comply with VAT filing, from time to time.

Well folks, I hope that was insightful. As Yours Truly says goodbye, remember to pay to Caesar what belongs to him. If you want to join our Tax Whatsapp group, send me a text on the cell number below. Jonathan Hore writes on behalf of Aupracon Tax Specialists and feedback can be relayed to jhore@aupracontax.co.bw or 7181 5836. This article is of a general nature and is not meant to address particular matters of any person.

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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
Samson

… 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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‘RO, ‘RO ‘RO YOUR ‘BOT

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 www.willrobotstakemyjob.com    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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