Connect with us
Advertisement

Individuals can’t deduct the 3% construction tax

JONATHAN HORE

You may know that certain persons are, per the Income Tax Act, required to deduct a 3% tax on payments made in respect of construction contracts. The 3% tax is a tax falling under a category of what is commonly referred to as Other-withholding taxes. A withholding tax (WHT) is a tax required to be deducted at source by the payer to the payee in respect of amounts arising from construction contracts.

Whilst the 3% tax is in most instances deductible by companies, NGOs and government departments, one question which is never clear is whether individuals who are not in business should also deduct the tax. This issue arises from the fact that the section of the Income Tax Act (hereinafter Act) requiring that the tax be deducted reads as follows, ‘Every person who makes any payment to any person under a contract relating to construction operations shall deduct tax from such payment.’ You see, the word ‘person’ includes even our 75 year old granny in the village who pays for construction contracts. So, I want to analyse whether individuals not in business should deduct the 3% tax. In this article, words importing the masculine shall be deemed to include the feminine.

WHAT’S THIS 3% TAX?

The 3% construction tax is imposed by the Act on payments made in respect of construction contracts which are at least P 5 000 in value. I highlighted above that the Act states that the tax shall be deducted by every ‘person’ which implies that there are no exceptions. I will get back to this matter further below. On another note, the Act does not define construction contracts but it is common cause that the term includes, among others, the construction of the following: houses, office complexes, bridges, dams, tarred roads and sewerage works.

The payer of the amount charged on construction contracts is mandated by the Act to deduct the tax and remit the amount so deducted to BURS no later than the 15th day of the month following that of payment of the contractor. Failure to remit the tax to BURS within the stipulated time exposes the payer to an annual effective interest rate of 19.56% or compounded 1.5% interest per month or part thereof. Further, non-deduction of the tax makes the payer personally liable for the tax. You certainly don’t want to find yourself in such a situation; believe you me.

INDIVIDUALS CAN’T WITHHOLD

Now, let me get back to the main issue of today’s discussion, being that individuals who are not in business should ideally not deduct the 3% WHT. This is my view and you are free to disagree with it. My view is based on the points below:
Hard-to-tax: Individuals who are not in business cannot deduct this tax because they belong to a group of taxpayers who are by default, sworn tax evaders.
 

This group is commonly called the Hard-to-Tax. By nature, individuals do not volunteer to pay tax as their personal interests take precedence over tax laws. The fact that individuals can’t voluntarily pay their taxes explains why BURS, just like all tax authorities worldwide requires employers to deduct PAYE at source. If that were not the case, BURS would surely lose out as the majority of individuals not in business simply do not comply with taxes. Now, if this group of taxpayers can’t pay their own taxes, do you think that BURS would get anything if they were to deduct the 3% tax from other persons? They would simply squander the tax and play catch-me-if-you-can with BURS. This would be a losing game for the taxman.

 Impracticable: If individuals who are not in business were required to deduct the 3% tax, some of them could actually deduct the tax and then discover that there was no way of taking it to BURS. Practically, anyone who deducts such taxes should be registered for WHTs with BURS (i.e. have a WHT account). Most such persons should first be registered for income tax, implying that those who are not registered for tax would simply keep the tax at home and finally squander it.

If individuals not in business were to deduct the 3% tax, that would mean that every person in the country including those in the villages would need to register for WHT with BURS. Do you think that it would be practicable to require our aged mothers and fathers in the villages to register for tax, deduct the 3% tax and remit it to BURS?

That would simply be impossible. How many people on the streets, even those who are learned, understand that there is a section 57 and a Sixth Schedule in the Act which requires deduction of some 3% tax? Further, assuming that somehow tax knowledge was widespread such that everyone in towns and villages understood taxes, imagine how long the queues at BURS would be on the 15th of each month with individuals wanting to pay taxes. And also imagine how BURS would be inundated with cases of individuals who would deduct tax and never give the payee proof of payment of the tax in the form of withholding tax certificates (ITW 9s).

Exemptions for individuals: Whilst there is no specific exemption for payments made in respect of construction contracts by individuals not in business, other WHTs provisions such as on rent simply state that only businesses should deduct the tax. In other words, individuals not in business can’t be given a liability to collect state funds. So, the exact reasons that the legislature had in mind when he prescribed that tax on rent shouldn’t be deducted by such individuals should apply to those individuals deducting the 3% WHT. There is no difference between the principle of these two taxes; so technically, they should be applied uniformly.

Contra-fiscum principle: The contra-fiscum principle prescribes that where there is anything unclear in a taxing Act, the courts rule in favour of taxpayers. So, as stated above, there is no exemption on individuals not in business but again it is impracticable for them to deduct the tax and it is in such cases where the contra-fiscum principle applies. Effectively,  if such matters were to be laid before the courts, the taxpayers would win, i.e. they can’t be obligated to deduct tax, for the reasons stated above.

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 is the Managing Tax Consultant 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.

Continue Reading

Columns

Parricide at Herod’s Court

25th January 2021
SAILI

A wife, uncle, and two in-laws fall at the hands of Judah’s despot

The pre-eminent Jewish chronicler, Flavius Josephus, said of Herod the Great that he was “blessed with every gift of looks, body, and mind” but he was a “slave to his passions”. This was in the context of a gloating bloodlust.

His sword knew no sacred cows: neither his own kids, wives, in-laws, next of kin, nor bosom friends were immune from it. He is on record as pestering Caesar Augustus with a barrage of letters seeking permission to execute his own flesh and blood, prompting the Roman emperor to at one time quip that, “It is better to be Herod’s pig than his son”, which was apt: as a “Jew”, Herod did not eat pork and therefore in the event that he kept any pigs, they would never have to be killed.

You are by now well-apprised of the death of Hyrcanus II by the same Herod, General Atiku, in 30 BC. Hyrcanus, a Hasmonean ruler of Judah twice over, was actually the grandfather of Mariamne I, Herod’s most beloved wife and his second of up to 10 wives. It was Mariamne’s own mother Salome, who dreading Herod’s pathological savagery, pitched Mariamne to Herod in the hope that that would insure her family from Herod’s murderous caprices.

Now, Mariamne, General, was as much a stunning beauty as her younger brother Aristobulus III was breathtakingly good-looking. Having tied the knot with Herod in 37 BC, Mariamne had prevailed over her husband to install Aristobulus as High Priest. The post had fallen vacant on the death of Antigonus in 37 BC and Herod had appointed one Ananel, who had no ties whatsoever to the Hasmoneans, the first such in more than a century, in his place. Unable to resist the spirited entreaties of his beloved wife, who had also lobbied Queen Cleopatra of Egypt and her beau Mark Anthony, Herod gave in and replaced Ananel with Aristobulus, who was only 16 years old, in 36 BC.

Because of his enormous charisma and overall affability, Aristobulus was a hit with the masses despite his tender age and Herod was envious of the young man’s rock star-like popularity. To make doubly sure the young man did not harbour a seditious ace up his sleeve, the morbidly paranoid Herod had his spooks watch on both Aristobulus and his mother round the clock. Sensing imminent danger, Aristobulus contacted Cleopatra, asking for a pre-emptive safe passage to Egypt and there enjoy absolute freedom. When Herod got wind of this, he decided to get rid of Aristobulus as he did not wish him to be a perennial thorn in his flesh from the utter safety of self-imposed exile.

The opportunity came at a banquet in Jericho which was organised by Aristobulus’ mother. There, Herod had one of his henchmen cause Aristobulus to drown during a dusk time horseplay in a swimming pool. Of course Herod would forever maintain the drowning was accidental when everybody knew it was in truth a tactical elimination. Poor Aristobulus was only 17 years old having been born in 56 BC. He was the last Hasmonean High Priest and was replaced by the previously deposed Ananel, who was to remain in that position till 29 BC.

HEROD ACQUITTED OVER THE ARISTOBULUS DEATH

It need not be over-emphasised, General, that Mariamne and her mother Alexandra did not take Herod’s line over the all too untimely demise of Aristobulus lying down. If he had reckoned that with the death of Aristobulus he had gotten rid of potentially the most potent threat to his omnipotence, he was totally mistaken. Herod had actually simply fanned the flames of intrigue against him, for mother and daughter confronted him and accused him of murdering their boy in cold blood.

Nor did the two Iron Ladies end matters there: Alexandra wrote a lachrymal letter to Cleopatra to get her to bring her influence to bear on Mark Anthony so that Herod paid dearly and likewise for his nefarious act. Anthony, who at the time was the Roman colossus in charge of the whole of the Middle East, was persuaded and during a visit to Laodicea (in modern-day Turkey, though some accounts say it was Rhodes in Cyprus), he commanded Herod to report to him forthwith and exculpate himself over the affair.

Although Herod put a brave face on the matter, General, he was rather unsure of his eventual fate after the trial. He also suspected rightly or wrongly that Anthony had a thing for the voluptuously beautiful Mariamne and the last thing Herod wanted was for any other man to bed his beloved Mariamne even in death. So before he set off for Laodicea, Herod instructed his uncle Joseph, who was married to his sister Salome, to make sure that in the event that Anthony sentenced him to death, he should immediately put her to the sword. He also detailed a certain Sohemus, a most trusted aide, to stand sentry over the entire womenfolk at the palace.

Herod, however, had the nine lives of a cat, General. Using his immense rhetorical skills and the time-honoured palm greasing, he won himself an acquittal. Meanwhile, the Judean rumourville was abuzz with chatter that Herod had been summarily executed by Anthony, as a result of which people became spendthrifts of their tongues.

Both Joseph and Sohemus disclosed to Mariamne the instructions Herod had left them with in relation to her fate once he was no more. Mariamne was both livid and distraught that her husband regarded her as so easily expendable when outwardly he cherished her beyond words. To her mind, his arrangements with Joseph had nothing to do with love but sprang from sheer monstrosity. She probably thanked God that he was dead, but the fact of the matter was that he was not and when he at long last turned up, she did not want to have anything to do with him, including the conjugation which he so eagerly pined for after such an extended absence.

HEROD KILLS HIS WIFE AND HIS UNCLE

Now, if Herod had a kind of Svengali, General, it was his youngest sister Salome. Salome (65 BC-10 AD) was the most powerful woman at Herod’s court. A sly, scheming, and manipulating vixen, she arguably more than any other living being had the most sway in a negative sense on her brother, who took practically whatever she said as gospel truth.

Let us nevertheless, General, take stock of the fact that the bulk of what we learn about Salome comes from Flavius Josephus, who himself relied on the writings of Herod’s court historian Nicolaus of Damascus. For one reason or the other, Nicolaus did not see eye to eye with Salome and it is therefore possible that much of what Nicolaus relates of her is embellished to smear her before the court of history.
Upon his return, Herod was told of the rumours of his death and so was surprised to find Mariamne alive when Joseph and Sohemus should in the circumstances have had her killed if indeed they were loyal to him. In fact, Joseph had even put Mariamne and Alexandra into the safe custody of Roman legions stationed in Judea just in case Jewish malcontents who abhorred Herod turned their wrath on them.

But there was more. Salome reported to Herod that Mariamne, who she hated like the plague, had had sexual relations with both Joseph and Sohemus, this being Mariamne’s reward to them for dishing out to her the dirt on Herod, and that she had on several occasions before attempted to poison him. Now, no one would hump Herod’s most beloved wife and get away scotfree. It is therefore small wonder that Herod straightaway ordered the execution of Joseph and Sohemus. Joseph was 61 years old at the time of his death in 34 BC, having been born in 95 BC. In the case of Mariamne herself though, he had her subjected to a formal court trial not on charges of adultery but of attempted regicide.

Herod had hoped that the court would acquit her, whereupon he would make bygones be bygones so great was his love for the woman, but sadly for him, General, she was found guilty and sentenced to death. Even then, Herod tactfully dilly-dallied on signing the writ of execution and simply had his wife detained at a fortress for some time until Salome prevailed over him to execute her at long last. Writes Josephus: “Thus, with the death of the noble and lovely Mariamne ended the glorious history of the Hasmonean High Priest Mattathias and his descendants.”

For a long time to come though, General, Herod was haunted by the death of his wife to the point of even sometimes coming across as if he had lost his mind. “When Herod realised what this meant (the death sentence passed on Mariamne), he tried in vain to have the verdict changed, but Salome did not rest until the death penalty was carried out,” Josephus informs us. “Herod was heartbroken; nothing could comfort him for the loss of his lovely wife.

For seven years he refused to have her body buried, and held it, embalmed, in his palace. Afterwards, he became so melancholy and despondent, nothing interested him or could arouse any enthusiasm in him for living … He was so far conquered by his passion, that he would order his servants to call for Mariamne, as if she were still alive, and could still hear them … He tried hard to forget his trouble by going hunting and banqueting, but nothing helped. Herod built new cities and erected temples and palaces. He also named a tower in honour of Mariamne.”

HEROD SLAYS SISTER’S EX-HUBBY

Mariamne’s death was not the only one which Herod perpetrated through the instrumentality of Salome. There were actually several and included those of her own husband Costobarus. Salome was married four times, to her uncle Joseph (45 BC); Costobarus (34 BC); Sylleus (circa 27 BC); and Alexas (20 BC).

Like the Herod clan, Costobarus was of Idumean stock. It was Costobarus Herod had made governor of Idumea and Gaza and upon Joseph’s death had him tie the knot with Salome, with the couple eventually siring two children, Berenice and Antipater III. Costobarus, though, soon began to harbour monarchical ambitions of his own and wrote to Cleopatra beseeching her to persuade Mark Anthony to make Idumea independent of Herod and install him (Costobarus) as Rome’s client King of the territory.

Of course upon learning of this, Herod was not amused. It was Salome who pleaded with him not to put her husband to the sword. Next time, however, a dumped Costobarus was not so lucky. Seven years after their marriage, Salome and Costobarus parted ways and a possibly hurt Salome decided to exact vengeance. She informed her brother that he had been harbouring two fugitives from Herodian justice for a full 12 years at his own farm.

The two were simply known as the Sons of Baba. Baba ben Babuta, their father and clan patriarch, was related to the Hasmonean ruler Antigonus, who Herod had replaced and killed in 37 BC with the help of Roman legions. Baba and his sons had resisted Herod at the time, with his sons henceforth persisted in insurrectionist activity against Herod. Baba himself had been captured and blinded by Herod but spared anyway as he no longer posed any threat. Writes Josephus: “Now the Sons of Babas were of great dignity, and had power among the multitude, and were faithful to Antigonus, and were always raising calumnies against Herod, and encouraged the people to preserve the government to that royal family (the Hasmoneans) which held it by inheritance.”

Costobarus had provided the Sons of Baba an indefinite lair “supposing that their preservation might be of great advantage to him in the changes of government afterward”. Following the Salome tip, Herod had Costobarus and the Sons of Baba summarily executed “so that none was left alive of the family of Hyrcanus (the Hasmonean), and the kingdom was wholly in Herod’s power, there being no one of high rank to stand in the way of his unlawful acts” per Josephus.

NEXT WEEK: HEROD’S WRATH ON HIS OWN SONS

Continue Reading

Columns

WHAT’S UP WITH WHATSAPP?

25th January 2021

In early January, WhatsApp, part of Facebook Inc., began alerting its 2 billion users to an update of its privacy policy which, should they want to keep using the popular messaging app, they have to accept. Much of the policy, which is about commercialising WhatsApp, states ‘WhatsApp receives information from, and shares information with, the other Facebook Companies.

We may use the information we receive from them, and they may use the information we share with them, to help operate and market services’. WhatsApp is now reserving the right to share data it collects about you with the broader Facebook network, which includes Instagram, regardless of whether you have accounts or profiles there, claiming it needs it to help operate and improve its offerings. More broadly, almost all of the $21.5 billion in revenues which Facebook generated in the third quarter of 2020 came from advertising and there is currently none in WhatsApp.

The company now wants to be able to serve more targeted ads to people on Facebook and Instagram by also garnering their usage habits on WhatsApp and enabling businesses take payments via WhatsApp for items that were selected on other Facebook sites. For long-time users, the option to share data with Facebook was made available in 2016, but it was just that: optional and temporary. It was now to become mandatory for everybody from Feb. 8 but owing to a massive backlash, the company has delayed that to May 15 to try and persuade users to sign up to the new Ts and Cs.

WhatsApp on Monday attempted to address the uproar over privacy concerns with a post on its website, explaining that the update was designed to aid businesses on its platform, as it reiterated in Friday’s post.

“We want to be clear that the policy update does not affect the privacy of your messages with friends or family in any way. Instead, this update includes changes related to messaging a business on WhatsApp, which is optional, and provides further transparency about how we collect and use data.”

These new terms have caused an outcry among technology experts, privacy advocates, billionaire entrepreneurs and government organisations and triggered a wave of defections to rival services. Elon Musk has urged his followers to switch to Signal and the governments of Turkey and India have threatened to block the app if it insists on proceeding.

‘WhatsApp’s updated privacy policy verges on user surveillance and threatens India’s security’, a petition filed in an Indian court said on Thursday, presenting another legal challenge for the Facebook Inc. -owned messenger. “It virtually gives a 360-degree profile into a person’s online activity,” lawyer Chaitanya Rohilla told the Delhi High Court. Many Indian users have began installing rival apps like Signal and Telegram, pushing WhatsApp to begin a costly advertising campaign to calm its 400 million customer-base, the largest of any country. The change has also met with a challenge in Turkey with the country’s Competition Board this week launching an investigation into the messaging service and its parent company.

Elsewhere too, in spite of Whatsapp protestations, millions of its users are already migrating to alternative platforms. Signal saw 7.5 million downloads last week,  a 4,200% spike since the previous week and large swaths of users also jumped to Telegram, as the platform gained 9 million new users last week, up 91% from the previous week. Both apps are now topping Google and Apple’s app stores,

Facebook could possibly learn a lesson from history here. Every past empire – Aztec, Mayan, Greco-Roman, Sumerian, Mongol, Chinese, Ottoman and more recently British, all saw their star rise, their glory swell, their boundaries grow and yet each eventually fell, often the instigators of their own downfall.

They expanded too far too fast and could not control what they had initially conquered. And now it looks like the same fate might await this large tech giant. Parent company Facebook has also come under fire recently for overt and covert censorship policies with questions raised as to partisanship and curtailment of freedom of speech. Thus one would have to question the wisdom of the timing of this new Whatsapp privacy policy, if nothing else.

To understand its influence and control one only has to check out the un-smart sector of the mobile phone industry which for some time has offered handsets a small step up from the basic starter sets with Facebook and Whatsapp as default screen app settings. These limited internet access options have allowed millions of users to connect with affordable data bundle packages.

And for Google smartphone subscribers, the search engine automatically connects its base to Whatsapp and Facebook – one big, happy family. Facebook is also seamlessly linked to Paypal offering contact-less charges for its boosted post advertising, a somewhat sinister partnership which accesses their Paypal log-in and authorisation details without the need to inform the payee – the transaction is simply deducted automatically from the registered credit card. This is Big Brother with a blue logo.

The bottom line here is that if you have any privacy issues at all – and you probably should – you might as well make the switch now before you are forced to sign away your rights in May. And the plus part is that both Signal and Telegram have the technological edge over Whatsapp anyway, the latter even being accessible on multiple platforms simultaneously, not just on your phone.
Empires take time to crumble and Facebook is not in imminent danger but information is a weapon that can be used in any war, even a virtual conflict, so don’t give this giant any more ammunition than it already has.

Continue Reading

Columns

The Daring Dozen at Bari

8th December 2020
JEFF---Batswana-smoke-unit

Seventy-seven years ago, on the evening of December 2, 1943, the Germans launched a surprise air raid on allied shipping in the Italian port of Bari, which was then the key supply centre for the British 8th army’s advance in Italy.

The attack was spearheaded by 105 Junkers JU88 bombers under the overall command of the infamous Air Marshal Wolfram von Richthofen (who had initially achieved international notoriety during the Spanish Civil War for his aerial bombardment of Guernica). In a little over an hour the German aircraft succeeded in sinking 28 transport and cargo ships, while further inflicting massive damage to the harbour’s facilities, resulting in the port being effectively put out of action for two months.

Over two thousand ground personnel were killed during the raid, with the release of a secret supply of mustard gas aboard one of the destroyed ships contributing to the death toll, as well as subsequent military and civilian casualties. The extent of the later is a controversy due to the fact that the American and British governments subsequently covered up the presence of the gas for decades.

At least five Batswana were killed and seven critically wounded during the raid, with one of the wounded being miraculously rescued floating unconscious out to sea with a head wound. He had been given up for dead when he returned to his unit fourteen days later. The fatalities and casualties all occurred when the enemy hit an ammunition ship adjacent to where 24 Batswana members of the African Pioneer Corps (APC) 1979 Smoke Company where posted.

Thereafter, the dozen surviving members of the unit distinguished themselves for their efficiency in putting up and maintaining smokescreens in their sector, which was credited with saving additional shipping. For his personal heroism in rallying his men following the initial explosions Company Corporal Chitu Bakombi was awarded the British Empire Medal, while his superior officer, Lieutenant N.F. Moor was later given an M.B.E.

Continue Reading
Do NOT follow this link or you will be banned from the site!