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Is there 3% tax on dust roads works?


Welcome folks to today’s instalment of my weekly tax articles. I am sure that all of us have used a dust road at one point or the other and I want to start by asking you whether you would say that dust roads are constructed, in the true meaning of the word?

Is it really construction or it is some road making works or something close to that? You may also know that certain persons are, per the Income Tax Act, required to deduct a 3% tax on payments made in respect of construction contracts. Well, that being the case, should there be the 3% tax on payments made for dust road works? I must state that this is a very debatable matter and therefore different taxpayers accord it different treatment.

Let me also state that the Income Tax Act (Act) does not categorically deal with the matter at hand. The said Act simply prescribes that, ‘every person who makes any payment to any person under a contract relating to construction operations shall deduct tax from such payment.’ The Act does not define the phrase ‘construction operations,’ which leaves us to make our own assessment on the payments made for dust road-making works. In this article, words importing the masculine shall include the feminine.


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. On another note, the Act does not define ‘construction operations’ 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 it to BURS no later than the 15th day of the month following that of payment of the amount to the contractor. Failure to remit the tax to BURS within the stipulated time exposes the payer to annual effective interest rate of 19.56% or compounded 1.5% interest per month or part thereof. Further, failure to deduct 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.


I don’t want to insinuate that the phrase ‘construction operations’ used in the Act points to the fact that there should be brick and mortar in the works involved. However, you and I know that one cannot construct a house, office, stadium, bridge etc, without bricks and mortar. So, whenever there is the use of bricks and mortar, any payments one makes to a contractor will more than likely be subject to the 3% tax.

Below are the reasons why business has divergent views about the deduction of the 3% tax on dust roads:

The process: Dust roads are made through the ferrying of trees, removal of rocks, levelling the surface, watering and compacting the soil. At no point does one use brick and mortar in the process. Further, at the end of the road making exercise, one cannot really point to a firm structure that they could say they constructed. Technically, the end product after the road-making works is a dusty road which can turn into mud when it rains.

So, the dilemma is whether the dust road making process is really construction and if so, what the end product really is? The end product of a tarred road construction process is the tarred road which is firm and durable. The dust road is just a cleared piece of land and no real firm structure is produced in the process. No guidance: I will tell you that colleagues who work for councils, government or farms get quotations written something like ‘dust road construction’ from their contractors.

These colleagues also tend to believe that the dust road construction process is actually construction works. The dilemma that we have is that there is no definition of construction works in the Act and hence we end up using our interpretation. Whilst BURS has issued a guidance note, it is not specific to dust roads. BURS’ view is that ‘road works’ fall within the ambit of construction operations but one assumes that those are tarred roads.

So, the dust road issue remains unanswered. Even if BURS had included dust roads under construction operations, remember that guidance notes issued by BURS are neither binding on it or the taxpayer. Only the law is binding. The above-mentioned colleagues also believe that the road clearing works, soil compacting and levelling works produce a tangible product called a road. The fact that the road can turn into a pool of mud when it rains does not sway them from their view. They therefore conclude that the 3% tax is therefore deductible to all such construction works.


As you can see, this matter is subject to divergent views as stated above and one cannot, in the absence of a definition of ‘construction operations’ in the Act conclude with certainty whether payments in respect of dust road making works are subject to the 3% tax. Well, I always say to people, withholding taxes are a common source of divergent views and it’s not surprising that we have a live case that we are analysing now.

I always like to say that where one is in doubt with a withholding tax, they must seek clarity before making payments. However, if the doubt remains after seeking clarity, then one is better off deducting the tax and leaving the option of objecting to the deduction to the payee. 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 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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Is COVID-19 Flogging an Already Dead Economic Horse?

9th September 2020

The Central Bank has by way of its Monetary Policy Statement informed us that the Botswana economy is likely to contract by 8.9 percent over the course of the year 2020.

The IMF paints an even gloomier picture – a shrinkage of the order of 9.6 percent.  That translates to just under $2 billion hived off from the overall economic yield given our average GDP of roughly $18 billion a year. In Pula terms, this is about P23 billion less goods and services produced in the country and you and I have a good guess as to what such a sum can do in terms of job creation and sustainability, boosting tax revenue, succouring both recurrent and development expenditure, and on the whole keeping our teeny-weeny economy in relatively good nick.

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Union of Blue Bloods

9th September 2020

Joseph’s and Judah’s family lines conjoin to produce lineal seed

Just to recap, General Atiku, the Israelites were not headed for uncharted territory. The Promised Land teemed with Canaanites, Hittites, Amorites, Perizzites, Hivites, and Jebusites. These nations were not simply going to cut and run when they saw columns of battle-ready Israelites approach: they were going to fight to the death.

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Security Sector Private Bills: What are they about?

9th September 2020

Parliament has begun debates on three related Private Members Bills on the conditions of service of members of the Security Sector.

The Bills are Prisons (Amendment) Bill, 2019, Police (Amendment) Bill, 2019 and Botswana Defence Force (Amendment) Bill, 2019. The Bills seek to amend the three statutes so that officers are placed on full salaries when on interdictions or suspensions whilst facing disciplinary boards or courts of law.

In terms of the Public Service Act, 2008 which took effect in 2010, civil servants who are indicted are paid full salary and not a portion of their emolument. Section 35(3) of the Act specifically provides that “An employee’s salary shall not be withheld during the period of his or her suspension”.

However, when parliament reformed the public service law to allow civil servants to unionize, among other things, and extended the said protection of their salaries, the process was not completed. When the House conferred the benefit on civil servants, members of the disciplined forces were left out by not accordingly amending the laws regulating their employment.

The Bills stated above seeks to ask Parliament to also include members of the forces on the said benefit. It is unfair not to include soldiers or military officers, police officers and prison waders in the benefit. Paying an officer who is facing either external or internal charges full pay is in line with the notion of ei incumbit probation qui dicit, non qui negat or the presumption of innocence; that the burden of proof is on the one who declares, not on one who denies.

The officers facing charges, either internal disciplinary or criminal charges before the courts, must be presumed innocent until proven otherwise. Paying them a portion of their salary is penalty and therefore arbitrary. Punishment by way of loss of income or anything should come as a result of a finding on the guilt by a competent court of law, tribunal or disciplinary board.

What was the rationale behind this reform in 2008 when the Public Service Act was adopted? First it was the presumption of innocence until proven otherwise.

The presumption of innocence is the legal principle that one is considered “innocent until proven guilty”. In terms of the constitution and other laws of Botswana, the presumption of innocence is a legal right of the accused in a criminal trial, and it is an international human right under the UN’s Universal Declaration of Human Rights, Article 11.

Withholding a civil servant’s salary because they are accused of an internal disciplinary offense or a criminal offense in the courts of law, was seen as punishment before a decision by a tribunal, disciplinary board or a court of law actually finds someone culpable. Parliament in its wisdom decided that no one deserves this premature punishment.

Secondly, it was considered that people’s lives got destroyed by withholding of financial benefits during internal or judicial trials. Protection of wages is very important for any worker. Workers commit their salaries, they pay mortgages, car loans, insurances, schools fees for children and other things. When public servants were experiencing salary cuts because of interdictions, they lost their homes, cars and their children’s future.

They plummeted into instant destitution. People lost their livelihoods. Families crumbled. What was disheartening was that in many cases, these workers are ultimately exonerated by the courts or disciplinary tribunals. When they are cleared, the harm suffered is usually irreparable. Even if one is reimbursed all their dues, it is difficult to almost impossible to get one’s life back to normal.

There is a reasoning that members of the security sector should be held to very high standards of discipline and moral compass. This is true. However, other more senior public servants such as judges, permanent secretary to the President and ministers have faced suspensions, interdictions and or criminal charges in the courts but were placed on full salaries.

The yardstick against which security sector officers are held cannot be higher than the aforementioned public officials. It just wouldn’t make sense. They are in charge of the security and operate in a very sensitive area, but cannot in anyway be held to higher standards that prosecutors, magistrates, judges, ministers and even senior officials such as permanent secretaries.

Moreover, jail guards, police officers and soldiers, have unique harsh punishments which deter many of them from committing misdemeanors and serious crimes. So, the argument that if the suspension or interdiction with full pay is introduced it would open floodgates of lawlessness is illogical.

Security Sector members work in very difficult conditions. Sometimes this drives them into depression and other emotional conditions. The truth is that many seldom receive proper and adequate counseling or such related therapies. They see horrifying scenes whilst on duty. Jail guards double as hangmen/women.

Detectives attend to autopsies on cases they are dealing with. Traffic police officers are usually the first at accident scenes. Soldiers fight and kill poachers. In all these cases, their minds are troubled. They are human. These conditions also play a part in their behaviors. They are actually more deserving to be paid full salaries when they’re facing allegations of misconduct.

To withhold up to 50 percent of the police, prison workers and the military officers’ salaries during their interdiction or suspensions from work is punitive, insensitive and prejudicial as we do not do the same for other employees employed by the government.

The rest enjoy their full salaries when they are at home and it is for a good reason as no one should be made to suffer before being found blameworthy. The ruling party seems to have taken a position to negate the Bills and the collective opposition argue in the affirmative. The debate have just began and will continue next week Thursday, a day designated for Private Bills.

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