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2020/2021 Budget speech review: the tax thoughts

TUMELO RANNAU

Tax; the most basic source of revenue for government and often the first to be adjusted whenever there is pressure on government revenue due to expenditure being more than revenue has been one of the most talked about subject in the build up to the 2020/2021 Budget Speech (the Budget Speech).

The Budget Strategy Paper highlighted that the Ministry of Finance and Economic Development (MoFED) is reviewing taxes and there is possibility of increasing taxes to cover the government deficit. On Monday during the Budget Speech the Minister of Finance and Economic Development Dr. Thapelo Matsheka (the Minister) announced that there will be no tax increases during the next financial year but focus will be towards efficiency in tax collection. This approach might find some taxpayers in the bad side of the law and therefore calls for improved tax risk management for all taxpayers.

Botswana Unified Revenue Service (BURS) personnel have been working closely with African Tax Administration Forum (ATAF) and other tax authorities such as Kenya Revenue Authority (KRA) in attempts to improve efficiency in revenue collection. The announcement by the Minister that focus will be more on the maximization of revenue collection is not surprising as BURS recently issued a tender for appointment of a consultancy to establish Botswana’s tax gap.

A tax gap in simple terms is the difference between tax that should have been collected and the actual tax collected. The results of the tax gap will help BURS and the Ministry to come up with interventions (policy and other compliance measures) that are specific to the tax base risks and non-compliance trends and thereby improving efficiency in tax collection.

In relation to the initiatives or interventions that are already in place BURS is likely to increase frequency of tax audits for business through adaptation of sector focused audits. ATAF and KRA have been helping on that aspect and introducing revenue officers to various sector specific analytical tools. Financial services sector especially banks were subject of the audits in the past 2 to 3 years.

Therefore, it is important for tax teams in various companies in different industries to identify tax risks that are inherent in their industries and ensure they are attended to if identified to avoid incurring lots of interest and penalties. Companies that do not have internal tax teams should engage tax consultants for health check reviews to assess their tax gaps or risks. Though there is always room for pardon based on “just cause”, remember, ignorance of the law is no excuse.

Data has become a massive weapon for every industry and revenue authorities are starting to harness tender award data from various government agencies engaging private sector companies for their projects. This data is used to project Valued Added Tax (VAT), Income Tax and other taxes arising from such tenders and tender-preneurs that haven’t been compliant may find themselves in trouble if they do not improve on their tax compliance status.

Tax bills for defaulters can reach up to 200% of the original tax bill if it is discovered that such compliance was done to avoid taxes. Therefore, it is important that directors of these companies ensure whatever is filed on their behalf is accurate to avoid such catastrophes. Additionally, such companies and their directors may be blacklisted if it is discovered that they haven’t been compliant and tax hasn’t been recovered from them.  

African tax authorities usually mismatch their employees’ skills and end up having their best employees in departments that are irrelevant to their skills sets. Example, a good auditor may be placed in the assessing department or at the border while they’re supposing to be leading inspection in the field. A skills audit for better resource allocation may also be an exercise BURS may carry out to ensure their best human resources are well placed.

The imminent introduction of the Lekgetho Live system is also likely to increase efficiency as the business expects it to be user friendly and provide accurate tax liabilities (interest) especially for withholding taxes. The current system creates lots of inefficiencies for the business when they need to apply for tax clearances as the artificial liabilities created by the system makes them spend more time on reconciliations that are unnecessary and sometimes delays business transactions and processes.

Lastly, BURS may intensify their taxpayer education efforts as tax awareness has proved to be one of the efficient strategies in encouraging compliance. Improvement in updating their website may be among areas they may start in improving taxpayer education. The results of the tax gap analysis will likely provide more informed interventions in relation to BURS’ efficiency in collection and issues such as review of tax exemptions are likely to be covered by this.

In conclusion, as tax authorities work on improving their systems and becoming more aggressive in collection, tax risk management is becoming more than just a tax authority issue. Therefore, all stakeholders ranging from businesses, civil society and individual taxpayers should ensure that they have proper tax risk management policies/strategies in place to avoid unnecessary pitfalls.

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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.

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A Strong Marriage Bond Needs Two

8th December 2020

Remember: bricks and cement are used to build a house, but mutual love, respect and companionship are used to build a HOME. And amongst His signs is this: He creates for you mates out of your own kind, so that you may find contentment (Sukoon) with them, and He engenders love and tenderness between you; in this behold, there are signs (messages) indeed for people who reflect and think (Quran 30:21).

This verse talks about contentment; this implies companionship, of their being together, sharing together, supporting one another and creating a home of peace. This verse also talks about love between them; this love is both physical and emotional. For love to exist it must be built on the foundation of a mutually supportive relationship guided by respect and tenderness. As the Quran says; ‘they are like garments for you, and you are garments for them (Quran 2:187)’. That means spouses should provide each other with comfort, intimacy and protection just as clothing protects, warms and dignifies the body.

In Islam marriage is considered an ‘ibaadah’, (an act of pleasing Allah) because it is about a commitment made to each other, that is built on mutual love, interdependence, integrity, trust, respect, companionship and harmony towards each other. It is about building of a home on an Islamic foundation in which peace and tranquillity reigns wherein your offspring are raised in an atmosphere conducive to a moral and upright upbringing so that when we all stand before Him (Allah) on that Promised Day, He will be pleased with them all.

Most marriages start out with great hopes and rosy dreams; spouses are truly committed to making their marriages work. However, as the pressures of life mount, many marriages change over time and it is quite common for some of them to run into problems and start to flounder as the reality of living with a spouse that does not meet with one’s pre-conceived ‘expectations’. However, with hard work and dedication, couples can keep their marriages strong and enjoyable. How is it done? What does it take to create a long-lasting, satisfying marriage?

Below are some of the points that have been taken from a marriage guidance article I read recently and adapted for this purposes.

POSITIVITY
Spouses should have far more positive than negative interactions. If there is too much negativity — criticizing, demanding, name-calling, holding grudges, etc. — the relationship will suffer. However, if there is never any negativity, it probably means that frustrations and grievances are not getting ‘air time’ and unresolved tension is accumulating inside one or both partners waiting to ‘explode’ one day.

“Let not some men among you laugh at others: it may be that the (latter) are better than the (former): nor let some women laugh at others: it may be that the (latter) are better than the (former): nor defame nor be sarcastic to each other, nor call each other by (offensive) nicknames.” (49:11)

We all have our individual faults though we may not see them nor want to admit to them but we will easily identify them in others. The key is balance between the two extremes and being supportive of one another. To foster positivity in a marriage that help make them stable and happy, being affectionate, truly listening to each other, taking joy in each other’s achievements and being playful are just a few examples of positive interactions.
Prophet Muhammad (PBUH) said: “The believers who show the most perfect faith are those who have the best character and the best of you are those who are best to their wives”

UNDERSTANDING

Another characteristic of happy marriages is empathy; understanding your spouses’ perspective by putting oneself in his or her shoes. By showing that understanding and identifying with your spouse is important for relationship satisfaction. Spouses are more likely to feel good about their marriage and if their partner expresses empathy towards them. Husbands and wives are more content in their relationships when they feel that their partners understand their thoughts and feelings.

Successful married couples grow with each other; it simply isn’t wise to put any person in charge of your happiness. You must be happy with yourself before anyone else can be.  You are responsible for your actions, your attitudes and your happiness. Your spouse just enhances those things in your life. Prophet Muhammad (PBUH) said: “Treat your women well and be kind to them for they are your partners and committed helpers.”

COMMITMENT

Successful marriages involve both spouses’ commitment to the relationship. The married couple should learn the art of compromise and this usually takes years. The largest parts of compromise are openness to the other’s point of view and good communication when differences arise.

When two people are truly dedicated to making their marriage work, despite the unavoidable challenges and obstacles that come, they are much more likely to have a relationship that lasts. Husbands and wives who only focus on themselves and their own desires are not as likely to find joy and satisfaction in their relationships.

ACCEPTANCE

Another basic need in a relationship is each partner wants to feel valued and respected. When people feel that their spouses truly accept them for who they are, they are usually more secure and confident in their relationships. Often, there is conflict in marriage because partners cannot accept the individual preferences of their spouses and try to demand change from one another. When one person tries to force change from another, he or she is usually met with resistance.

However, change is much more likely to occur when spouses respect differences and accept each other unconditionally. Basic acceptance is vital to a happy marriage. Prophet Muhammad (PBUH) said: “It is the generous (in character) who is good to women, and it is the wicked who insults them.”
“Overlook (any human faults) with gracious forgiveness.” (Quran 15:85)

COMPASSION, MUTUAL LOVE AND RESPECT

Other important components of successful marriages are love, compassion and respect for each other. The fact is, as time passes and life becomes increasingly complicated, the marriage is often stressed and suffers as a result. A happy and successful marriage is based on equality. When one or the other dominates strongly, intimacy is replaced by fear of displeasing.

It is all too easy for spouses to lose touch with each other and neglect the love and romance that once came so easily. It is vital that husbands and wives continue to cultivate love and respect for each other throughout their lives. If they do, it is highly likely that their relationships will remain happy and satisfying. Move beyond the fantasy and unrealistic expectations and realize that marriage is about making a conscious choice to love and care for your spouse-even when you do not feel like it.

Seldom can one love someone for whom we have no respect. This also means that we have to learn to overlook and forgive the mistakes of one’s partner. In other words write the good about your partner in stone and the bad in dust, so that when the wind comes it blows away the bad and only the good remains.

Paramount of all, marriage must be based on the teachings of the Noble Qur’an and the teachings and guidance of our Prophet Muhammad (PBUH). To grow spiritually in your marriage requires that you learn to be less selfish and more loving, even during times of conflict. A marriage needs love, support, tolerance, honesty, respect, humility, realistic expectations and a sense of humour to be successful.

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Chronic Joblessness: How to Help Curtail it

30th November 2020
Motswana woman

The past week or two has been a mixed grill of briefs in so far as the national employment picture is concerned. BDC just injected a further P64 million in Kromberg & Schubert, the automotive cable manufacturer and exporter, to help keep it afloat in the face of the COVID-19-engendered global economic apocalypse. The financial lifeline, which follows an earlier P36 million way back in 2017, hopefully guarantees the jobs of 2500, maybe for another year or two.

It was also reported that a bulb manufacturing company, which is two years old and is youth-led, is making waves in Selibe Phikwe. Called Bulb Word, it is the only bulb manufacturing operation in Botswana and employs 60 people. The figure is not insignificant in a town that had 5000 jobs offloaded in one fell swoop when BCL closed shop in 2016 under seemingly contrived circumstances, so that as I write, two or three buyers have submitted bids to acquire and exhume it from its stage-managed grave.

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