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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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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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