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Prevailing Securities gives BURS an ultimatum

Prevailing Securities

Prevailing Securities which is currently placed under Judicial Management, has through its attorneys written to the Commissioner General of Botswana Unified Revenue Services (BURS) on July 7th 2020, seeking that the P82 million tax assessment for both VAT and Income they were slapped with in early 2019 be re-visited as agreed failure of which they will approach the High Court for review.

In a letter penned by Serole and Partners, Shadrack Baaitse who is the owner of Prevailing Securities said the Income Tax Assessment according to BURS letter dated 30th January 2019, was based on all deposits held at First National Bank, Bank Gaborone and Standard Chartered Bank in the company accounts.

He noted that these deposits were treated as “income” by BURS and business “turnover” as they were coming from the “company customers”. Baaitse said the explanation given for treating the income as turnover was that the company had failed to provide records demanded on numerous occasions.

“It is to be noted that, the company has always provided documents needed by your office,’’ said Baaitse. “Client instructs us that upon receipt of notice of assessment in the total sum of P81, 766, 882, 46 (VAT and Income Tax inclusive) it submitted a detailed list and/or account of matters which were not taken into consideration when they ought to have been at the time of assessment.’’

Serole and Partners write that on numerous occasions, both telephonically and in person through its Directors and Judicial Manager, they attended to BURS to request for reassessment.

“You have on a number of occasions promised to attend to the reassessment on the submitted information but all has been futile,” the lawyers stated.

The lawyers said that in their opinion the client’s request and demand is not unreasonable as it makes it difficult for the client to lodge a substantive objection without a reassessment as promised, which would incorporate the submitted information and reflect how the amount claimed was arrived at.

“Interestingly, despite demands from Client to do a reassessment you have proceeded to attach and seize client’s monies from its creditor’s property and even failed to pay employees’ salaries. Your acts have as a result crippled business to an extent that Client has not been running,” they said.

The attorneys alleged that further to demonstrate mala fide, the tax master, contrary to the judicial management orders, deliberately continued with his acts aforementioned.

Prevailing Securities once again demanded for the reassessment as agreed and as of today (July 16), BURS has not responded to their letter. “It is our intention to be tax- compliant and we have no intention of not paying what is due to the taxman. However, it should be noted that, the VAT and Income Tax Assessment by yourself makes erroneous assumption.

“First it fails to recognize inter- banking transfers by the company by treating such transfers as payments and income from customers, when in fact and in truth, this is not income or turnover.

“Secondly, the assessment treats the so called income as net profit as well as gross profit for levying tax, without taking into account expenses.

“Thirdly, the assessment has included loans from financial institutions, obtained by the company for purposes of running the business as income or turn-over from customers,” the lawyers contended.

According to the letter, these are some of the errors made by BURS, which have been previously brought to their attention. “You have chosen to deliberately ignore such concerns and proceed to impose extreme penalties on amounts done and payable resulting in the collapse of the business.

“That, you acted mala fide is evident from letters and execution. Client received Notice of Assessment on the 30th January 2019 without being provided with the findings of the Assessment. The next day, 31st January 2019, you attended to execute our client’s property” they said.

The letter also provide that on the objection, client filed with BURS, the difference between what is owed is less than P4, 000.00 as opposed to their P80, 000.00. On account of the above, client urgently requires a reassessment of both the Income Tax and VAT.

“Given the history of the communication between the parties should client not hear from you by the 15th July 2020, on its request for reassessment client will approach the High Court for review and set aside of your assessment,” read the letter.

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Government sitting on 4 400 vacant posts

14th September 2020
(DPSM) Director Goitseone Naledi Mosalakatane

Government is currently sitting on 4 400 vacant posts that remain unfilled in the civil service. This is notwithstanding the high unemployment rate in Botswana which has been exacerbated by the recent outbreak of the deadly COVID-19 pandemic.

Just before the burst of COVID-19, official data released by Statistics Botswana in January 2020, indicate that unemployment in Botswana has increased from 17.6 percent three years ago to 20.7 percent. “Unemployment rate went up by 3.1 percentage between the two periods, from 17.6 to 20.7 percent,” statistics point out.

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FNBB projects deeper 50 basis point cut for Q4 2020

14th September 2020
Steven Bogatsu

Leading commercial bank, First National Bank Botswana (FNBB), expects the central bank to sharpen its monetary policy knife and cut the Bank Rate twice in the last quarter of 2020.

The bank expects a 25 basis point (bps) in the beginning of the last quarter, which is next month, and another shed by the same bps in December, making a total of 50 bps cut in the last quarter.  According to the bank’s researchers, the central bank is now holding on to 4.25 percent for the time being pending for more informed data on the economic climate.

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Food suppliers give Gov’t headache – report

14th September 2020
Food suppliers give Gov’t headache

An audit of the accounts and records for the supply of food rations to the institutions in the Northern Region for the financial year-ended 31 March 2019 was carried out. According to Auditor General’s report and observations, there are weaknesses and shortcomings that were somehow addressed to the Accounting Officer for comments.

Auditor General, Pulane Letebele indicated on the report that, across all depots in the region that there had been instances where food items were short for periods ranging from 1 to 7 months in the institutions for a variety of reasons, including absence of regular contracts and supplier failures. The success of this programme is dependent on regular and reliable availability of the supplies to achieve its objective, the report said.

There would be instances where food items were returned from the feeding centers to the depots for reasons of spoilage or any other cause. In these cases, instances had been noted where these returns were not supported by any documentation, which could lead to these items being lost without trace.

The report further stressed that large quantities of various food items valued at over P772 thousand from different depots were damaged by rodents, and written off.Included in the write off were 13 538 (340ml) cartons of milk valued at P75 745. In this connection, the Auditor General says it is important that the warehouses be maintained to a standard where they would not be infested by rodents and other pests.

Still in the Northern region, the report noted that there is an outstanding matter relating to the supply of stewed steak (283×3.1kg cans) to the Maun depot which was allegedly defective. The steak had been supplied by Botswana Meat Commission to the depot in November 2016.

In March 2017 part of the consignment was reported to the supplier as defective, and was to be replaced. Even as there was no agreement reached between the parties regarding replacement, in 51 October 2018 the items in question were disposed of by destruction. This disposal represented a loss as the whole consignment had been paid for, according to the report.

“In my view, the loss resulted directly from failure by the depot managers to deal with the matter immediately upon receipt of the consignment and detection of the defects. Audit inspections during visits to Selibe Phikwe, Maun, Shakawe, Ghanzi and Francistown depots had raised a number of observations on points of detail related to the maintenance of records, reconciliations of stocks and related matters, which I drew to the attention of the Accounting Officer for comments,” Letebele said in her report.

In the Southern region, a scrutiny of the records for the control of stocks of food items in the Southern Region had indicated intermittent shortages of the various items, principally Tsabana, Malutu, Sunflower Oil and Milk which was mainly due to absence of subsisting contracts for the supply of these items.

“The contract for the supply of Tsabana to all depots expired in September 2018 and was not replaced by a substantive contract. The supplier contracts for these stocks should be so managed that the expiry of one contract is immediately followed by the commencement of the next.”

Suppliers who had been contracted to supply foodstuffs had failed to do so and no timely action had been taken to redress the situation to ensure continuity of supply of the food items, the report noted.

In one case, the report highlighted that the supplier was to manufacture and supply 1 136 metric tonnes of Malutu for a 4-months period from March 2019 to June 2019, but had been unable to honour the obligation. The situation was relieved by inter-depot transfers, at additional cost in transportation and subsistence expenses.

In another case, the contract was for the supply of Sunflower Oil to Mabutsane, where the supplier had also failed to deliver. Examination of the Molepolole depot Food Issues Register had indicated a number of instances where food items consigned to the various feeding centres had been returned for a variety of reasons, including food item available; no storage space; and in other cases the whole consignments were returned, and reasons not stated.

This is an indication of lack of proper management and monitoring of the affairs of the depot, which could result in losses from frequent movements of the food items concerned.The maintenance of accounting records in the region, typically in Letlhakeng, Tsabong, and Mabutsane was less than satisfactory, according to Auditor General’s report.

In these depots a number of instances had been noted where receipts and issues had not been recorded over long periods, resulting in incorrect balances reflected in the accounting records. This is a serious weakness which could lead to or result in losses without trace or detection, and is a contravention of Supplies Regulations and Procedures, Letebele said.

Similarly, consignments of a total of 892 bags of Malutu and 3 bags of beans from Tsabong depot to different feeding centres had not been received in those centres, and are considered lost. These are also not reflected in the Statement of Losses in the Annual Statements of Accounts for the same periods.

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