Botswana Democratic Party (BDP) will in the upcoming meeting of parliament table a number of bills that are motivated by the party’s 2019 election manifesto, party Secretary General Mpho Balopi has said.
Since October elections the party has been subject of criticism from various quarters including political commentators that it has failed to walk its promise. Balopi has however told this publication this week that the party is initiating several reforms that speak to the party promises contained in the manifesto.
Key among its pledges was the land question, a topic which has been a subject of debate for years. BDP promised to address the land issue which has been a thorny issue for the indigenous people. In 2016, Parliament was informed by then Minister of Lands and Housing (now Ministry Lands Management, Housing and Sanitation) Prince Maele that there are 1.062,158 applicants on the waiting list as maintained and published by various Land Boards and the Department of Lands.
Maele said the applicants on these waiting lists will continue to be vetted for eligibility for allocation, to ensure compliance with the Land Policy provision on equity in distribution of land. The waiting list, predominately for residential land, mostly in urban and peripheral, date back to a period of more than 30 years.
“It has been a case for most of Batswana, and I am proud to say as a party we have decided that this meeting (July) of parliament we will also table land allocation bill to ease and reduce the list for benefit of our people,” Balopi said.
Presently, land policy and governance in Botswana are based on three types of land tenure systems: tribal land, which accounts for 71 percent of the total land area of Botswana; freehold, which comprises 3 percent; and state land, which accounts for 26 percent, BDP will in this meeting revise the land tenure laws.
Last week President Mokgweetsi Masisi launched the revised Citizen Entrepreneurial Development Agency (CEDA) guidelines as part of its commitment to citizen empowerment. “We are bring these reforms as we have already done with CEDA because we want to improve the livelihoods of Batswana especially the youth and to ensure that the economy is sustainable.”
As part of its election pledges, Minister of Presidential Affairs, Governance and Public Administration has published a bill that seek bar Members of Parliament and Councillors from floor crossing. The diminishing national educational results is another matter that the BDP says deserves concentration to overturn.
“Are we getting value out of investment we make,” Masisi asked rhetorically during the campaigns. Masisi promised that he will engage Ministry of Basic Education (MOBE) to do school mapping. “In our education we have not responded to the way we should have especially to junior school students, we have created prisons which are not good for human development, this is my professional view.”
He also revealed that plans are underway to resume double shift. “Concentration of kids for four hours is too much. We will engage MOBE to commit to double shifting.” “We will revise educational bills so that it will more aligned to the knowledge based economy,” Balopi added.
Balopi says as a party they will also suggest bills that will be able to sustain the nation on how to respond to the new/normal as a result of Covid-19. “More especially looking and employer/employee relation and occupational health and many more other bills and debates aimed at improving the livelihoods of Batswana,” he concluded.
Leader of Opposition’s (LOO) Dumelang Saleshando has said the Speaker of the National Assembly, Phandu Skelemani risks losing the moral authority to preside over the house due to the manner in which he handles parliament proceedings.
This week parliament made an unprecedented decision to suspend Saleshando, from parliament for a period of a week. Saleshando is also Member of Parliament for Maun West. Subsequent to Saleshando’s suspension, opposition Members of Parliament boycotted parliamentary proceedings, save for Alliance for Progressives’ Wynter Mmolotsi.
Saleshando was suspended for refusing to withdraw his statement in which he implicated President Mokgweetsi Masisi’s sister in a tender alleged to have been awarded corruptly. While Skelemani has relatively enjoyed respect from opposition parties since the beginning of the 12th parliament, it appears the Tuesday events will turn things around.
“The speaker is risking losing the moral authority to precede over the house. Because we don’t have the numbers but we can’t participate in a match,” Saleshando told media on Wednesday. Saleshando who has since written a letter to the speaker to outline the opposition’s displeasures, pointed out that the Speaker has on many occasions spoke to members of opposition in a disrespectful manner.
One example, according to the Leader of Opposition was during the State of Emergency when the speaker ordered that Oneetse Ramogapi, Member of Parliament for Palapye, to sit down “because matters being discussed are too complex for him to comment on.” Saleshando indicated that some of the jabs being thrown at them undermine themselves as MPs because of use of condescending expressions.
Saleshando further emphasised that his suspension from parliament was not an independent decision made by the Speaker. He also pointed out that his suspension was staged hence Masisi was present on the day. Former BDP MP Tshekedi Khama also expressed his displeasure, further indicating that they stand in solidarity with the Umbrella for Democratic Change (UDC).
“We already knew that Saleshando was going to be suspended on that day. Skelemani must understand one thing, that he is not the speaker of the Botswana Democratic Party but that of the national assembly,” said Khama. “We are totally disappointed by yesterday’s events, this can only mean one thing. That democracy in Botswana has come to pass.
Secondly we have heard that the three institutions the third being parliament are supposed to be independent but we have seen clearly that Speaker Skelemani is wearing a BDP cap and not his wig.” Moreover, they further indicated that they have observed a very disturbing trend by the Speaker to want to turn parliament into a court of law.
They elaborated that on numerous occasions the Speaker demands that the MPs prove opinions with facts which they point out as unfair on them. “As members pf parliament our role is to raise a suspicion based on what we are observing. We are not supposed to be demanded to prove evidence. That is the duty of other agencies, maybe if we could call the DCEC to explain to Skelemani what constitutes corruption maybe it can be something,” said Ngami MP, Carter Hikuama.
The opposition members said their main concern with the way the Speaker conducts his day to day business is that he might end up losing the authority to control the parliament proceedings altogether. Furthermore, they indicated that the speaker should not stand in the way of attempts by MPs of the opposition to hold the President accountable with fear or favour. Mahalapye East Member of Parliament Yandani Boko said it is surprising how the speaker has elevated himself to the role of a judge in parliament.
Botswana Investment & Trade Centre (BITC), the country‘s intergraded trade & investment promotion agency has reiterated Botswana’s position on the International Finance Services Centre (IFSC), a tax incentive provision for accredited companies.
Speaking at a media engagement session on Tuesday BITC Chief Executive Officer, Keletsositse Olebile underscored that the IFSC is not a breeding vehicle of illicit capital flows but a provision purely crafted as an investment wooing instrument which already has tangible and significant benefits to the country’s economy.
Olebile explained that the provision is a mechanism to attract foreign investment, channel capital into local investment projects, provide additional opportunities for local investors and create sustainable employment opportunities for suitable and qualified Batswana.
Furthermore the BITC Chief added that the IFSC fiscal framework plays a role in the enhancement of skills base for the Botswana workforce, fostering of innovation and sophistication in financial and business services and enhancement of Botswana’s already excellent reputation in the international financial and business community as well as generate tax revenue for Botswana.
BENEFITS TO ACCREDITED COMPANIES
Whilst most companies pay Corporate Tax at 22%, IFSC companies are generally taxed at 15%, Eighth Schedule to Income Tax Act. When deliberating on the provision leading tax consultant Jonathan Hore of Aupracon said because IFSC companies predominantly deal with non-residents, they are taxed 15 % on nonresident proceeds, while paying the normal 22 % for Botswana resident’s proceeds.
“This means that the tax computation of an IFSC company will most likely have two columns, to separate the 15% income from that taxable at 22%, IFSCs can, just like any other taxpayer, also claim withholding tax credits for tax suffered in foreign countries,“ he said. Hore added that such credits cannot exceed the Botswana tax on the foreign income, that is to say BURS cannot refund a taxpayer because the taxpayer paid tax offshore.
An IFSC entity which invests in an offshore entity to the extent of at least 25 % is not taxed on the dividends it earns from such investments. The investments are called Qualifying Foreign Participation (QFP) and are exempt in terms of the Second Schedule to the Income Tax Act, which states that, any dividends received by international financial services Centre Company in respect of a qualifying foreign participation as defined under section 2; shall be exempt from tax to the extent indicated.
The act defines Qualifying Foreign Participation (QFP) as participation held by an international financial services centre company in a company which is not resident in Botswana, where the international financial services centre company controls either directly or indirectly, alone or with connected persons, 25 per cent or more of the share capital including 25 per cent or more of the voting rights of the nonresident company.
IFSC companies also enjoy zero Capital Gains Tax (CGT). CGT is levied on the capital appreciation of any specified assets such as shares, immovable properties etc. Any person who disposes shares must pay the CGT.
However, IFSC companies do not suffer CGT when they dispose of shares held in a Qualifying Foreign Participation, i.e. at least 25% shareholding in nonresident subsidiaries. Secondly, the shareholders in an IFSC company are exempt from CGT.
WHAT ARE BOTSWANA’S BENEFITS?
Jonathan Hore noted that IFSC is an incentive which attracts FDI as foreign dividends are not taxed – “CGT exemption means that investors can set-up holding companies in Botswana and when they want to exit, they don’t have to worry about CGT.
Mauritius doesn’t have CGT at all and this Botswana incentive can only be compared to Mauritius. Most SADC states have CGT for most investors. Botswana is therefore ahead of the pack, together with Mauritius,” he said.
The renowned Tax consultant explained that this helps IFSC entities to obtain the best of non-resident consultants and investors. “Dealing with IFSCs is more business-friendlier as compared with dealing with any other BW entity, which deducts WHT from payments due to non-residents.”
BITC CEO noted that as a consequence of the framework insisting on a physical presence (Office) as opposed to brass plating, indirectly this contributes to business tourism in the form of shuttle services, lodging, dining fees when non-resident directors visit their head offices.
Previously various global economic and financial commentators such as the International Monetary Fund (IMF), Organisation for Economic Cooperation & Development (OECD) expressed concerns over Botswana’s tax incentives noting a possibility of the provisions being used as window of tax invasion, raking in all returns, eroding national tax bases and compromising domestic resources mobilization systems.
OEDC observed that tax exemptions such as IFSC fiscal framework if not tightly managed have little impact on investment attraction but only cripple the country‘s revenue collection vehicles. “Under pressure to offer internationally-competitive tax environments, developing countries offer generous tax breaks that undermine their domestic resource mobilization efforts with little demonstrable benefit in terms of increased investment,” said OECD in previous publications in 2018.
“There is limited information on the way in which Botswana’s IFSC is used for illicit and criminal practice, but according to a 2017 evaluation carried out by Eastern and Southern Africa Anti-Money Laundering Group, without developed anti-money laundering and counter-terrorist financing regime the country is at risk of being used as a conduit,” noted the Tax Justice Network in 2017.
THE FRAMEWORK & SUCCESFULLY DUSTING OFF THE ‘TAX HAVEN’ TAG
Botswana as since refined the IFSC fiscal framework in a bid to tighten compliance with international practices. The investment promotion boss who championed Botswana‘s campaign against the tax haven tag in 2014 noted that Botswana has since joined the Inclusive Framework by OECD and G20.
Furthermore Botswana has since complied with resolutions of OECD Forum on Harmful Tax Practices (FHTP) by subscribing to Base Erosion and Profit Shifting Standard (BEPS), Substantive Presence, Tax Information Exchange agreements which are requested from time to time.
Olebile reiterated that Botswana is not a tax haven, noting that in conjunction with respective industries regulatory and compliance authorities such as Bank of Botswana, NBFIRA , BURS , IFSC accredited companies are regularly zoomed into check if they living up to promises and comply with the law.
President Mokgweetsi Masisi has this week left a number of Botswana Democratic Party (BDP) legislators disappointed after not gracing the party’s parliamentary caucus, where they expected to slap him with a litany of concerns they encounter within the party.
The Tuesday meeting was the first BDP caucus meeting since the country went into lockdown in March this year. Chronicles of activities within the party leading to this week’s meeting necessitated Masisi to be present at Boipuso Hall held meeting, posit some MPs. Some legislators have been unhappy with how the party leadership and the party in general conduct its business in relation with the backbenchers.