Botswana Unified Revenue Services (BURS) has lost an P80 million tax claim against Prevailing Securities (Pty) Ltd, a company owned by Shadrack Baaitse, an ally of former President Lt Gen Ian Khama.
Lobatse High Court Judge Michael Leburu this week ruled in favour of Danny Julius Guduli in his capacity as the Judicial Manager of Prevailing Securities (Pty) Ltd against Botswana Unified Revenue Services (BURS) and its Commissioner General.
On the 17th August 2018, the company [Prevailing Securities] was selected by the BURS for Tax Investigations. The Managing Director, Baaitse, attended an interview called by BURS, duly represented by Kaone Molapo, Daphney Baka and Samuel Mokelwane. The said interview was in respect to the company’s tax liability.
On the 30th January 2019, the respondent [BURS] issued two notices of assessments. The first one related to Value Added Tax (VAT) and the other to the Income Tax Assessment. In respect to the VAT Assessment, the Respondents issued a total additional assessment of P7, 179, 977.92 for the period January 2013 to December 2017. It further imposed a penalty of 200%, thus bringing the total penalty charge to P14, 359, 955.85.
In the Notice of Assessment, BURS state among others that the company had understated output tax, as evidenced by the Company bank statement, which had indicated that the company had received more “income” than what was declared as “turnover” in the submitted returns. As for input tax, the Respondents stated that the Company had not provided tax invoices.
According to the Applicant, the company had provided all the requisite documents to the Respondents.
The VAT Assessment, according to Danny Julius Guduli, did not include some of the payments made to the Respondents by the Company, for instance, the sum of P119, 952.83 paid on the 1st March 2014 was not reflected on the assessment schedule.
Furthermore, it was averred that the Respondent levied VAT on unpaid invoices and this subjected the company to an unreasonable tax burden for the sum of money received.
The applicant denies that the company understated its income. In amplification, it contended that the company received two types of income, namely income derived from its ordinary course of business and that the other income came from non- income activities.
These non- income activities were not related to any contractual income from its different customers. The non- income activities included reversed instalments, dishonoured cheques, reversed stop- orders, intercompany fund transfers, temporary loans, insurance claims, funds deposited from other bank accounts of the company to meet expenses and rejected salaries from employees bank accounts.
For services rendered, the company was paid in arrears by its customers and not all customers paid for services rendered on time and in full. According to the Applicant, the Respondents levied tax for services rendered, even before the company was actually by its customers.
It is the applicant’s case that the inclusion of non- income activities in the assessment is not only wrongful but irrational and that it amounts to abuse of authority.
With respect to Income Tax Assessment, the Applicant avers that the Respondent erroneously treated all deposits in the company bank accounts as income. The total amount levied as outstanding assessment was P56 703 834.34 which included a 200% penalty.
The total credits from all the four banks stood at P72, 928, 094.61. A total of P22, 068, 250.50 was from non- income activities. The total income before the expenses and running costs, from the four banks was P50, 859, 844.11.
According to the Respondents, this conduct by the company was determined to be intentionally made so as to cheat the fiscus and that this imposition of administrative penalty, was in terms of Section 118 (1) (a) (b) and (c) of the Income Tax Act.
Under the Judicial Review, the documents filed of record will show that the audits conducted against the Applicant covered the periods of 2012- 2018. Information in the Bank statements was wrongfully extrapolated to deem receipt of income when such was not so.
According to the applicant, a number of contracts either did not exist or had expired for the periods under assessment. These included the University of Botswana, BAMB, and BPC contracts, which had expired in 2016; BMC contract which expired in the early part of 2018 and BCL in 2016.
High Court Judge Michael Leburu wrote: “In my view, while banks statements may show the amount in the bank at any given point, they don’t indicate the company’s profitability, the various taxes collected nor the deductions that a tax payer would be entitled to.”
According to the judgement a bank is thus not necessarily a reflection of the profitability or financial performance of a company and cannot always objectively be used to determine the profitability of company nor its VAT liability, given the allowable deductions permitted under the Income Tax and Value Added tax legislations.
“The expenses associated with the company operations are by law not part of its taxable income and any re-assessment should have not ignored this fact.
For all the above reasons, I am satisfied that the Applicant has made out a case for review and has succeeded in showing that the decision of the Commissioner General to include non- income receipts, as part of its taxable income, and receipts that did not constitute a taxable supply was irrational and unreasonable.”
Consequently, the re-assessment by the Respondent is hereby set aside, including the consequences penalties imposed. It is accordingly ordered that the respondent’s additional VAT assessment of P7, 179, 977.92 against Prevailing Securities (Pty) Ltd for the period January 2013 to December 2017 be reviewed and set aside; and that the Respondents’ imposed penalties of 200% against Prevailing Securities (Pty) Ltd in the sum of P14, 359, 955.85 be reviewed and set aside.
Again the respondents Income Tax Assessment of P56, 703, 834.34 inclusive of penalty of 200% against Prevailing Securities (Pty) Ltd be reviewed and set aside.
The respondents were also ordered to carry out a re- assessment of the company’s tax liability (Income Tax and Value Added Tax) within 60 days from the date hereof and they shall bear the costs of this application, including that of the counsel. The judgement was delivered by electronic mail on the 27th April, 2021.
The lawyers representing former President Lt Gen Ian Khama, Ramalepa Attorneys have come forth dismissing a response letter penned down by Botswana Democratic Party (BDP) activist MacDonald Peloetletse after he was slapped with a P1.5 million lawsuit for defamation of their client.
Tebogo Tladi, an attorney at Ramalepa, said last week Thursday Peloetletse took to social media to publish a substantively false, wrongful and unlawful statement about Khama. MacDonald Peloetletse’s commentary which was posted on Gabz FM News page reads, “I am a former soldier. Everything former President SKI Khama said here is a LIE. In fact, soldiers suffered more under Khama than under his predecessors.
He actually stole money that the UN had paid to the soldiers who went for the operations and paid them less than a quarter of what was actually due to them. “Unhappy soldiers took the BDF to court and won, the BDF is still struggling to pay the debts! Khama can fool some people, but not all the people and not all the time.
“In fact many soldiers, serving, retired and those that resigned and were in the operations during Khama’s time get even more annoyed to such disrespectful statements by Ian Khama.” Khama’s lawyer says the impugned statement was published with the intention to injure his client (Khama) in his personality rights, good name and dignity, further indicating that the statement has damaged his good reputation.
“We have therefore been instructed by Client to demand, as we hereby do, that you publish on the same forum a retraction and a full and unconditional apology to Client within three days of receipt of this letter- and that you deliver such apology in a formal letter to the Office of the Former President, Dr Khama. In the event that you have not compiled with this demand by close of business on Monday 10th May 2021, our Client will assume that you have refused to comply with this demand.”
To top it all off, Khama demands that Peloetletse pay him P1.5 million in damages for defamation. “Furthermore, we hold instructions to demand as we hereby do, that you pay our Client damages for defamation in the sum of P1, 500,000.00 within seven days of receipt of this letter.” In the event that Peloetletse fails to pay the amount of damages demanded by Khama, Tladi says they will institute legal proceedings for the recovery of the aforesaid damages.
In his response letter addressed to Ramalepa Attorneys, Peloetletse said that he requests enlightenment and clarification that he be provided with proof that the allegations and comments which they attribute to him were indeed authored by him and that the platform which the comments were placed was not hacked.
“Please also advise if whether your clients has been endowed with a “special particular privilege status” that restricts the citizens of this country from commenting or responding to public statements made by your client in the course of political discourse especially when made on public forum and relate to matters of general public concern. (I trust that your brilliant legal mind is well informed with respect to the jurisprudence in such matters)”.
Peloetletse also said he would like to share with the attorneys a video which was posted on a public forum. “Please listen carefully to the conversations and discussion herein and advice if possibly such discussions form a reasonable basis for a justifiably rebuttal by any Motswana Citizen to the public pronouncements and defamatory statements made by your client about our government (bearing in mind of course a citizens constitutional right to freedom of speech and freedom of expression).’’
Consulted for further comment on the matter on Thursday after receiving Peloetletse’s response, Khama’s attorney Tebogo Tladi said the letter doesn’t hold any water. “The only way out for him is to prove the truth of the allegations on his comment or deny publication. He does not answer substantively to the defamation and does not respond to the demand of an apology or payment of damages.
So his letter really contains largely matters irrelevant to the substance of the letter of demand. His response in fact presents no legally cognizable defence at all- it would appear he responded without the benefit of legal advice, which would not be prudent for such an important case. So we will proceed to issue summons and wait to see what defences he will plead in court.’’
Botswana and Zambia this week celebrated the opening of a multi-million Dollar infrastructural project, the Kazungula Bridge, projected to contribute around P100 million annually for Botswana. This project comes after the signing of the 2012 Agreement between the two countries to construct a bridge that would ease movement of goods.
President Mokgweetsi Masisi said the Kazungula Bridge will open avenues for improved trade, job creation and economic diversification in both countries. Further, the Bridge will significantly accelerate Southern African Development Committee (SADC) regional integration agenda which Botswana and Zambia are vigorously pursuing.
“By growing our strategic partnerships through this project, we have improved the development and competitiveness of our economies to attract more private sector investment, thereby, supporting our efforts to create employment, especially for the burgeoning youth,” Masisi said at the opening ceremony in Kazungula on Monday.
The Kazungula Bridge comprises a road and rail bridge over the Zambezi River, directly linking Botswana and Zambia. It has One-Stop-Border Post facilities on both sides, which will enhance the operational efficiency at entry points, replicated on both sides of the boarder.
The Bridge was originally conceived as a critical link in the African North-South Corridor under the African Union’s New Partnership (NEPAD) for Africa’s Development programme. It has since evolved to encompass a multimodal transport plan under the Programme for Infrastructure Development in Africa (PIDA).
The PIDA programme, which encompasses liberalisation of air travel, rail links, road, water and all other modes of transport has only one objective: to unite the States of Africa in order to foster trade on the continent
“Connectivity of our nations will in no small measure, promote people to people interactions and uplifts their standard of living. I am pleased to state that the completion of this project is a clear demonstration of our commitment to PIDA.”
The 260 million US Dollar Kazungula Bridge was commissioned by Zambian President, Edgar Lungu and President Masisi. President Lungu said the bridge was a monumental effort linking Zambia internally and externally to ease the movement of goods and services.
“I have held talks with my counterpart in Botswana that this project must run daily up to 22 hours as soon as possible and you the technocrats must not play ping-pong with us after making these public procurements,” Lungu said at the official opening in Kazungula.
For his part, DRC President Felix Tshisekedi said the project was tandem with the Africa Union (AU) goals and priority areas for Agenda 2063 which called for a prosperous Africa, based on inclusive growth and sustainable development.
The new Kazungula Bridge replaces the Kazungula Ferry, a pontoon ferry across the 400-metre-wide Zambezi River between Botswana and Zambia. It was one of the largest ferries in South-Central Africa, having a capacity of 70 tonnes.
In 2003 the ferry was the site of a disaster when a severely overloaded Zambian truck capsized one of the pontoons and 18 people drowned. The accident was blamed on the lack of weighbridges in Zambia to check the weight of trucks.
In August 2007, the governments of Zambia and Botswana announced a deal to construct a bridge at the site to replace the ferry. The existence of a short boundary of about 150 meters between Zambia and Botswana was apparently agreed to during various meetings involving Heads of State and officials from all four States in the 2006-2010 period.
The route for this new bridge crosses the boundary without entering Zimbabwe and Namibia. Zimbabwe already has a bridge into Zambia at Victoria Falls, 70KM from Kazungula. Namibia on the other hand has a bridge into Zambia at Katima Mulilo about 150KM upriver.
Member of Parliament for Jwaneng/Mabutsane, Mephato Reatile has noticed intention to bring to parliament an amendment on Adoption of Children’s Act during the winter session, expected to start its sittings in July 2021.
The purpose of the Bill to amend the Adoption of Children’s Act (cap, 28-01) by removing those elements in the Act that are against the letter and spirit of the United Nations Convention on the Rights of a Child (UN-CRC).
The United Nations Convention on the Rights of Child, article 126, states; the adoptee and his or her legitimate descendants should acquire the same inheritance rights within the adopter’s family as a legitimate child but without the rights to inherit a reserved portion of the estate of the adopter’s descendants.
This is however differs from Botswana Children’s Adoption Act as section 6 (1) of the Adoption Act, 1952 (cap 28:01) states: ‘However, the adopted child does not by virtue of the adoption, become entitled to any property devolving on any child of his or her adoptive parents by virtue of any instrument executed prior to the order of adoption whether the instrument takes effect inter vivos or mortis causa, unless the instrument clearly conveys the intention that the property shall devolve upon the adopted child.’
Reatile said that an adopted child should have the right to inheritance like any other child because the adoptive parents would have made an oath in the court of law that they will be their rightful parents, therefore all the responsibilities of the child lies upon them.
He further highlighted the fact that no child asks to be adopted, it is therefore upon the adoptive parents to fully ensure that the child is well taken care off and that every decision taken should always be in their best interest.
“In most cases, adopted children are often enslaved by being made to work hard in their adoptive parents’ property and get nothing in return as they do not include them as their rightful heirs,” Reatile told WeekendPost.
The Jwaneng/Mabutsane lawmaker stated that adopted children may also have a part in investing wealth for their adoptive parents and in cases where these parents die, the family of the adoptive parents’ may deny them everything including what they contributed.
This, according to him is clearly violating the rights of these children and that is why he wants the law to look at it from his perspective and protect them regarding this matter. Moreover, the amendment also seeks to delete paragraph; (a) so that it should not be permissible in law for a person to marry a child they have adopted, and paragraph (b) that it does not become permissible for a person to have any sexual relations with a person they have adopted.
The Act in section 3 of the Succession (Rights of the Surviving and Inheritance Family Provisions) Act 1970, act [Cap 31:02], and section 7, Customary Law Act 1969[Cap16:01] Laws of Botswana does not prohibit or permit marriage between the adopted child and other persons including adoptive parents and their relatives, which would have been prohibited or permitted if the adoption had not taken place.
It further says that where the adoptive parents are not related to the adopted child, then marriage between them is not prohibited because there is no blood relation between them. “I am utterly disappointed with this provision as this action has the potential to promote sexual abuse of children by those that are meant to protect them and that adoption relations must always to the fullest extent possible in law, ensure and enforce the truest parent-child relationship,” Reatile said.
He also added that the country is still fighting to stop violation of human rights cases and that if this law is not amended, then all efforts would be in vain. Nevertheless, article 124 of the (UN-CRC) states that it prohibits marriage between the adopter and their descendants, the adoptee and their adopter’s spouse; and, conversely, between the adopter and the adoptee’s spouse, the adoptive children of the same individual as well as the adoptee and the adopter’s children.
He said that Botswana Children’s Adoption Act should be in line with the laws stated in the UN –CRC in order to match their standard for the benefit of these children. Reatile said that the proposed amendments seek to address the identified gaps to ensure that to the greatest extent, the law on adoption speaks the same language as espoused by the UN-CRC and the Children’s Act to address the principle of ‘best interest of the child’.