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Botswana loses P10 billion to tax evasion annually

BURS-COMMISSIONER-GENERAL: Jeanette Makgolo

Botswana could be losing P9.5 billion to tax evasion, Botswana Unified Revenue Service (BURS) Commissioner in charge of operations, Mr Phodiso Valashia hinted the sad scenario during a media briefing on Wednesday.

Mr Valashia said the revenue service does not have an exact value yet on how much Botswana is losing to individuals and businesses deliberately dodging their tax obligations, however preliminary results from tax gap survey  conducted in the previous financial year has revealed that about 40-60 percent of eligible taxpayers are invading tax.

“This translates to about 4- 5 percent of GDP, ” he said. From the latest annual GDP figure of around P190 billion (pre-COVID in 2019), 5 percent of GDP translates to P9.5 billion. The BURS Commissioner Operations said detailed figures will be communicated once the analysis of the findings of the tax gap survey is completed, with a scientific report released.

” It is a difficult exercise to determine how much the country is losing to tax invasion, because these are individuals and businesses who are hiding from us and don’t want to be seen, that’s why they are not paying tax,” Mr Valashia said.

2021/22 TAX REVENUE 

Meanwhile the Botswana Unified Revenue Service has collected more than the target it had set for itself during the financial year 2021/22, ended 31st March 2022. BURS Commissioner General Ms Jeanette Makgolo said according to preliminary accounts for the financial year ended 31st March 2022, the revenue service has raked in total tax revenue of P45.3 billion for the year, surpassing a target of P44.4 billion on the back of a stronger income tax and VAT collection.

“During these period where macroeconomic conditions are not favourable to realise optimal revenue collection, this collection is not a windfall, but the results of deliberate efforts and hard work of visionary men and women of BURS, and our key stakeholders,” Makgolo said. For the financial year 2022/23 which commenced 1st of April 2022, the Botswana Unified Revenue Service has been assigned to collect 46.433 billion.

However Minister of Finance and Economic Development Ms Peggy Serame who was the guest speaker, as the parent Minister and cabinet custodian of revenue collection in Botswana said BURS can do more.

“I am happy they surpassed the target, but a lot can still be done, we want the revenue service to collect more because taxes are the anchor of our economy, for government to spend money, money has to come from somewhere, and every eligible individual, business must pay tax,” she said.

Minister Serame said BURS still needs to improve revenue collection, efficiency, upgrade its ICT Infrastructure, to leverage on digital and technological advancements. ”I still want BURS to close those loopholes and leakages, so that we collect as much as we can as a country to be able to finance our developmental expenditure, this economy needs us to collect more efficiently, um not saying we should increase taxes, with the existing tax rates we can collect more,” the Minister said.

TAX AMNESTY 

In terms of the tax amnesty that has been running since 1st of July 2021, extended in December to end 30 June 2022, a massive improvement has been realised from the poor uptake of less than 10 percent as at 31st December 2021 to 52 percent as at 31st March 2022, the program still has 2 and half months to run before coming to an end; April, May and June.

The objective of the Tax Amnesty Scheme was to ease the burden on taxpayers with outstanding tax liabilities, by granting them an opportunity to clear the total principal tax owed in exchange for write-off of interest and penalties charged during tax periods prior to 1st July, 2021.

Minister Serame said Tax Amnesty is effective in recovering outstanding taxes because of the reduced penalties and interest charges. Typically, such a scheme is characterised by a blanket waiver of interest and penalties, subject to the taxpayer paying the outstanding principal tax amount during the period of the amnesty.” Tax Amnesty schemes are common globally and even in our region” she said.

The Scheme was extended to 30th June, 2022 to allow for more taxpayers to benefit from the dispensation. In 2021, Cabinet approved the introduction of a Tax Amnesty Scheme for Income Tax under the Income Tax Act and Value Added Tax (VAT) under the Value Added Tax (VAT) Act during the period 1st July, 2021 to 31st December, 2021; and that subject to the taxpayer paying off hundred percent (100%) of their outstanding principal tax amount, hundred percent (100%) of the outstanding interest and penalties be written off.

To date 52 percent of the taxpayers in arrears have applied for the Tax Amnesty, bringing in over P394 million (P146 million income tax, VAT P248 million) to the revenue service, compared to just P64 million collected during the initial 6 months of the scheme. Mr Makgolo explained that this 52 percent was made up by 11 884 taxpayers who came forth out of 22 839 eligible taxpayers in arrears.

“We still have taxpayers who have come forth to make payment plans, from those we are expecting about P52 million,” revealed the Commissioner General. However Minister Serame said more has to be collected. “I am still concerned by the 48% taxpayers in arrears who have not come forth to take advantage of the Scheme; considering that we are left with less than two (2) months” said Minister Seretse

The Minster however noted that BURS is continuously working on initiatives to improve the uptake of the Tax Amnesty and has currently engaged Business Botswana and Botswana Institute of Chartered Accountants (BICA) to encourage their members to apply for the Amnesty. “These initiatives include having a dedicated desk for assisting taxpayers to apply for Tax Amnesty and making telephone calls to taxpayers who have applied,” she said.

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Food prices continue to rise, but at a slower rate

28th November 2022

Prices for cereals or staple foods in Botswana and other Southern African countries continue to rise at a slower pace, following trends in the global markets, according to the latest November 2022 Food Price Monitoring and Analysis by Food Agricultural Organization (FAO) of the United Nations.

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Still doing business the old way?

18th November 2022

It’s time to get business done better with MTN Business Botswana’s ICT Solutions.

Running a digital businessMTN Business Solutions Botswana, popularly known as MTN Business is an Internet Service Provider. We are a subsidiary of MTN Group Limited, a multinational telecommunications Group headquartered in South Africa, which operates in 19 markets across Africa and the Middle East.

More and more, clients are looking for ways to keep their staff productive in a dynamically changing business environment. Whether your people are working from home, the office or abroad, there is a growing recognition that digitising your operations can offer unprecedented commercial value in flexibility, productivity and growth. This new, digital reality means that it is more important than ever to stay agile – if there is anything that can slow a business down, it is being burdened by othatld technology.

Having made substantial investments in fibre technology, high-speed terrestrial and undersea networks and new frequency spectrum across the markets wherein it operates, MTN is perfectly positioned to respond to this shift in the market.

A few years ago, MTN also made the decision to build an IP capable radio network for its mobile services, giving its core network the ability to seamlessly integrate with enterprise IP networks. The mobile towers deliver services to enterprise clients absolutely anywhere it has a network, shortening the last mile and removing complexity and cost.

Now there is increasing demand from clients to connect their remote sites in all areas, including rural and semi- rural. MTN has assisted clients with overcoming this connectivity hurdle, enabling their staff to get the job done wherever they are.
MTN’s evolution

For MTN, the focus has shifted from just being a core telecommunications services provider, towards also becoming a technology solutions provider. The service offering now also includes Unified Communications, Data Hosting and Cloud Solutions, Security-As-A-Service and Managed Network Services. The scope has changed to being client and industry specific, so the requirements and service portfolio vary from one client to the next. The expectation is that a company like MTN must respond to these challenges, helping clients to get business done better as they shift from old to new technologies.

As many businesses continue to grapple with a digitally dynamic world, they face new challenges that have to be solved. This environment will benefit those that are more digitally enabled and agile. It is a brave new world that will favour online over on-site, wireless over wired and fluid over formulaic. Businesses will seek out partners and suppliers that are every bit as flexible and forward-looking as they are.
Ultimately, clients need partners like MTN Business that will invest in infrastructure, deliver the services they require, have market credibility, are financially sound and have a long-term commitment to their market presence.

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BIE to vitalize the Dignity of Engineers

9th November 2022

Botswana Institution Of Engineers (BIE), has last week hosted a gala dinner in  which they appreciated engineers who worked tirelessly and with dedication for 10 years from 1983 to steer the BIE to its current status.

The event that was held at the Phakalane Golf Estate had brought together young, experienced and veteran engineers and was held under the theme “Vitalize the dignity and eminence of all professional engineers”.

Explaining the theme, the institution’s treasurer, Thanabalasingam Raveendran said that engineers were looked upon reverentially with respect as the educated but with time it seems to have deteriorated. He indicated that there is a need to change the narrative by all means.

“The BIE exists for the welfare and the betterment of us Botswana engineers, we need to recognize specialised units within our Institution. We Engineers strongly believe in Engineers make it happen” Raveendran said.

He indicated that under the theme they appeal to all engineers to energize, to attain quality of being worthy of honour and respect and to achieve recognized superiority amongst the Society.

Raveendran stated that engineers need to ensure their end product is of good quality satisfying the end users expectations and engineers must be honest in their work.

“Approximately 8000 engineers registered with Engineering Regulatory Board (ERB) are not members of the BIE, engineers need to make every effort to recruit them to BIE” he said.

He alluded that BIE being a society, it currently needs to upgrade itself at par with professional institutions elsewhere like the UK and USA.

He further stated that BIE has to have engineering units of specialised disciplines like Civil/Mechanical/electrical etc

“As President Masisi indicated in his inaugural speech, the young people, who make 60 percent of the population of this country, are the future leaders and therefore investing in them is building the bridge to the future” said Raveendran

Kandima indicated that BIE has a memorandum of Understanding with Engineers Registration Board (ERB), where BIE is a recognised provider of CPD training, mentorship programmes and more importantly IPD undertaking to upgrade the skills and know-how of our engineers.

“For us to achieve our mandate and make worthwhile changes to engineering in Botswana, we have to be totally focused and act with intent” said Kandima.

Furthermore, Stephen Williams, past president of the BIE from 1986-1988 told the engineers that  the BIE provides a fertile environment where they can meet, share ideas and grow professionally.

“The BIE is also a nesting place for graduate engineers to learn from their peers and seniors, it also cater for engineering technicians and technologists and so nobody in the technology field is left out” he said.

He further indicated that Botswana Government provides a conductive environment for growth of engineering professionals.

“It must be stated that the Botswana Government recognises the existence of BIE and it can further be stated that the government enables ERB to carry out its mandate as a regulator of engineering professionals” said Williams

He plead with engineering companies to recognize and support BIE as it is the only source of engineering personnel’s for various Industries .

Furthermore, when giving his farewell speech, Michael Pinard , a past president of the institution  said how they are viewed as engineers by the general public might be due to some lack of appreciation as to exactly what role they play in the development of the country.

“The BIE slogan is aptly coined-Engineers make it happen, in other words, what man dreams engineers create” Said Pinard.

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