At a G-20 summit in November last year, French president Nicolas Sarkozy called for Botswana, alongside eleven other countries, to be excluded from the international business community because the country was a tax haven that did not have a "suitable legal framework for the exchange of tax information."
The amendments are expected to cover previously raised concerns by the OECD and the World Bank on bank secrecy as an impediment to the exchange of tax information, as well as the lack of legislation requiring identification of nominees' clients.
In an interview with the Mmegi this week, finance minister Kenneth Matambo said cabinet had already approved the amendments he proposed to the Income Act and Banking Act.
"It is important that we are in line with international standards," Matambo said. "The changes to the two Acts have been given the nod by Cabinet. Next, I will take the amendments to Parliament for final approval."
The amendments are expected to give the Commissioner General of Botswana Unified Revenue Service (BURS) powers to obtain and provide information requested by foreign tax authorities from local banks.
Due to the existence of the Botswana International Financial Services Centre (IFSC), the OECD's Global Forum chose Botswana for review, turning up deficiencies in the country's legislative framework with regard to tax information transparency.
Investors under the Botswana IFSC tax status pay a corporate tax rate of 15 percent, compared to 22 percent that is paid by domestic companies. IFSC companies are also exempted from capital gains tax and withholding tax.
According to the Ministry of Finance, the Global Forum review assessed the state of preparedness of Botswana's regulatory and legislative framework to freely enter into tax information exchange agreements with tax and regulatory authorities from foreign countries.
While Matambo admitted the shortcomings in Botswana laws, he said the country had tried its best to share tax information with as many countries as possible and had signed many double taxation agreements with numerous countries.
Botswana currently has 13 Double Taxation Avoidance (DTA) treaties and a further 12 at various stages of negotiation and ratification.
"We have many treaties that are currently in force, including with countries such as UK, France, Sweden, South Africa and Mauritius," said the minister. "This month, I will be signing yet another DTA treaty with China while the process of signing more such agreements with our trading partners is on-going."
The agreement covers taxes on income and provides for co-operation on avoidance of double taxation and prevention of tax evasion on income and capital gains as well as fraud by providing for the exchange of information on taxpayers.
According to the IFSC website, Botswana is currently in DTA treaties negotiations with countries that include Japan, Angola, Uganda and Kenya.
In instances where DTA treaties are not already in place, the Botswana IFSC legislative framework, as set out in the Income Tax Act, allows accredited companies a unilateral credit of up to 15 percent for withholding taxes suffered in jurisdictions with which Botswana does not yet have a DTA.