While they are still busy counting proceeds from December sales, the Botswana Unified Revenue Service (BURS) has come out to spoil the party for second hand motor dealerships.
The taxman has launched an operation by raiding the motor dealerships and has since closed some and sealed their premises. The BURS warehouse is also overflowing with vehicles detained from the raids.
Pre-owned car imports, mostly from Japan, Singapore and United Kingdom, have become a hit in Botswana over the past decade. These affordable motor vehicles popularly referred to as Fong Kongs have come to the rescue of Batswana who could otherwise not afford brand new cars.
One would expect that as these cars increase on the roads, the country would get more money from taxations. That is however not the case.
It is for this reason that BURS has started an operation to ascertain whether the dealers are compliant in paying their tax obligations or not and punish those denying him his fair share from their proceeds.
BURS General Manager Investigations, Compliance and Enforcement, Kaone Molapo has confirmed the operation.
“We are investigating the imported vehicles to check if they are compliant with the BURS laws. We are concerned that they are not complying with the law,” he said. “There are a lot of under valued vehicles, which deprive us of money we should have collected. We are also looking at those people using Botswana to buy and register the cars then take them to Mozambique and South Africa.”
BURS has stated in its past annual reports that it was losing millions of pula it could have gained from the importation of second-hand motor vehicles in the form of Value Added Tax (VAT), customs duty and Value Added Duty.
The tax agency lamented that second-hand car dealers undervalue the cars to the disadvantage of government.
Molapo said this is done with the involvement of suppliers at the Durban warehouses, South Africa, who issue false invoices of lesser values leading to the collection of lower taxes from such vehicles.
Molapo further corroborated an investigation done by Mmegi (sister publication to The Monitor) in 2018 that the dealerships maintain parallel invoices so they can underpay tax. Mmegi investigations had unearthed some receipts showing that lesser amounts were kept as official copies, that some sales did not even make it onto the books, as there were no bank records to
He has since cautioned Batswana that they could lose their cars if they are found to have undervalued them.
He however said they would be lenient with those who voluntarily go to their offices to confess as their main target are the dealers who act fraudulently to deny Batswana income that could be used for developments.
Molapo further warned that the exercise will be done nationwide and not only at the Mogoditshane based dealerships. He further said they would be embarking on various operations to ensure that people comply with tax laws. Section 16.2 of Customs Act states that any person who (a) knowingly submits false or fraudulent information; or (b) forges any information, accounts or documents, for purposes of evading of duties or taxes, commits an offence and shall be liable to a fine not exceeding P 1 000 000 or to imprisonment for a term not exceeding five years, or to both or to treble the value of the goods in respect of the offence, whichever is greater and the goods and the container in respect of which the offence is committed shall be liable to forfeiture.
Section 96 of the Act states that a person who does not declare goods commits an offence and shall be liable to a fine not exceeding P 1 000 000 or to imprisonment for a term not exceeding 10 years, or to treble the value of the goods in respect of such offence, whichever is greater and the goods and the container in respect of which the offence is committed shall be liable to forfeiture.
Meanwhile, president of Botswana Used Motor Dealers Association (BUMDA), Arshad Niyaz could not be reached for comment as he was said to be out of the country at the time of going to press.
However, he had in the past told this publication that their members were not implicated in any tax evasion schemes.
“We hear of such cases, but I can assure you that none of our 35 members is implicated. Our association strives to encourage disciplined and ethical dealings.”
This publication can however confirm that some of the dealerships whose cars have been are BUMDA members.