The Botswana Unified Revenue Service (BURS) has seized nearly 2,000 vehicles, sealed off hundreds more in their showrooms and confiscated fake invoices and dirty cash, as part of an escalating campaign to recover billions of pula in unpaid import duties.
Launched recently, the campaign is focusing on all vehicle dealerships countrywide, particularly the notorious imports common in areas such as Mogoditshane.
The tax agency has warned that its efforts will also extend to individual innocent motorists whose imported vehicles may be seized until they produce evidence of adequate duty payment.
The BURS long raised alarm that it was losing millions through understated invoices of import vehicles, even stating in its 2010 Annual Report that the P5.3 billion import value of vehicles for that year was a gross underestimate due to falsification of invoices.
In startling revelations on Wednesday, senior BURS officials laid out the preliminary findings of their new campaign showing that on average, dealers are claiming the vehicles they import into Botswana cost between $400 and $500.
The agency’s post-clearance audits have shown that the same vehicles are sold for their true market value many times higher than the invoice presented at the border. BURS General Manager Investigations, Compliance and Enforcement (ICE) Kaone Molapo gave an example of one vehicle, which was found being sold for P105,000 after being imported with a $400 price tag on the invoice.
“Here we are talking about organised crime and that’s something that will always be an issue even with good systems,” Molapo told journalists on Wednesday.
“We are pulling out all the stops and there will be a difference. Everyone will eventually do the right thing even if it’s those involved in organised crime.”
BURS investigations have found that while most of the mis-invoicing can be traced back to auto-businesses in Durban, other dealers and individual importers are also producing their counterfeit invoices to cheat the taxman. Molapo showed journalists examples of fake invoices complete with letterheads and stamps that have been seized in the campaign.
In addition, the BURS has found that some dealers are hiding dirty money, or cash suspected to be used for money laundering, in secret compartments within vehicles to evade border agents.
On Wednesday, Molapo showed journalists a stash of cash estimated to be P110,000, which was taken from an import vehicle during a raid. The BURS also showed journalists their massive haul of confiscated vehicles, numbering some 1,500 and housed at the taxman’s warehouse.
Should the owners fail to produce proof of legal and adequate import duty payment, the BURS intends to sell off the vehicles to recover the billions estimated to have slipped through the economy’s fingers over the years.
“This is just the beginning and we suspect tens of thousands of cars have been undervalued,” Molapo said. “We will be targeting the whole country on dealers and even the ‘innocent buyers’.“Batswana may lose their cars if they are found to have undervalued them.
“We will be lenient with those who voluntarily go to our offices to confess.
“Our main targets are the dealers who act fraudulently
BURS acting commissioner general, Segolo Lekau said those dodging the taxman were betraying Batswana and the country’s development.
“When a vehicle has an invoice of $400, when it is actually worth P40,000, the importer pays P1,300 in tax instead of P14,000 which is a huge difference.
“The Honda Fit that was undervalued when imported, when it gets involved in an accident, the person is rushed to Princess Marina being taken care of at other taxpayers’ expense.
“Tomorrow when government says the budget is short or there’s no money for certain things, who suffers?
“This is not just for the vehicle sector, but all businesses. There are businesses not paying their proper tax; they inflate their expenses so they seem as if they have losses.
“When we find them, the same people cry that we are shutting down their businesses.”
Meanwhile, it is understood the BURS campaign has ruffled the feathers of powerful, politically-connected businesspeople who have launched a bid to squash the taxman’s enquiries.
Authoritative sources close to the campaign told Mmegi that as the enquiries and post-clearance audits have spread, investigators have stepped onto the toes of some Politically-Exposed Persons (PEP) who have resisted probing. In money laundering and corruption parlance, PEPs present “a higher risk for potential involvement in bribery and corruption by virtue of their position and the influence that they may hold”.
BURS investigations have reportedly encountered mis-invoicing even in the import of luxury vehicles such as Ferraris and Porches, as well as similar illegal practices in established dealerships and the businesspeople behind them.
“There are PEPs who want to mess up the investigations and upset the campaign, even muddying the waters. Investigators have seen a lot of things in this campaign, including communications coming from high offices.
“Powerful people are making noises about the investigations and even putting pressure on the BURS to stop.
“There is an air of intimidation. From the people importing sand trucks to those with Ferraris,” sources told Mmegi.
The BURS, meanwhile, has vowed to press on with its efforts. The acting commissioner general said while BURS would continue using the value on invoices to estimate duty, the law also allowed the agency to go further in gauging value.
“The international standard is that the transaction value is based on the invoice, but the law allows that if we don’t agree with the value on the invoice, we put the price we believe is the correct value.
“There is room for us to assess the comparable price of an import and close that loophole.
“This has been going on for a long time and we are saying we have arrived and we are going to deal with these issues conclusively.
“Going forward, the compliance has to be of the highest level possible,” Lekau said.