FIA study exposes troubles in some Asian businesses
Sharon Mathala | Tuesday April 22, 2025 14:17
While the country’s regulators, including the Botswana Unified Revenue Service, have previously pointed to the possibility of tax avoidance and dirty money amongst some local businesses with owners of Asian origin, FIA’s study is uncharacteristically blunt in its findings of red flags within the community.
According to the FIA latest annual report released on Thursday, the study was carried out in the 2023-24 financial year and “was triggered by an observed trend of large cash deposits into bank accounts held by companies owned by people of Asian origin”.
“The deposits are then followed by immediate electronic transfer of funds to Asian countries,” the FIA said in its report.
The study found several alarming trends which FIA described as “red flags,” namely:
• Cash deposits which are not consistent with business profile. • New accounts used to deposit large cash followed by immediate transfers outside the country • Bank accounts that do not reflect normal business transactions such as utility bills, rental or payment of salaries • Cash deposits characterised by new notes of high denominations inconsistent with the business profile • Cash deposits by locals into business accounts held by foreigners • Non registration for corporate income tax, value added tax and other relevant taxes
The FIA study did not clarify how many businesses were surveyed in the study, their size or in which sectors they are involved in. FIA officials could not be reached by Press time for details on the study and what the findings would be used for.
The findings are likely to rock the local business community, particularly as FIA’s study could be read as racially profiling some businesses and potentially blaming them for countrywide challenges in tax evasion and dirty money suspicions.
However, before FIA’s study, the BURS had flagged risks within some sections of the Asian business community, noting that there appeared to be either low tax collection efforts or a deliberate trend of avoiding tax.
The BURS embarked on a campaign some years ago to engage the Chinese Embassy in Gaborone and also print its education material on tax filings in different Chinese languages. However, since then, the tax agency has shied away from publicly commenting on which sections of the business community could be avoiding tax.
Meanwhile, FIA’s latest annual report also shows that the high tendency of consumers and others in the local economy to prefer cash, declined last year, with greater uptake of digital alternatives.
According to the report the value of cash transactions recorded a decline to P47.3 billion from of P61.7 billion in the previous financial year.
“A decrease in the cash transaction reports may be attributable to under reporting by some sectors and a shift towards more non-cash transactions, for example, digital payments, bank transfers,” the agency noted.
FIA also reports that in 2023-24 it “restrained” P31 million linked to online scams locally.
This figure reflects not only the global rise in cyber-enabled fraud but also the increasingly sophisticated tactics used by scammers to lure citizens and businesses into digital traps.
“In response to the threat, FIA supported the relevant stakeholders to raise public awareness regarding the online scams. “In addition, FIA continues to work with its domestic and international partners to prevent, detect and combat all forms of financial crime. In order to assist in fighting these crimes and as part of its core mandate,” the agency said. Ends...