BURS reforms widen tax base five fold

Brian Benza | Friday November 8, 2013 15:35

 

In an interview with Businessweek, Commissioner General Ken Morris said following amendments to the Income Tax Act of 2011, taxpayer registration has risen from 50,000 to over 250,000, mostly individuals registering for the Tax Identification Number (TIN).

“We have seen a phenomenal increase in the taxpayer registry and we expect this to translate into higher revenue mostly from individual secondary income streams, such as rentals and other earnings and proceeds, which were previously not being declared,” he said Under the new regulation designed to enhance accountability for taxation by placing it at individual level, workers earning above P36, 000 per annum are required to register for TIN.

Prior to the amendments, people whose income was from employment were not required to register for the submission of tax returns as the Pay As You Earn system ensured deduction and submission of tax via company payrolls.

With the amendments, all tax transactions involving an individual, including from sources other than employment, will be filed under the same TIN account. Under the tax administration reforms, Morris says that BURS’ capacity has been boosted by the recent changes to its funding model. The parastatal no longer relies on the oscillating government appropriations but will be allowed to retain three percent of the revenues collected.  “The new funding model has given us the flexibility to carry out our mandate effectively. For this year, our revenue target is P31.4 billion so we can retain three percent of that for both our capital and operational expenses,” he said.

 BURS recently commenced an e-filing pilot project for VAT taxpayers whereby tax returns will be submitted electronically. The project, if successfully implemented, is expected to be extended to individual taxpayers in the next financial year. Furthermore, the tax system will be streamlined to eliminate opportunities for tax avoidance such as tax expenditures. Specific measures in this regard are expected to be considered as part of the 2014/15 budget speech.

“We are also advocating for a review of the tax system in a bid to modernise the laws so that it becomes easy for the tax payer to comply.

 “This will also include extending the self assessment to individuals. Currently, only a handful of companies are on the self assessment platform,” he added.Through an amendment to the Banking Act, BURS is now empowered to have access to bank accounts of suspected tax dodgers.

Morris insists that the objective of the law is to make sure that taxpayers comply and not to pry on people’s banking information.

“The amendment to the Banking Act does not make us an intrusive organisation at all. There is a process that we will follow,” he said.

While the Banking Act amendment will significantly boost BURS capacity to bust local tax evaders, internationally, the changes will also affect foreign investors who either hide assets in Botswana or avoid to pay the right amount of tax in the right jurisdiction.