A raft of laws have either been passed or are due in Parliament, which, when together, aim to plug holes in our tax administration through which an estimated P8 billion has been flowing away from national coffers.
Through practices such as money laundering, trade misinvoicing and the abuse of transfer pricing, corporates and individuals in Botswana have perfected the art of sidestepping Botswana Unified Revenue Services (BURS) over the years, assisted by tax advisories both locally and abroad. Money laundering involves concealing the source or purpose of “dirty” money while trade misinvoicing is a practice involving the falsification of import or export values to trick the taxman. Transfer pricing, a term most Batswana are ignorant about, involves transactions between related entities. The violation comes when the value or terms of these transactions is manipulated to lower a tax liability.
While the concepts involved may appear complex and removed from ordinary Batswana, some of these practices have become so commonplace that they are no longer thought of as unethical by perpetrators. Think of the hundreds of millions of Pula annually lost through under-invoicing of grey import vehicles, through a trail of collusion stretching from Japan, to Durban to Mogoditshane.
Think of international companies that have landed in Botswana to take advantage of tax incentives, promising sustainable jobs and wealth, only to either under-deliver or disappear when the tax holidays end, leaving with their equipment, skills and monies.
Botswana has been losing an average of P8 billion annually over the years, as criminally intelligent corporates and individuals have exploited lapses in
When confronted with evidence of the abuse in 2016, Finance Minister, Kenneth Matambo famously replied that people should not believe everything they read on the Internet, a ringing confirmation of official denialism at the highest levels. Besides the new laws, a change in attitude was confirmed by new president, Mokgweetsi Masisi, when he broke precedent by becoming the first leader to tackle tax evasion, avoidance and other abuses in an inaugural address.
Diamonds are petering out and other traditional drivers of national income such as agriculture are under threat from climate change. The billions of Pula that have been ploughed into preparing for a post-diamond future, such as through infrastructure investment and skills development, will count for nought if tax revenues continues to spill through our fingers.
“…compelling accountants and tax advisors to pay their first professional allegiance in the discharge of their duties to the nation, then ensuring that their clients pay in full taxes that are legitimately due.”
- President Mokgweetsi Masisi