The Botswana Unified Revenue Service (BURS) is now taking aim at landlords who are dodging the tax they are supposed to pay on rental income, BusinessWeek has established.
For the upcoming 2020-2021 financial year, the taxman has set a target of P44.4 billion and the agency has ramped up tax collections across previously overlooked lines. In his budget speech last month in which he unveiled a P5.2 billion deficit for 2020-2021, Finance Minister, Thapelo Matsheka said rather than raise taxes, the focus would be on enhancing collections to ensure that everyone who must pay, pays. The campaign has already seen the BURS seize thousands of vehicles from second-hand dealerships suspected of cheating the taxman of billions of pula over the years by undervaluing their imports.
This week, BusinessWeek established that BURS officials are already questioning tenants in multi-residential compounds in Mogoditshane and Tlokweng digging up information about the landlords.
“BURS officials have been going around, especially on multi-residentials asking about the owner and the amount we pay on our rented houses on a monthly basis,” one resident said.
It is understood the information gathered will be used to follow up on the landlords and check whether they are paying the five percent annual rental income tax required by law. Under the law, rental income for individuals is treated as a business and landlords are required to submit it as declared earnings each tax year for assessment. However, many landlords are suspected to be conniving with their tenants to dodge the taxman. “When they fill in their tax return forms every year, tenants state they don’t rent or that they own their
“But this is a leakage to the BURS and the nation at large,” a BURS insider told BusinessWeek. According to local tax expert Jonathan Hore, taxing individuals is not easy, as they do not keep records making it easier for them to dodge BURS while some people do not understand the importance of paying tax.
Several years ago, the BURS mounted campaigns that rental income, be it from backyard rooms or any other property, should be reported with other sources of income on a yearly basis. The campaigns, however, died down over the years, apparently leading to rising non-compliance by landlords.
Efforts to reach BURS were not successful as they had not responded to the questionnaire sent to them by the time of going to press.
BURS acting commissioner general, Segolo Lekau previously told journalists that a more patriotic attitude to taxes was critical and Batswana needed to view paying taxes as a civic duty rather than a nuisance to be avoided.
“Our taxes are the lowest in the region and I’m saying to the extent that we are all paying taxes, there’s no need for us to increase them.
“What we need is voluntary compliance.
“However, we are running into difficulties of people not paying taxes and they think they have cheated government or BURS.
“You have actually cheated another Motswana.”