Officials at the tax agency expect legislation for the Digital Services Tax (DST) to be placed before the December sitting of Parliament.
“That’s our wish, but the draft is still behind,” the Finance Ministry tax policy director, Boitshoko Keabofe-Medupe, told Mmegi during a briefing on Tuesday. “We had wanted it to pass through the July Parliament but because the draft was delayed, we are now seeing it going through Parliament in December. “It’s either it will be introduced in the calendar year or the tax year and we are still a bit behind, but the desire is that it must be in place.”
The calendar year would mean the tax kicks in before December 31 this year, while the tax year would mean a start before June 30 next year.
BURS acting domestic taxes commissioner, Segametse Radibe-Michael told Mmegi the plan was to enable the tech giants to pay Value Added Tax (VAT) on the services they sell in Botswana.
“It’s very difficult (to collect tax) in a situation where someone buys something online or hires a movie online. “The proposed amendment is that we will be requiring the major service providers to register for local tax and they will be charging people the VAT of Botswana. “The way the VAT system works is that if you want to register for VAT, you must be in the country and we want to change the laws, so that more service providers can register and have that VAT,” she said.
VAT is a tax paid by consumers and collected by businesses to remit to tax agencies such as BURS.
Radibe-Michael told Mmegi that government was currently reviewing tax laws plug gaps and improve efficiencies, including collections. One of these gaps is where Batswana are buying services online or from outside the country, while in the country.
The planned digital tax was first proposed in the Budget Strategy Paper of October 2020, as government scrambled to raise more money to fill the holes created in the budget by COVID-19. However, while other new taxes such as the sugar tax, were introduced in April 2021, the digital tax has been in planning over the years.
Radibe-Michael said the planned amendments were not unique to Botswana and tax authorities had already had positive feedback in discussions with tech giants such as Netflix.
“We have set up a team that is working towards the implementation of that tax and we have started consulting with service providers and their representatives such as Netflix to sensitise them about this law. “This law is not just here, but also other jurisdictions such as Kenya have started collecting taxes from remote service providers,” she said.
Digital Service Taxes have been growing in the global trade environment since 2018, but COVID-19 accelerated their implementation. The stated aim of DSTs is to ensure that countries get increased taxing rights over the profits of tech-based multinational companies that sell into their local market.
