Botswana strongly rejects tax haven label

Isaac Pinielo | Friday December 16, 2016 15:13

Since 2012, the diamond-rich country has been excluded from the international business community because the country was labelled by France as a tax haven that did not have a “suitable legal framework for the exchange of tax information.”

Following the blacklisting, Botswana stepped up efforts to remove secrecy provisions and deficiencies in its tax information exchange agreements and laws in a bid to reverse impressions that the country may be a tax haven.

Despite all the efforts, the country still finds itself blacklisted. Recently at the 19th meeting of the ACP-EU joint ministerial trade committee held in Brussels, Belgium, the Minister of Investment, Trade and Industry, Vincent Seretse expressed concern at what he termed “unsolicited” blacklisting of the country as an uncooperative tax jurisdiction by France.

“Botswana strongly contests the blacklisting in view of her cooperation with the Global Forum on Transparency Exchange of Information or Tax Purposes,” he told delegates.

According to the minister, the country has in all respects been transparent and has continually responded to the Global Forum fair taxation requirements with the objective of being transparent and compliant in the exchange of tax information at all levels.

He noted that the country’s commitment in response to transparency and in exchange of information has been evidenced by various engagements of its treaty partners to renegotiate “our existing Tax Treaties or Protocols to amend existing Double Taxation Avoidance Agreements (DTAA) in place (that were considered non-compliant)”.

“The exercise of reviewing our domestic tax and banking laws to meet international standards including the OECD requirements started as far back as 2010,” Seretse said.

He further pointed out that Botswana has worked on the deficiencies, including amending DTAAs that she has with other countries that were not compliant.

He said the country then requested for a Supplementary Report from the Global forum and the Report was discussed at the Global Forum Peer Review Group (PRG) meeting held in Malta in March 2014 where Botswana succeeded and proceeded to Phase 2 Review. It should be noted that the PRG was chaired by a French national.

“It, therefore, comes as a great surprise that notwithstanding all our efforts we find ourselves blacklisted,” he stressed.

Seretse insisted that the move appears to go against the spirit of cooperation that has been nurtured over the years, noting that the country remains steadfast that transparency assessment on tax matters be carried out strictly on the basis of the OECD standards.

He said Botswana has concluded eight agreements last year in response to a review by the Global Forum on transparency and exchange of information for tax purposes following revelations that some of Botswana’s laws have deficiencies, which could hamper the country’s ability to exchange information for tax purposes.

The country was also accused of not having adequate international agreements under which information for tax purposes could be exchanged.

The main laws that were considered to have deficiencies were the Income Tax Act and the Banking Act. All of the existing 12 DTAAs, except that with the United Kingdom, were seen not to be compliant with the standards on exchange of information for tax purposes.