Net closes in on tax evaders

Brian Benza
Staff Writer | Thursday July 11, 2013 00:00

 

Finance Minister Kenneth Matambo read the Banking Amendment Bill for the second time in Parliament this week, taking a step further in dissolving secrecy provisions in the Banking Act. This will allow disclosure of confidential information by banks to the Botswana Unified Revenue Services (BURS) without requiring a court order.'This will facilitate disclosure of banking information to be used by BURS in its function to counteract tax fraud and other forms of tax evasion as well as exchange information with countries with which Botswana has concluded double taxation avoidance agreements, whenever required to do so by the treaty party,' said Matambo.From the second reading, the bill will be debated by committee members followed by the third reading  before the President signs it into law.

In an effort to widen the tax base and improve state revenues, BURS last year placed a requirement on individuals earning P3,000 per month and above to register for a Tax Identification Number (TIN) for tax returns submissions, under a new regulation designed to enhance accountability for taxation.All tax transactions involving an individual, including from sources other than employment, will be filed under the same TIN account.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.

At a G-20 summit in November 2011, former French President Nicolas Sarkozy called for Botswana, alongside 11 other countries, to be excluded from the international business community, saying the country was a tax haven that did not have a 'suitable legal framework for the exchange of tax information'.Under the first phase of the review by the Global Forum, Botswana has been urged to strengthen institutional and legislative frameworks to prevent illicit international financial flows, which have the potential to tarnish the integrity of the country's financial system.'Botswana will proceed to the second phase of the review once the inconsistencies identified in the first phase, which in the main involved revision of tax and banking laws, have been addressed,' Matambo told Parliament.

This year Botswana has concluded Tax Information Exchange Agreements (TIEAs) with eight European countries in response to an ongoing review by the Global Forum. In an earlier interview with Mmegi Business director of Tax Policy in the Ministry of Finance Boikanyo Mathipa said in an effort to shake off the tax haven tag, Botswana is not only amending her laws to do away with the deficiencies observed by the Global Forum but it is also amending the Exchange of Information Article in the Double Taxation Avoidance Agreements (DTAAs) that are currently in force.

'Apart from the deficiencies in 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. For any country to pass the review, it has to have the ability to exchange information by having no secrecy clause in its banking law, to have provisions that allow its revenue authority to exchange tax information with other tax jurisdictions and to have a minimum of 12 international agreements that are compliant with international standards,' she said.

Botswana has so far concluded negotiations of Protocols to Amend the Article on Exchange of Information in the Double Taxation Avoidance Agreements (DTAAs) with Sweden, Seychelles and South Africa to allow for effective exchange of information for tax purposes.