Botswana ups drive to shed 'tax haven' label

Brian Benza
Staff Writer | Friday May 24, 2013 00:00

 

Last week, Botswana signed Tax Information Exchange Agreements (TIEAs) with Guernsey in London.Arrangements are being made to sign a similar agreement with The Isle of Man soon. This follows February's agreements with six other European countries, signed in France. 

The conclusions of the eight agreements this year are in response to an on-going 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.

Botswana is also accused of not having adequate international agreements under which information for tax purposes could be exchanged. Last year the country was named alongside 11 other countries to be excluded from the international business community because they are tax havens. 

In an interview with the Business week, Director of Tax Policy in the Ministry of Finance, Boikanyo Mathipa said that in efforts 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. 

'The main laws that were considered to have deficiencies are 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.

'For any country to pass the review, it has to have 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.

Parliament approved the amendment of the Income Tax Act in December 2012 to allow the Botswana Unified Revenue Service to exchange information for tax purposes.Additionally, the amendment of the Banking Act is at an advanced stage and may be presented to the June/July 2013 session of Parliament for approval. This amendment is mainly meant to repeal strict banking secrecy provisions and to allow for banking information to be provided for the purpose of exchanging information with treaty partners.

According to Mathipa, efforts are continuing to initiate amendments to the existing DTAAs to make them comply with international standards on transparency and exchange of tax information.  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. 

'The Protocol with Sweden was signed in Paris, France on 20th February, 2013 while that with Seychelles was signed in Pretoria, South Africa on 12th March 2013. Arrangements are still being made to sign the protocol with South Africa.  Negotiations to amend the DTAA with Barbados and France are also at advanced stages,' she added.  Since the amendment of the DTAA model to make it compliant, Botswana has also concluded agreements with China, Zambia, Belgium and Luxembourg.