The carbon tax was first mooted in the Economic Recovery and Transformation Plan approved by Parliament in September 2020, while the digital tax was proposed in the Budget Strategy Paper of October 2020.
Giving an update on the digital tax at a BURS briefing last week, finance minister, Peggy Serame said the target would be multinational entities extending their products into Botswana.
“The digital tax will affect top companies because there are a lot of entities that are doing business here, while domiciled outside and they are not taxed,” she said in response to enquiries from BusinessWeek. “We want that at a certain level. “The global standard is that the money they are making in Botswana, the country must make something from that.”
Serame continued: “Look at Amazon. How much of the business is from Botswana and is Botswana benefiting at all? “To a large extent, we are not saying we will charge people in Botswana because they already have other taxes, but we should be receiving more from the multinationals and others.
Tax Policy director in the finance ministry, Keabofe Medupe said the digital tax was in line with international efforts to clamp down on Base Erosion Profit Shifting, a term that refers to a tactic by multinational enterprises to reduce their tax obligations by exploiting gaps and mismatches between different countries' tax systems.
“We are member of the Base Erosion Profit Shifting initiative under the Organisation for Economic Co-operation and Development,” she told BusinessWeek. “They are working on regulations concerning that and as a member, it is something we will adopt when these are ready. “At the end of the day, there’s a lot of leakage in that space and efforts around that are in the pipeline.”
In October 2020, the African Tax Administrators Forum (ATAF), of which Botswana is a member, released a blueprint guiding member states on how to approach taxing the tech giants. Local tax expert, Jonathan Hore said ATAF is concerned that tech giants derive revenue from Africa without paying taxes as they do not need offices wherever their clients are located.
ATAF proposes that a tax of between one percent to three percent of the annual revenue derived in member countries be subjected to a digital sales tax.
“The tax is targetted at, among other revenue streams, online advertising, online gaming services and services delivered through online marketplaces,” he said.
Meanwhile, BURS commissioner of operations, Phodiso Valashia told BusinessWeek the carbon tax was currently going through consultations with environmental stakeholders, ahead of its commencement.
He said the tax was a two-pronged affair, targetting environmental protection and revenue mobilisation for government.
“It’s an environmental measure to deal with harmful issues such as second-hand vehicles and on the finance side, it is about revenue mobilisation like any other tax. “We have taken the view that to the extent that it’s an environmental tax, there’s a need to consult with other stakeholders to make sure that’s what the principles in the environmental space believe is an appropriate measure,” he said.
In documents made public by the finance ministry, government had estimated that it could raise as much as P700 million annually from the carbon tax. No estimates were provided for the digital tax.
