27 Nov 2018

Tax Acts are normally drafted in such a way that they are efficient and able to cover a wide range of taxpayers. Case law teaches us that there are ordinary and legal meanings of almost every word. Words such as ‘person’ and ‘charity’ may not necessarily mean the same thing to the ordinary man on the street and a judge at courts of law. Therefore in whatever context we use, there is need to define such words, especially when we are dealing with matters of law. The Transfer Duty Act stipulates that all persons who acquire property whether through donation, purchase or other means shall be subject to Transfer Duty. Unlike the Income Tax Act, Value Added Tax Act and Capital Transfer Act, the Transfer Duty Act does not define what a person is.

A standard definition of a person for tax purposes will include among others, an individual, a body corporate and non-corporate bodies such as religious organisations, political parties, employee unions and other non-governmental organisations. Such definitions are normally included to avoid any doubt of who may be subject to tax or have any other obligations within such tax Act.  There is need to define a person for Transfer Duty purposes to avoid any confusion that may arise as to who is chargeable to tax or not. This will further avoid unnecessary disputes that may arise between buyers of property, Registrar of Deeds/Land Boards and Botswana Unified Revenue Service as most of the time these organisations are of the opinion that they are all tax exempt while there is nothing that expressly states that.

The Act has two rates that are applicable on the acquisition of property, 5% for citizens and 30% for non-citizens. The Act further clarifies that a citizen shall include a company that is 100% owned by a citizen(s) of Botswana. Organisations such as religious institutions, community trusts and other charitable organisations are not owned by individuals and belong to the public. Hence when it comes to such we do not talk of shareholding but rather trusteeship, therefore we suggest that the definition of citizen be expanded to also include such organisations that are registered in Botswana. Admittedly it may be argued that the use of the phrase “includes” in a description means that the listed items are not exhaustive. But it is advisable to make it clear for taxpayers by expanding the list of whom is regarded as “citizen”.

Otherwise, in case of a dispute in court, the contra fiscum rule may apply and taxpayers may easily win the case which may result in a loss to the fiscus. The contra fiscum rule is a common law principle stipulating that should a taxing statutory provision reveal an ambiguity, the ambiguous provision must be interpreted in a manner that favours a taxpayer. It will be in the interest of Botswana Unified Revenue Service to define a person and further elaborate on whom is a citizen or non-citizen.


Tumelo Rannau

A practising Tax Consultant, writes on his own capacity /73874566