Botswana and The United Arab Emirates have been granted permission by the Global Forum on Tax Transparency to move on to the second phase of becoming fully fledged forum members.
The group, which is part of the Organisation for Economic Co-operation and Development, said after making substantial changes to implement recommendations, the two countries are “no longer blocked from moving to the next phase of the peer review process”. Passing the phase one peer review means Botswana, alongside UAE, Colombia, Latvia and Saudi Arabia which are at the same stage, can pass on to the second phase peer review. After submitting to the phase one review, the UAE, alongside Botswana, was asked to make a number of changes which have now been completed.
Botswana has in recent months 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. The country 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.
Botswana was also accused of not having adequate international agreements under which information for tax purposes could be exchanged. The country was named alongside 11 other countries to be excluded from the international business community because they are tax havens.
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.
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 was presented in Parliament last year for approval. This amendment was 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.
At a G-20 summit two years ago, French president Nicolas Sarkozy called for Botswana, alongside eleven other countries, to be excluded from the international business community because the country was a tax haven that did not have a “suitable legal framework for the exchange of tax information.”