By Kabelo Seitshiro
The Botswana Unified Revenue Service (BURS) Acting Commissioner General, Segolo Lekau, has bemoaned the low level of tax literacy in Botswana.
He said for the country to realise its aspirations to transcend from an Upper Middle Income to High Income status it will remain a mirage unless taxpayer behaviour changes to embrace voluntary compliance.
Lekau was speaking at the annual First National Bank of Botswana (FNBB) national budget review. He said tax incentives on their own are not a panacea for development but good governance and the rule of law, infrastructure and security.
He lamented illicit financial flows, trade mispricing, lack of taxpayer compliance and the low uptake of e-services as some of the challenges facing the BURS.
“BURS contribution to the government budget has averaged 70 percent over the past four years. BURS role, with respect to the aspirations of government as presented by the Minister, is to mobilise resources in the form of taxes and to facilitate trade,” he said.
Quizzed on the anticipated legislative changes for transfer pricing effective July 2019, his response was that taxpayers must keep records of related party transactions. He said there is need for clarification on treatment of related parties’ transactions. LEKAU said legislation allows for Advance Pricing Agreements (APAs).
Further quizzed on whether the Botswana tax system enables for ease of doing business, he replied in the affirmative saying the enactment of new legislation, the Electronic Communications and Transactions Act which legitimises the use of on-line services, demonstrates BURS commitment to ease doing business in the country.
He also stated the BURS introduced on-line filing and payment platforms in 2016 as well as trade facilitation initiatives.
“In Botswana various exemptions and incentives are available under the revenue laws. Exceptions are accepted as base erosion features but accepted as necessary in some areas to fill gaps or to meet certain policy needs within any economy,” said Lekau.
Lekau believes the willingness to pay tax stems from government’s fair distribution of financial resources to provide social and other developmental services to the country’s population.
He is of the view that a transparent service oriented tax administration that has the citizens’ trust remains key to facilitation of a country’s realisation of the Sustainable Development Goals (SDGs).
He added that therefore tax is a social contract between the state and the citizens.
“Some of the incentives for promoting private sector participation are selective incentivised corporate tax rates for various industries which are manufacturing, IFSC and Innovation Hub companies,” he stated.
He observed that there is growing international consensus on the importance and role of tax administrations as the main drivers of SDGs.
He added that the Addis Tax Initiative (ATI) recognizes that much of the increase in public financing necessary to reach the SDGs will have to be g domestically generated saying it is a concept known as Domestic Resource Mobilisation (DRM).
“No major interruptions are anticipated for existing IFSC companies and Ministry of Finance will be working closely with Ministry of trade and BITC on the IFSC revitalisation effort during 2019,” said Lekau.