Member of Parliament for Nata-Gweta, Paulsen Majaga has alleged that some small businesses such as car dealerships which deal strictly with cash selling imported and second-hand motor vehicles could be dodging the taxman’s axe.
Majaga, who is a member of the Parliamentary Public Accounts Committee said Tuesday when the ministry of Finance and Development Planning appeared before the committee that not enough is being done by Botswana Unified Revenue Service (BURS) to ensure that taxes are collected from such businesses.
Permanent Secretary in the Ministry of Finance and Development Planning, Solomon Sekwakwa however holds a different view. Sekwakwa assured Majaga that raids, although not regular and consistent, are conducted on suspicion of certain problems. He added that the tax is levied based on the accounting books, which seek to trace the entire value chain of a business, but due to capacity limitations not every small business can be raided.
By law, it is expected that every other form of income received from rendered services must pass through the tax man. Majaga’s interest was in finding out if there are adequate and efficient processes that can detect if such kinds of businesses are adhering to the tax law.
His concern was that tax avoidance comes easier with cash transactions given that a misrepresentation of figures can be recorded so as to reduce the tax bill. It is therefore the lack of automatic paper trail to transactions done that gives the impression that the tax man might be cheated of what is rightfully his.
Tati East Member of Parliament Guma Moyo chipped in to suggest that perhaps BURS should consider levying tax on revenue rather than on profit made, to which Sekwakwa responded by saying that the Ministry is mindful that BURS needs to be strengthened so as to audit and inspect effectively and charge appropriately against the wrongdoings.
MILLION PULA LOSSES
BURS has itself previously admitted that Botswana is making less money than it should because some online transactions cut out the Botswana Unified Revenue Services (BURS), which levies duty on goods entering the country.
In 2013, Benjamin Kesenyang, a BURS officer noted in an edition of BURS NEWS that with increased information communication technology (ICT) connectivity, it is both possible and convenient for people to use a swathe of technological devices to transmit goods outside the matrix of the customs system.
“For example, the use of IT makes it possible for people to transfer goods like music and videos over the internet without declaring them to customs. However, if the same music and videos are physically brought into the country in other formats like CDs and DVDs, then it will be possible for customs to charge duty. If the music and videos are shared or transferred over the internet, it is difficult for customs to collect the duties since there is no cyber customs. Simply put, there are no electronic customs officers in the internet world,” says Kesenyang, who wrote the article in his personal capacity.