The government 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. That is the basic assessment that Benjamin Kesenyang, a BURS officer, makes in the latest edition of BURS NEWS, an in-house newsletter published quarterly.
His basic argument is 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 some duties. 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.
He states further that ICT devices can electronically store “thousands of videos and millions of music files” which customs officers have no way of detecting and are thus unable to levy duty on them. The problem seems intractable even for him because even while stressing the need for BURS to stamp its footprint on online transactions, he acknowledges the fact that doing what is needful lies outside his professional competence.
“… [I]s it possible to have an electronic customs that can detect these electronically stored and shared goods? Perhaps that question can be answered by IT experts and not a customs officer like me,” he writes.
One such expert is Seganeleng Matale who expresses cautious confidence that it is possible for BURS to expand its digital footprint in the manner Kesenyang suggests. Matale locates the problem not in the realm of IT but legislation. Whilst acknowledging that alongside other African countries Botswana has harvested a bountiful from ICT, he expresses some dismay that in terms of IT legislation on the continent “we are 10 steps behind our western counterparts.” Matale, who is the services manager at Desktop Holdings, further contends that the latter have not been too slow to capitalise on this situation and have displayed marked disinclination to cut Africa in on the benefits they are reaping. He gives an example of Botswana residents who use credit cards to buy goods from eBay, the largest online store which is based in the United States. He notes that when these parties transact, it is impossible for BURS to be part of the picture because Botswana’s policies on e-commerce and e-governance are not up to the task.
“Our customs regulating body does not have any form of agreement with any of the major online stores. This not only makes it lose out on the revenue it could be generating, but it also puts citizens at the risk of being charged exorbitant tax rates from off-shore companies,” Matale told Sunday Standard.
However, even if Botswana had laws to regulate cyber trade, that alone would be inadequate. In 2011, Botswana hosted a conference on international e-governance laws and policies that was attended by delegates from all regional economic communities of Africa as well as the US, European Union, Asia and the Middle East.
Matale, who also attended the conference, says that the general feeling at the end of the conference was that there is absolute need to have an independent universal body to regulate all online trade. Such body would have the tone and texture of those like the World Trade Organisation and the International Labour Organization. Such sentiment notwithstanding, there has been no substantive progress towards such ideal.
Presenting the 2013/14 budget last month, the minister of finance and development planning, Kenneth Matambo, announced a surplus of P3.4 billion in 2011 which was a result of the recovery in the world diamond market prices and higher Southern African Customs Union receipts “which included an additional P2.5 billion adjustment for an earlier SACU under-payment. However, preliminary estimates of the overall balance of payments indicate a deficit of P1.5 billion for 2012.”
Matale says that with a more watertight e-taxing system, SACU would be able to make a lot more revenue than it presently does. The system he proposes is one in which all residents in SACU countries would have their records stored in an integrated e-gov system that would contain all related attributes (fields) of each entity – that being each citizen.
“Each entity would be related to one or more other entities (like banks and e-retailers) to form a comprehensive entity-relationship diagram. Each table of entities must have a unique identifier which separates one entity from other entities in the same table called a Primary Key in Relational Database Management Systems. In the case of citizens in a country’s database, this will be an ID number; in a banking environment, it will be an account number whereas in e-retailers, it will be their respective VAT numbers,” he says.
His promise is that past this thicket of jargon, the taxman would have a fool-proof tax collection system that would guarantee more money. He gives an example of a Botswana resident who shops in Sandton, a Johannesburg suburb, using a VISA card. All transactions of this shopper would be recorded in the integrated SACU system in real time.
“Before he even leaves the shop, all his transactions have been entered into the border e-passport system. When he crosses the border back into Botswana, no one would have to search his car because everything (including the total amount of duty due to customs in Botswana) would show in the screen when his e-passport is scanned,” Matale says.
His sense is that this would only be possible if an international e-taxing system is in place and rigorously enforced by all contracting parties.
The current situation notwithstanding, Kesenyang acknowledges the important role that the automated system for customs data (ASYCUDA) has played in changing the environment in which customs operates.
ASYCUDA, a computerised customs management system that can be configured to suit the national characteristics of individual customs authorities, is used for most foreign trade transactions.
Developed by the United Nations Conference on Trade and Development at the urging of the Economic Community of West African States (ECOWAS), the system provides for electronic data interchange between traders and customs.