The number of companies that pay tax is expected to grow significantly following the signing of a Memorandum of Understanding (MoU) by Botswana Unified Revenue Services (BURS) and the Companies and Intellectual Property Authority (CIPA).
BURS Commissioner General, Ken Morris said Wednesday at the signing ceremony that his entity intends to use information that will be supplied by CIPA to follow up on potential tax payers. By August 2014, figures from the government tax collection agency showed that, over the last 10 years, Botswana’s taxation register grew from 44,359 taxpayers to 312,447 taxpayers, an increase of 604 percent. CIPA, which is mandated with facilitating establishment and operation of business through registration and protection of intellectual property rights, has agreed to assist BURS with statistics and company information required for tax purposes. CIPA has a statutory obligation under the Companies Act to seek a no-objection notice from the Commissioner of Taxes whenever a company is de-registered.
On Wednesday, CIPA Registrar General-Conductor Masena said in spite of its co-existence with BURS over the years, either voluntarily or involuntarily, the two organisations have never sat at a table to formalise a working relationship.
“Through our combined effort, our organisations will create many significant activities which will target individuals and the business community in their quest to set up business, create employment for citizens and improve the global competitiveness of the country whilst intensifying revenue generation for the government,” said Masena.
The MoU comes at a time when BURS has been recording a decline in its collections. The agency’s annual report shows that, apart from income tax, all other collections declined considerably; with VAT declining by 7.3 percent from P5.4 billion to P5billion while customs receipts declined by 7.4 percent from P14.2 billion to P13.1 billion in 2014. BURS revealed that most of the collections came from the Training Levy and Alcohol Levy which contributed 45.5 percent and 44.4 percent respectively. They were followed by levies from Transport Permits, Road Safety and Foreign Registered Vehicles, which contributed 15.9 percent.
Sunday Standard is informed that BURS is currently busy scrutinizing issues related to Value Added Tax (VAT) refunds. Botswana’s gross VAT collection in 2014 stood at P7.7 billion while total refunds paid to taxpayers amounted to P2.9 billion, reflecting a net collection of only P5billion. The refunds are a growing concern to BURS as they continue to rise over the years, in the process subduing overall VAT collection. According to the BURS financial report, the refunds grew by 31.2 percent in 2014, prompting the tax agency to consider implementation of a number of interventions to authenticate the refunds. In a bid to decrease the risk posed by the refunds, BURS has selected a few companies for an audit. Taxpayers selected for audit were reportedly drawn from the export market, property development market and those involved in major infrastructural developments.