Wednesday, June 19, 2024

Three mining companies seek tax relief

Soda Ash Botswana, the embattled BCL Limited and Tati Nickel have approached government to be included in the current corporate tax which is lower in rates than the Tax Agreements the mining companies entered into.
Currently Tax Agreements provide higher tax rates, dealing Soda Ash Botswana, BCL and Tati Nickel heavy financial blows.
The mining companies agreements which proved unsustainable with their current dwindling financial status. They approachedthe Minister of Finance and Development Planning, Kenneth Matambo,to be included in the current corporate tax rates under the Twelfth Schedule introduced under the Income Tax Act of 1999.
“Under the Schedule any mining company which was subject to an existing mining tax agreement was allowed to continue to operate under terms of such Agreement  or make a once only election to come under the provisions of this Schedule not later thanJune 30, 1999. A number of affected companies did not opt to be taxed under the Twelfth Schedule,” revealed Matambo in the just ended Parliament when presenting the Income Tax Bill specifically for the change of the provision. 
“The main reason why the mining companies did not opt out of such Tax Agreements was that the Tax Agreements they entered into offered more favourable tax rates than those in the Twelfth Schedule. However, with periodic review of our tax regime some tax rates provided in the Tax Agreements are now higher than the tax rates provided under the Twelfth Schedule and it is therefore no longer favourable to the companies to be taxed under such Tax Agreements,” he added, rubbing the opposition MPs the wrong way,who demanded the names of the mining companies looking for a change of status quo.
Matambo informed Parliament that the three companies approached his office long before Tati Nickel and BCL were put into provisional liquidationat the beginning of the year.
“We both know the financial problems that beset Tati Nickel and BCL. For the past 43 years BCL has been operating under unfavourable conditions. It was not making any huge profits like some of you say. For the past three years BCL did not pay dividends,” the Minister further revealed, responding to opposition legislators Shawn Ntlhaile and Wynter Mmolotsi, who argued the mineral sector was making huge sums of profits to deserve be taxed higher.
The opposition MPs wanted to know all the companies that sought relief.Matambo had initially not mentioned the names of the companies in his presentation of the Bill.
“Agreements entered with government must be transparent. Anything short of such sparks suspicion and promotes corruption,” argued opposition MP Phenyo Butale.
He observed BCL was in trouble because of maladministration as the Minister eventually revealed the names of the mining companies to Parliament.
Butale questioned the relevance of BCL and “help to our economy”as it was liquidated and there was no need for tax leniency.
Mmolotsi argued it was not for the good interest of this country for the mining companies to “dictate terms” to the Minister just because they could have audience with him anytime and strike a deal.
He said the Tax Agreements was good to them then but they are making a U-turn when things go wrongto enter the corporate tax regime.
“The mining sector accumulates huge profits and as such we should tax them heavily,” he earlier said before the Minister revealed the names of the companies.
With no legal authority to reduce the tax rates provided under the Tax Agreements or cancel, Matambo requested Parliament to amend the law to give affected companies another window through which to opt out of such agreements.
“The date of June 30, 1999 which is currently provided under the Twelfth Schedule has long passed hence the proposed new date of June 30, 2017,” he concluded as Parliament eventually passed the Bill.



Read this week's paper