Minister of Finance and Economics addresses tax issues and the update of tax amnesty

We take time this morning to update you on matters relating to the Tax Amnesty, which started on 1st July 2021 and is due to end on 30th June 2022. I will also cover issues relating to general administration and collection of taxes in Botswana.
Botswana Unified Revenue Service (BURS) was established in 2004 with a view to streamlining the assessment and collection
of the income tax, value added tax, capital transfer tax and customs and excise duties and any other taxes that the Minister
of Finance and Economic Development may determine.
When BURS was establishment, BURS inherited all tax debts that existed as at 1st April, 2004.
Some of these arrears had a history of not being collectable due to a number of reasons, including; liquidated companies, non-operational entities, deceased individuals and insolvent individuals.
The objective of the Tax Amnesty Scheme was to ease the burden on taxpayers with outstanding tax liabilities, by granting them an opportunity to clear the total principal tax owed in exchange for write-off of interest and penalties charged during tax periods prior to 1st July, 2021.
Tax Amnesty is effective in recovering outstanding taxes because of the reduced penalties and interest charges. Typically, such a scheme is characterised by a blanket waiver
of interest and penalties, subject to the taxpayer paying the outstanding principal tax amount during the period of the amnesty. Tax Amnesty schemes are common globally and even in our region.
However the Tax Amnesty Scheme that was extended to 30th June, 2022 to allow for more taxpayers to benefit from the dispensation.
In 2021, Cabinet approved the introduction of a Tax Amnesty Scheme for Income Tax under the Income Tax Act and Value Added Tax (VAT) under the Value Added Tax (VAT) Act during the period 1st July, 2021 to 31st December, 2021; and that subject to the taxpayer paying off hundred percent (100%) of
their outstanding principal tax amount, hundred percent (100%) of the outstanding interest and penalties be written off.
I am informed that, 52% of the taxpayers in arrears have applied for the Tax Amnesty. This is quite an improvement as compared to less than 10% reported as at 31st December,
2021. This implies a positive response after the extension. I am, however, still concerned by the 48% taxpayers in arears who have not come forth to take advantage of the Scheme;
considering that we are left with less than two (2) months.
BURS is continuously working on initiatives to improve the uptake of the Tax Amnesty and has currently engaged Business Botswana and Botswana Institute of Chartered Accountants
(BICA) to encourage their members to apply for the Amnesty. These initiatives include having a dedicated desk for assisting
taxpayers to apply for Tax Amnesty and making telephone calls to taxpayers who have applied.
I also wish to share some statistics relating to the role of BURS:
i. on average, 77% of Government revenue and grants comes from the revenue collected by BURS;
ii. in the current financial year 2022/23, BURS is expected to collect P46.33 billion (which is 68% of the P67.87 billion revenue needed for financing Government projects and programmes);
iii. in Botswana, on average, imports of P70 billion and exports of P60 billion are processed annually. This significant work is done by BURS, to facilitate timely importation of raw materials and machinery necessary
to stimulate growth of industries in the economy; which leads to employment creation and poverty reduction.
An important aspect worth highlighting is that “attention be paid to ensuring that those who should pay taxes, do so”. As much as it is a responsibility of those that should pay taxes to come forward to do the needful, the need to have an efficient and effective tax collection system cannot be overemphasised.
In light of that, we identified the following as key activities in assisting BURS to ensure operational efficiency in tax revenue collection:
i. Review of tax legislation – We are undertaking a holistic review of the Value Added Tax Act and the Income Tax Act to ensure that these legislations anchor
the efficacy of tax revenue mobilization in the modern society. The review will result in the enactment of a new Tax Administration Act, as well as revised Income Tax Act and VAT Act;
ii. Leveraging on Information and communication Technology (ICT) – this is in alignment with one of the national priorities of the Government Reset Agenda, which is to leverage on digitalisation with the view to growing the economy of the country and improve service delivery. There has been significant investment in ICT systems to enhance operational efficiency in revenue collection and service delivery. Two major ICT systems were procured in the last 3 years; namely, Customs Management System (CMS) and Lekgetho Live. CMS has reached its maturity as evidenced by its optimal usage by taxpayers and traders.

Lekgetho Live, on the other hand, continues to
experience challenges which BURS continues to address.
iii. Increased tax audits and inspections –BURS is enhancing the capacity, skills and capabilities of its auditors to ensure that there is no tax revenue that eludes the Government. This includes training tax Auditors are continuously being trained in general,
auditing techniques and in specialised areas such as international financial reporting standards, auditing the telecommunications, mining, retail and financial sectors, as well as transfer pricing. To that effect, the Auditors have commenced audits in these specialised sectors and BURS continues to explore the possibility of auditing other areas such as the tourism sector.

At this point, I encourage all those who have not taken advantage of the Tax Amnesty Scheme to do so before 30th June 2022. I wish to thank you the media for the role you play in public education and transmitting information.
In conclusion, I wish to urge all of us, to work together to ensure and sustain revenue stability for the much-needed growth and development to better the lives of the people of Botswana.