10 Jul 2013

The Minister of Finance and Development Planning, Mr Kenneth Matambo says given the vulnerability of being a small economy, Botswana is prone to tax evasion and there is need to ensure that tax evaders have no safe havens to hide their income and assets.

Presenting the Banking (Amendment) Bill, 2013 for its second reading in Parliament on July 9, Mr Matambo said there was need to ensure that the right amount of tax was paid in the right tax jurisdiction, since in recent years, concerns had increased regarding tax evasion more especially through non-disclosure of banking information.

Mr Matambo explained that the Banking (Amendment) Bill would, among other things, seek to allow for disclosure of confidential information by banks to the Botswana Unified Revenue Service (BURS) without the requirement of obtaining a court order.

“This will facilitate disclosure of confidential information to be used by BURS in its function to counteract tax fraud and other forms of tax evasion as well as to exchange information with countries with which Botswana has concluded Double Tax Avoidance Agreements, whenever requested to do so by the treaty partners,” he said.

Mr Matambo also explained that due to the existence of the Botswana International Financial Services Centre (IFSC), Botswana was invited for a review by the Global Forum in March 2010 under phase one, which concluded that the country needed to strengthen its institutional and legislative framework to prevent illicit international financial inflows that could tarnish its integrity.

He said Botswana was yet to proceed to phase two of the review once inconsistencies identified in the phase one review had been addressed. “I am happy to note that Botswana has made some progress in this regard as the income tax act was amended in December 2012 to address the deficiencies identified in the Phase 1 review,” he said.

What remained, he said, was amendment of the Banking Act to protect the integrity of Botswana and also to satisfy the conditions of the Global Forum, which were, best international practice on transparency and the exchange of information for tax purposes.

Parliament was informed that the clauses to be amended in The Banking (Amendment) Bill 2013 are clause 2 (a) which amends section 43 of the Act by exempting the BURS from the need to file a notice of application for information with the court: by adding BURS to the list of privileged organisations to which banks may not refuse to give information.

The clause also clarifies that the information should be required by BURS to counteract tax fraud or other forms of tax evasion and also for the purpose of responding to a valid request for information under either the Tax Information Exchange Agreement (TIEA) or a Double Taxation Avoidance Agreement (DTAA).

Another clause to be amended is Clause 2 (b) which removes reference to BURS under section 43 (5) of the Act to do away with a requirement for BURS to obtain a court order to be provided with banking information. ENDS