09 Aug 2020

The National Assembly on August 6 voted to pass an Income Tax Amendment Bill as presented by the Minister of Finance and Economic Development, Dr Thapelo Matsheka.

Members of Parliament from both sides of the political aisle were unanimous in voicing their support for the bill.

Having passed through the committee stage, it was put to a vote, where all 50 MPs present elected to pass the bill and none voting against it with 13 other members absent.

Dr Matsheka had told the Parliament that the objective of the amendment was to allow the country to meet its international obligations with regard to effective exchange of tax information and transparency in tax issues.

Providing background, Dr Matsheka revealed that in June 2017, Botswana joined the Base Erosion and Profit Sharing (BEPS) inclusive framework.

“The BEPS agenda is focused on closing the gaps in international tax rules that multinational enterprises may use to artificially shift their profits to low or no-tax jurisdictions,” Dr Matsheka said.

By joining the BEPS framework, Botswana committed to complying with its standards and to participate in peer review mechanisms, the minister said.

Upon complying, Botswana would be allowed to sign the Convention on Mutual Administrative Assistance in Tax Matters, an international instrument providing for the reciprocal exchange of tax information among signatory countries, Dr Matsheka said. This convention provided for cross border tax examination and assistance in tax collections.

“In order for a country to be allowed to sign, its legislative framework has to be seen by other countries that have signed to allow for effective implementation,” Dr Matsheka said.

The minister added that the country had been working on meeting some of the set standards, including countering harmful tax practices, preventing harmful tax practices, transfer pricing documentation and enhancing dispute resolution.

He also revealed that since October 2019, Botswana had been undergoing review by the Organisation for Economic Cooperation and Development (OECD) secretariat in order to be allowed to sign the convention and deficiencies in the country’s Income Tax Act were identified.

“Botswana was given an extension by the European Union secretariat to sign the convention by August 31, 2020 and to ratify it by August 31, 2021,” Dr Matsheka said.

As such, Section 5 of the Income Tax Act was being amended to provide for certainty on confidentiality, authorised use of tax information and give clarity that Botswana would not introduce any laws overriding international agreements. ENDS