04 Feb 2019

Government will continue to expand tax base through review of tax legislation to enable the revenue authority to effectively discharge its mandate.

Presenting budget proposals for the 2019/2020 financial year in Gaborone yesterday, the Minister of Finance and Economic Development, Mr Kenneth Matambo, said government’s focus was on simplifying the tax legislation and give it a priority to enhance tax compliance while reducing the cost of tax administration.

Mr Matambo indicated that government had reviewed the Botswana International Financial Services Centre tax regime, which led to the amendment of the Income Tax Act last year.

The amended regime, Mr Matambo said, had been assessed by the Organisation for Economic Cooperation and Development (OECD) last month and it was declared not to be harmful.

Moreover, Minister Matambo said amendment to the Income Tax Act introduced Transfer Pricing Rules and Thin Capitalisation provisions.

The Transfer Pricing Rules, Mr Matambo said, guarded against attempts by multi-national corporations to minimise their tax liability by transferring profits to low tax jurisdictions in order to pay less tax. He also said it guarded against where costs were charged to a company in a high tax jurisdiction to reduce profits and thereby pay less tax.

Minister Matambo said the thin capitalisation provisions sought to restrict the amount of interest on debt, which he said would reduce a company’ s profits and thereby reduce its tax payable.

In March this year, Minister Matambo would present a bill that would seek to amend the Transfer Duty Act.

He indicated that the bill proposed significant changes to the current act in an effort to modernize and close gaps in the existing law.

He stated that one of the significant changes was the exemption of citizens from paying transfer duty under certain circumstances; such as where a citizen required residential property for the first time to be used as own home.

He also noted that the amendment increased the exemption threshold from P200 000 to P500 000 for purposes of computing duty payable upon transfer of property.

Furthermore, Mr Matambo said during 2019/2020 financial year he would seek an amendment to the Capital Transfer Tax Act to align it with the Transfer Duty Act.

He said the amendments would, among others, include; removing the ceiling for P15 000 for exemption of transfer of property such as household goods and personal belongings to heirs, increasing the value of gifts that were exempted from being taxed from P5 000 to P25 000 and the transfer of immovable property which was currently exempted under the Transfer Duty Act.

The PPADB Act, Mr Matambo also said it was being reviewed in order to address gaps and challenges that were experienced during the implementation of the Act.

He said the review was meant to be aligned with global trends within the procurement landscape.

This, he said was expected to improve efficiency and effectiveness in the management and regulation of public procurement and asset disposal process. ENDS