- Botswana reportedly loses P146m to global tax abuse committed by multinational corporations and wealthy individuals
- More that P50m is lost through multi-national corporations while over P75m is lost through individuals
- BURS says “these glaring pieces of evidence” mean “it cannot be business as usual”
Botswana Unified Revenue Service (BURS) is watching widespread international tax avoidance schemes revealed in the Panama Papers closely and may launch criminal investigations into those relevant to Botswana, The Business Weekly & Review has established. Botswana is losing $12.5 million (P146 million at current exchange rates) to global tax abuse committed by multinational corporations and wealthy individuals, according to a new report by tax justice campaigners.
The report says of this figure, US$5 million (over P50 million) is lost through multi-national corporations while US$7.4 million (over P75 million) is lost through individuals. A massive cache of documents known as Pandora Papers regularly reveals how wealthy and powerful players in politics, business and the criminal underworld – working with lawyers and accountants – use tax havens to hide their wealth from the taxman and public scrutiny. The remarkable work is a collection of documents from law firms and other financial service providers from several tax havens around the world.
As far back as 2016, the documents contained in the Panama Papers showed that at least 121 Batswana and some listed companies have been caught up in the scandal. In an interactive session with media house editors last week, BURS managers said they have been following leaks made in the Panama Papers and related developments around the world and that BURS will investigate where there are suspicions of wrongdoing.
“We are following up on these allegations raised in many of these Panama Papers and cannot rule out the possibility of opening criminal investigations and possible prosecution,” said Deputy Commissioner General of BURS, Segolo Lekau. “It cannot be business as usual when we are being presented with these glaring pieces of evidence.”
But as in many other countries, Botswana’s wealthy individuals and powerful personages in politics and business have always protested their innocence when even hints of such wrongdoing have been made. When the latest revelations were first made in winter last year, many countries instituted tax avoidance investigations drawing inspiration from the papers. In the process, some states requested collaboration with journalists who had coordinated the unprecedented leaks.
The release of the Panama Papers sparked public outrage across the world. The World Bank and the International Monetary Fund (IMF) warned that the industrial scale of international tax avoidance revealed by the Panama Papers represented a “great concern” for the global economy and was having a “tremendously negative effect on our mission to end poverty”. Former president of the World Bank, Jim Yong Kim, described the revelations that many of the world’s richest and most powerful people are avoiding paying millions in taxes by hiding money from the taxman in offshore havens as a “great, great concern” and “very, very damaging” to the bank’s “mission to end extreme poverty”.
Many leaders also resigned when the Panama Papers were released, among them the prime minister of Iceland and Spain’s industry minister following revelations about their offshore tax arrangements. David Cameron, the British prime minister, was also forced to defend his family’s tax arrangements after disclosures about an offshore fund established by his late father. He also took the unprecedented step of publicly releasing details from his tax returns.
Many tax agencies are concerned that when state assets are taken and put into these havens, there is a tremendous negative effect on their mission to collect tax and boost prosperity and development. At the height of the revelations, Christine Lagarde, managing director of the IMF, was quoted as saying the world’s financial regulators had long been “alarmed” about Panama’s lax approach to taxation and corruption but failed to take action.
In her strongest comments yet addressing the scandal exposed by the Panama Papers, Lagarde noted: “In the case of Panama there had been alert and alarm raised, but there had not been the level of implementation that was expected.” She said the leaks showed that “the (international tax) rules appear to be skewed towards” the global rich. “Clearly what has resulted from the review of these Panama Papers indicates that however important (international tax rules to prevent) base erosion and profit shifting … it is unfinished business,” Lagarde said.