This comes after the recent introduction of tax hikes which will result in Botswana Unified Revenue Service (BURS) collecting over P1.2 billion extra in taxes and levies on a yearly basis. The collection will be an addition to what the taxman usually collects annually.
This was said by tax specialist, Jonathan Hore at a tax training organised by Legal Guard Botswana and Ticano Group, an enterprise that provides financial services and purchase order financing to SMMEs. The training was meant to empower small ventures in tax matters. Hore is Managing Partner at Aupracon Tax Specialists.
Speaking at the training last Tuesday last week, Hore said legislations have been amended in Botswana to increase Value Added Tax (VAT) from 12-14 percent. The tax consultant gave a background that for the longest time Botswana had the lowest tax rate within the region. “Experts said the rate was unsustainably low,” he said. “Taxes were increased to match the average rates in SADC, more so that much of our revenue come from exports through SACU customs receipts.” According to the tax consultant, a litany of tax increments effected beginning of April mean that; “BURS revenue will increase by P1.2 billion per annum,” he said.
During the presentation, Hore emphasised that VAT is a consumption tax and also advised SMMEs that the moment they issue invoices, VAT has to be paid. Although he stated that most SMMEs have collapsed due to late payments, he further advised that they should deduct Pay As You Earn (PAYE). “As SMMEs the moment you pay employees more than P3000 you must deduct PAYE,” he emphasised.
Worth noting at the seminar was the amendments made by government relating to Withholding Taxes. Speaking on the Withholding tax on director’s fees, Hore said directors have been classified as company employees and their sitting fees will be taxed on PAYE.
Aupracon Tax Managing Consultant said previously, BURS had challenges collecting tax but due to COVID-19, the taxman has decided to have a tax amnesty. This is a once in a million years special arrangement that involves writing off liabilities whereupon taxpayers pay a stipulated fee to revenue’s office. For example, a business that owes P10million may be asked to pay only P2 million of the money.