Business
As a financial services hub, Botswana will not be a tax haven
As Botswana diversifies from it’s largely mineral dependent economy into the establishment of a financial services hub, the southern African country is stepping up efforts to remove secrecy provisions and deficiencies in its tax information exchange agreements and laws in a bid to reverse impressions that the country may be a tax haven.
Last week, Botswana signed Tax Information Exchange Agreements with Guernsey. This follows February’s agreements signed with six other countries.
The conclusions of these agreements this year are in response to an on-going review by the Global Forum on transparency and exchange of information for tax purposes following revelations that some of Botswana’s laws may “have deficiencies” which could hamper the country’s ability to exchange information for tax purposes.
Botswana has been accused in the past of not having adequate international agreements under which information for tax purposes could be exchanged. Last year the country was named alongside 11 other countries to be excluded from the international business community because they are tax havens – an action that could impact negatively onto the country’s financial services sector and reputation as a financial hub .
(More: Botswana diversifies into financial services: financial hub gains traction)
Bostwana is in the process of amending her laws to do away with the deficiencies observed by the Global Forum, and in addition, amending the Exchange of Information Article in the Double Taxation Avoidance Agreements that are currently in force.
“For any country to pass the review, it has to have ability to exchange information by having no secrecy clause in its banking law, to have provisions that allow its revenue authority to exchange tax information with other tax jurisdictions and to have a minimum of 12 international agreements that are compliant with international standards,” says Boikanyo Mathipa – the Director of Tax Policy in the country’s Finance ministry.
Parliament approved the amendment of the Income Tax Act in December 2012 to allow the Botswana Unified Revenue Service to exchange information for tax purposes. Additionally, the amendment of the Banking Act is at an advanced stage and will be presented to the June/July 2013 session of parliament for approval. This amendment is mainly meant to repeal strict banking secrecy provisions and to allow for banking information to be provided for the purpose of exchanging information with treaty partners.
Botswana has so far concluded negotiations of protocols to amend the Article on Exchange of Information in the Double Taxation Avoidance Agreements with the Seychelles and South Africa to allow for effective exchange of information for tax purposes.
Negotiations to amend the Double Taxation Avoidance Agreements with Barbados are also at advanced stages, while having been concluded with Zambia and China.