20/10/20

AFRICA: Botswana Reaches Milestone On Greylisting.

As published on allafrica.com, Sunday 18 October, 2020.

Gaborone — Botswana has shown strong political will and serious commitment to address issues that led to its greylisting by the European Union (EU) in November 2017, says the organisation's ambassador.

Addressing the media in Gaborone recently, Mr Jan Sadek said the country had reviewed potentially harmful tax provisions and revised the relevant legislation.

"Botswana has indeed delivered on its commitments. This is what we are celebrating today. Botswana has now reached an important milestone, which is the signature of the Organisation of Economic Cooperation and Development (OECD) Convention on Mutual Administrative Assistance in Tax matters," he said.

Mr Sadek said being a member of the 141-member convention would give Botswana a crucial legal basis to further combat tax avoidance and evasion as well as illicit financial flows.

He said the convention also provided opportunities for exchange of information and cooperation on tax audits.

"It will also enhance the international reputation of Botswana and secure international trust in Botswana's good governance on taxes. This is crucial to attract foreign businesses and investors," he said.

Mr Sadek announced that the deadline for ratification of the convention had been extended to end of 2021.

The objective, he said, was to keep the timeline and have Botswana entirely delisted beginning of 2022.

"We, the EU, encourage Botswana to keep the momentum and complete the next steps as agreed" which included improvement of Botswana's rating by the Global Forum on Harmful Tax Practices, said Mr Sadek.

Saying achievements showed the effectiveness of continuous dialogue and good cooperation between EU and Botswana over the past two years, Mr Sadek added that neither of the two parties could ever cease to be vigilant.

For her part, the Ministry of Finance and Economic Development's Ms Boikanyo Mathipa said in 2017, Botswana joined the Base Erosion and Profit Shifting (BEPS) framework which focused on equipping governments with domestic and international instruments to address tax avoidance and evasion.

She said Botswana had been working on four out of BEPS' 15 action items among them countering harmful tax practices and transfer pricing documentation.

Botswana had completed implementation of the countering harmful tax practices item entailing reviewing Botswana International Financial Service Centre regime which had since been cleared of any violation, she said.

Ms Mathipa said Botswana had also significantly worked on the transfer pricing documentation item by introducing transfer pricing rules in 2018.

She said last month the country signed the Mutual Administrative Assistance in Tax Matters (MAAC).

The multilateral instrument was aimed at tackling tax avoidance and evasion through increased cooperation while respecting tax payers' rights, she explained.

Ms Mathipa said MAAC allowed for cross-border tax examination as well as tax collection assistance.

Currently, she said, Botswana facilitated exchange of information through 27 agreements.

"Considering that the MAAC consists of 140 signatories, signing into the MAAC means widening of Botswana's exchange of information network. Botswana will now be able to exchange information with many countries through this convention and thus will enhance Botswana's transparency in tax matters," she said.