Regulation expected to boost transparency, curb tax leakages and protect consumers from illicit financial flows
BONGANI MALUNGA
The government is stepping up efforts to formalise the second-hand vehicle industry, a sector that has for long been linked to tax leakages and illicit financial flows.
Responding to questions in Parliament, the Minister of Finance and Vice President, Ndaba Gaolathe highlighted key policy reforms designed to tighten oversight and strengthen compliance. Central to this drive is the “fit and proper” licensing requirement, currently being introduced through amendments to the Trade Act. This move is aimed at preventing criminals or their associates from operating car dealerships, thereby protecting market integrity and consumers.
The government has also bolstered customs valuation controls at import points and enhanced post-clearance audits to verify declared vehicle values. “These measures ensure that only legitimate businesses can import and sell vehicles, reducing opportunities for financial malpractice,” the Minister explained.
COMBATING MONEY LAUNDERING
Gaolathe emphasized that the integration of data across key institutions forms another pillar of the reforms. According to the minister, the Botswana Unified Revenue Service (BURS), Financial Intelligence Agency (FIA), Department of Road Transport and Safety (DRTS), Botswana Police Service and other relevant agencies are set to collaborate closely to detect and combat trade-based money laundering.
“The DRTS Vehicle Registration and Licensing System is interfaced with BURS, preventing any vehicle from being registered without clearance from the revenue service,” Gaolathe stated. Meanwhile, police verification will ensure stolen vehicles are barred from registration while FIA intelligence informs enforcement actions.
DIGITAL TRASPARENCY
On digital transparency, the November 2025 Value Added Tax (Amendment) Act is expected to lay the groundwork for mandatory electronic VAT invoicing. Once fully implemented, vehicle dealerships will be required to issue digital invoices in real time to tax authorities. This system is expected to drastically reduce underreporting, improve VAT compliance and provide authorities with actionable analytics to detect irregular trading patterns.