Regional tax expertise is helping BURS extend VAT to remote services as Botswana looks for new public revenue beyond its traditional dependence on diamonds.
BONGANI MALUNGA
The Botswana Unified Revenue Service (BURS) is tapping continental tax expertise as it targets more than P400 million in additional VAT revenue from the rapidly expanding remote-services economy.
Regional Expertise
The revenue authority has leaned on the African Tax Administration Forum (ATAF) to help Botswana navigate the introduction of VAT on remote services supplied by non-resident businesses operating in the local market.
The move forms part of BURS’ drive to broaden Botswana’s revenue base beyond its traditional dependence on diamond proceeds, while ensuring that businesses generating income from Botswana’s digital economy contribute to the fiscus.
According to the ATAF website, Itumeleng Kgosietsile, Acting Director of Domestic Taxes at BURS and chairperson of ATAF’s Indirect Taxes Technical Committee, said the continental organisation played a key role in helping the revenue authority implement the reform.
“ATAF assisted us through the implementation of remote services. Botswana has been working on the review of the Value Added Tax to modernise it. Within the VAT Act, we introduced remote services, allowing Botswana to register remote service suppliers doing business in the country. ATAF facilitated benchmarking with the Kenya Revenue Authority and coordinated in-country technical assistance from Uganda and South Africa,” said Kgosietsile on the ATAF platform.
The assistance included a benchmarking mission to the Kenya Revenue Authority, allowing BURS officials to examine how another African tax administration approaches the taxation of remote and digital services.
P400m Target
BURS then drew on technical expertise from Uganda and South Africa as it developed the regulations and implementation framework needed to operationalise the new VAT regime. The continental support could now have a significant payoff for Botswana’s revenue mobilisation efforts, with BURS projecting more than P400 million from the new tax stream.
“With this introduction of remote services we are hoping to raise revenue. Botswana has been more reliant on diamonds and we are now pursuing another form of revenue raising through taxes. We hope to generate over 400 million Pula in VAT revenue through the assistance of ATAF,” she added.
Digital Tax Reach
Remote-service taxation also allows Botswana to extend its tax reach to economic activity taking place beyond the country’s physical borders, particularly where foreign-based companies provide services to local consumers.
Kgosietsile underlined that the move is an attempt to modernise tax collection, close potential gaps created by the digital economy and convert Botswana’s growing consumption of remote services into a new source of public revenue.
The reliance on Kenya, Uganda and South Africa also underscores the increasing role of African tax cooperation in helping countries develop systems suited to an economy that is becoming progressively more digital.