Botswana: Amnesty for resolving VAT, corporate and individual income tax liabilities

Opportunity for taxpayers to regularize their tax affairs and to benefit from waiver of penalties and interest

Opportunity for taxpayers to regularize their tax affairs

The Minister of Finance and Economic Development released “Value Added Tax (Remission of Penalties and Interest) Amnesty Regulations, 2021” and “Income Tax (Remission of Penalties and Interest) Amnesty Regulations, 2021” pursuant to Statutory Instrument No. 52 of 2021 and Statutory Instrument No. 53 of 2021.

The regulations are effective 1 July 2021, and provide an opportunity for taxpayers to regularize their tax affairs and to benefit from the waiver of penalties and interest, provided that certain conditions are satisfied.

The period for participating in the tax amnesty begins 1 July 2021 and ends 31 December 2021.   

Coverage

Tax amnesty is available for the following taxes:

  • Income tax (both corporate and individual or personal), taxes collected under the Pay As You Earn (PAYE) system and other withholding taxes for the tax year ending 30 June 2021 and prior tax years
  • Value added tax (VAT) for the following tax periods:
    • Category A: April-May 2021 and prior tax periods
    • Category B: May-June 2021 and prior tax periods
    • Category C: June 2021 and prior tax periods

Forgiveness or remission of penalties and/or interest applies in the following circumstances:

  • The penalties and interest must be outstanding on 1 July 2021 or arise during the amnesty period and the principal tax debt must have been paid in full before or during the amnesty period.
  • An unregistered taxpayer registers for tax before the expiration of the amnesty period.
  • The taxpayer files outstanding returns before the expiration of the amnesty period.

The following penalties and interest qualify for remission:

  • Income tax—all penalties and interest charged under the Income Tax Act (Chapter 52:01) except for penalties charged for failing to comply with the Commissioner General’s request for information including failure to file transfer pricing documentation
  • VAT—all penalties and interest charged under the Value Added Tax Act (Chapter 50:03)

Implications for taxes “under dispute”

A taxpayer who has filed (lodged) an objection against an assessment or has filed an appeal against the Commissioner General’s decision can participate in the tax amnesty program, provided the total assessed tax (including the tax in dispute) is paid in full before the expiration of the amnesty period. 

Payment of the disputed tax does not affect the taxpayer’s objection or appeal. In the event of a taxpayer-favourable decision, the amount of overpaid tax will be refunded. 

Taxpayers barred from tax amnesty

Certain taxpayers are not allowed to participate in the tax amnesty including a taxpayer who has no outstanding tax, penalties or interest as of 1 July 2021 or a taxpayer who has been convicted of a criminal offence under the revenue or other laws.

Procedure for invoking tax amnesty

No written application is required.

  • When the principal tax debt is paid in full before 1 July 2021, the Commissioner General will automatically remit all outstanding penalties and interest.
  • When payment of the principal tax is made during the amnesty period, the taxpayer is required to notify the Commissioner General through a designated electronic platform within seven days of making payment and no later than 31 December 2021.
  • On receipt of the payment notification, the Commissioner General is to remit the penalties and interest and notify the taxpayer of such remission within 21 days.

KPMG observation

Tax professionals have observed that taxpayers considering tax amnesty may want to seek assistance in registering, preparing and filing outstanding returns and computing the amount of tax due, and notifying the tax authority when payments are made and then obtaining confirmation of the remission of penalties and interest.
 

For more information, contact a KPMG tax professional in Botswana:

Olivia Muzvidziwa | +26 777 19 9022 | olivia.muzvidziwa@kpmg.bw

Leonard Muza | +26 777 19 9067 | leonard.muza@kpmg.bw

Masa Selerio | +26 777 19 9069 | masa.selerio@kpmg.bw

Kenneth Sakonda | +26 777 19 9079 | kenneth.sakonda@kpmg.bw

 

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