The Botswana Unified Revenue Service (BURS), concerned about a decrease in tax revenue, announced its intention to consider introducing a digital tax. William Nkitseng, director of tax and policy at BURS stated that the tax regime must evolve as the digital economy grows. He added that the government wishes to levy tax on all enterprises doing business in the nation.
The announcement came as the national budget presentation revealed a budget deficit of 1.98 billion pula i.e. 1.1% of GDP. The deficit is attributed to a fall in tax revenue in the previous financial year. Nkitseng stated that BURS faces difficulty in that digital businesses are not easy to tax. The tax authority believes that its capacity for tax collection is limited by the legal framework which currently only taxes businesses with a physical presence in Botswana.
Nkitseng pointed to the popularity of Uber and Netflix in Botswana as examples of digital companies who are not currently paying tax in the country. Social media is also very popular, with many companies using this as a means of marketing and BURS is concerned that it has not been able to tax these enterprises thus far. While the Minister of Finance, Thapelo Matsheka, did not raise the issue of digital tax in the national budget speech delivered in early February, Nkitseng contends that the tax authority is investigating digital tax and will announce its plans by the end of the year.
The issue of digital tax is topical globally and continues to be debated at fora like the G20 and the OECD. The Botswana government has indicated a need to review tax legislation and expand the tax base and perhaps the following year will see the introduction of digital tax in the country.
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