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Botswana's Budget for the 2017/18 fiscal year looks to reduce the country's dependency on revenues from diamonds.
During his Budget Speech on February 6, Matambo noted that, at end of 2015, diamonds accounted for 83.1 percent of total exports and mineral revenue provided 30.4 percent of total government revenues. In finding tax revenues to fund development, he continued, Botswana still remains open to the downside risks of a mining sector subject to the slow global economic recovery and weak commodity prices.
In addition, he pointed out that customs and excise revenues, specifically Southern African Customs Union (SACU) revenues, which are the country's second- largest source of revenue after diamonds, have been fluctuating recently due to the poor trading performance within the region.
"With mineral revenues declining and those from SACU being volatile," he said, "there is therefore an urgent need to diversify our revenue base towards more sustainable and reliable sources."
Matambo confirmed that, "to this end, my Ministry is considering proposals by the Taxation Review Committee of how to diversify the Government revenue base. These proposals include adjusting various taxes, levies, permits and licenses, and reviewing some tax expenditures such as value-added tax (VAT) exemptions."
Later in his speech, he added that the Taxation Review Committee's proposals to widen the tax base and encourage compliance included the "introduction of transfer pricing rules that would curb any undesirable tax avoidance as well as underscore the alignment of this country's tax system to international best practice; [and] amending the [tax code] to impose a penalty for non-filers irrespective of whether there is any tax to pay or not."
He also disclosed that his Ministry is to undertake a "simplification of both the Income Tax Act and the VAT Act with a view to developing a Tax Administration Act. This is intended to improve tax administration efficiency, resulting in optimal revenue collection. This project is envisaged to be completed in the next financial year."
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