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Surge in Botswana share of SACU revenues

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Surge in Botswana share of SACU revenues

Surge in Botswana share of SACU revenues
Photo credit: Mmegi

Botswana’s share from the Southern African Customs Union (SACU) common revenue pool showed a significant jump during the 2012-2013 financial years.

In its latest annual report, the Botswana Unified Revenue Services (BURS) says that SACU receipts for the 2012-2013 financial years surprised the market when they registered a huge increase of P5.8 billion, from P8.4 billion. This reflects a 68.7 percent increase from the previous period.

BURS commissioner general, Ken Morris stated that Botswana’s share from the common revenue pool remains a major revenue source for the national economy. He noted that the rise in the receipts was due to an increase in the members’ shares as an adjustment to account for the surplus in the common revenue pool, which was realised in the previous financial year.

Botswana’s share from the pool remains second highest after South Africa, constituting nearly 21 percent of the total shares. SACU member states use a revenue sharing formula that South Africa dislikes because it has a massive burden on its treasury and calls for a more equitable formula. “SACU member states are required to assess, collect and pay all customs, exercise and additional duties into the common revenue pool established by Article 33 of the SACU Agreement,” said Morris.

He further said in compliance with this requirement, Botswana collected and paid into the common revenue pool a total of P424 million during 2011-2012, representing a 25.7 percent increase from the previous year’s total of P337 million.

Customs duties, which contributed 70.8 percent of the total, recorded a significant growth of 143.6 percent, mainly due to the resurgence during the period of imports from outside the SACU region plus exercisable goods produced.

Meanwhile, Morris expressed disappointment at the tax revenue collections and targets, which show an overall shortfall of 1.0 percent during the year. He noted that the lower than expected performance was due to the low performance of income tax, which fell below target by 10.4 percent. “On the other hand, VAT [Value Added Tax] recorded a gain of 17.7 percent and there was also a modest gain of 0.5 percent in SACU receipts which was attributed to exchange rate fluctuations,” he said.

However, gross VAT collection for the reporting period was P7, 671 million, while total VAT refunds paid to taxpayers amounted to P2,234 million. According to Morris, this means that the net collection was P5,437 million, which is above the target by 17.7 percent, adding that it is mainly because of improved collections on internal VAT and reduction in the value of VAT refunds.

“Overall, all VAT collection streams recorded an increase over the previous year’s collections except for imports VAT,” said the commissioner general.

Moreover, income tax revenue collection from the assessed tax followed by deducted tax contributed 53 percent and 31 percent respectively to the total collection. The collections for 2012-2013 were lower than the previous year’s collections. It is believed that the drop in the collections is attributable mainly to subdued performance of the minerals sector caused by the global economic downturn.

During the period under review, BURS collected P609.1 million on behalf of government departments and agencies. Most of the collections came from the alcohol levy with 37.8 percent. The two together constitute 81.8 percent of total service levy collections.

Net revenues transferred to government departments and agencies, less the Revenue Service’s commission fee of P40.2 million, amounted to approximately P568.9 million.

Morris also revealed that investigations yielded revenue recovery amounting to P2.2 million, which is a 23 percent increase on last year’s recovery, which was P1.8 million. He added that a large portion of the recovered amount was from duties and taxies paid for goods that were either not declared or were undervalued at the time of import.


Infographics

SACU Receipts

Botswana’s share from the SACU Common Revenue Pool remains a major revenue source for the national economy. During the year under review, Botswana’s share from the Common Revenue Pool stood at P14.2 billion. This marked a significant increase of nearly P5.8 billion, from P8.4 billion received the previous year – a 68.7% increase from the 2011/12 period. The increase in the receipts was attributed to an increase in members’ shares as an adjustment to account for the surplus in the Common Revenue Pool which was realised in the previous financial year.

BURS Annual Report 2013 SACU pool receipts web

Customs and Excise Duty Collections

SACU Member States are required to assess, collect and pay all customs, excise and additional duties into the CRP established by Article 33 of the SACU Agreement. In compliance with this requirement, Botswana collected and paid into the CRP a total of P424 million during 2011/12, representing a 25.7% increase from the previous year’s total of P337 million. Customs duties, which contributed 70.8% of the total, recorded a significant growth of 143.6%, due mainly to the resurgence during the period of imports from outside the SACU region plus excisable goods produced.

BURS Annual Report 2013 Trade Tax collections web

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