1. Leonard Muza

2.  Change in VAT rate  Silent supplies  Audits  Penalties and interest  Other  Questions & discussion

3.  Purpose: increase govt revenue  Authority: section 78  Effective: 1 April 2010  Increase by 2%  Other countries experiences: ◦ UK > 17,5% to 20% w.e.f. 4/1/2011 ◦ EU VAT rises in last 2 years include: Spain, Portugal, Greece, Hungary, Czech Republic and Finland

4. VAT rate - comparatives CountryRate Botswana12% RSA14% Zambia16% Mauritius15% UK18% Norway25% Mozambique17%

5.  Increase in cost for final consumers  Old rate applicable for supplies made prior to change; section 80  Old rate applies on credit notes rate applies  Tax planning: to reduce cost/cashflow impact ◦ E.g. Zero rating going concern purchases

6. Silent supplies - characteristics  Do not form part of the day to day business activities of the enterprise  No tax invoices issued  Not aware that they are taking place!

7. Silent supplies - examples  Company vehicles ◦ Running costs (repairs, maintenance, insurance) attributable to private use  Utilities  Donations (cash vs. stock)

8. Silent supplies – risk control  Don’t claim input tax on benefits  Conscious adjustments  Cash based remuneration and donations

9. Audit - triggers  Large refunds  Issues with other tax heads  Press articles  BURS normal selection process

10. Audits - issues  Nature of business; differs from information provided on form RTG1  Compliant tax invoices – information, time limits, original, importation documents  Records kept off-shore  Prohibited claims – passenger vehicles, entertainment expenses etc

11. Penalties and interest – reduction strategies  Timeous and accurate filing and payments ◦ apply for extensions ◦ Arrange payment terms  Apply for waiver of penalties and interest ◦ Provide business reasons ◦ Demonstrate how your business is affected ◦ Provide details of strategies put in place to ensure compliance in future

12. Other practical issues  Cheques less than P500 not accepted?  Transaction charges of P10  Part payments rejected; procedures for acceptance not readily available  No notification of rejected returns  No standard procedures – requirements change depending on official

13. Discussions  Thank you  E-mail: leonard.muza@kpmg.bw leonard.muza@kpmg.bw  Phone: 391 2400  Cell: 7131 6143