Botswana 59thas global tax haven

FRANCISTOWN: The Corporate Tax Haven Index (CTHI) 2021 – published by the Tax Justice Network-ranks Botswana the 59th tax haven in the world, a report released on Tuesday this week states.

According to the Index, Botswana is responsible for 0.2% of the world’s corporate tax abuse risks. The CTHI is a ranking of jurisdictions most complicit in helping multinational corporations underpay corporate income tax. The CTHI thoroughly evaluates each jurisdiction’s tax and financial systems to create a clear picture of the world’s greatest enablers of global corporate tax abuse, and to highlight the laws and policies that policy makers can amend to reduce their jurisdiction’s enabling of corporate tax abuse. Jurisdictions are ranked by their CTHI value which is calculated by combining a jurisdiction’s Haven Score and Global Scale Weight.

A jurisdiction’s Haven Score is a measure of how much scope for corporate tax abuse the jurisdiction’s tax and financial systems allow and is assessed against 20 indicators.

A jurisdiction’s Global Scale Weight is a measure of how much financial activity from multinational corporations the jurisdiction hosts. Combining a jurisdiction’s Haven Score and Global Scale Weight gives a picture of how much of the world’s corporate financial activity is put at risk of corporate tax abuse by the jurisdiction. “The Index says Botswana’s CTHI Share is 0.18%, its Haven score is 55 (A measure of how much scope for corporate tax abuse the jurisdiction’s tax and financial systems allow. 0 means no scope, 100 means unrestrained scope), Global Scale Weight 0.011% (A measure of how much of the financial activity conducted by multinational corporations around the world is hosted by the jurisdiction),” says the Index.

It also indicates that Botswana’s CTHI Value is (80 - a measure of how intensely the jurisdiction enables multinational corporations to abuse corporate tax, calculated by combining Haven Score and Global Scale Weight).

The Tax Justice Network, a group funded by donations and campaigning for transparency, said its study measured multinational activity, as well as tax rates and loopholes. While companies are not forbidden from using loopholes, the practice is viewed critically.

“You don’t need to be a tax expert to see why a global tax system programmed by a club of rich tax havens is haemorrhaging over $245bn in lost corporate tax a year,” quipped Alex Cobham, Tax Justice Network’s chief executive. A number of countries, including Botswana, are putting pressure on the European Commission to remove them from the controversial ‘blacklists’ of countries deemed not to be cooperating in the fight against money laundering and terrorist financing.

African critics complain that the Commission gives them little chance to explain their laws.

While Mauritius was warned at the start of the year, that it faced being penalised because of its banks’ failure to tackle terrorism-financing, officials in Botswana and Ghana were not, according to EURACTIV.

In September last year, Botswana’s Ambassador to the European Union (EU), Samuel Outule, told EURACTIV that the EU listing came as a “shock”.

“This action, taken during a devastating pandemic, is tantamount to effectively destroying the economy of Botswana,” the Ambassador added.

“We had hoped, and still hope, the spirit of partnership would prevail and cause us to rather work together constructively with the EU to address the concerns raised through mutual dialogue, as opposed to one party taking unilateral, punitive actions against the other,” Outule said.

In 2018, lawmakers approved a bill that will create a freely accessible public database of active companies indicating direct, indirect and beneficial ownership, measures designed to ensure that these companies are not used for money laundering, terrorism funding or other illicit financial activities.