What is tax?
According to dictionary.com Tax is defined as “ a sum of money demanded by a government for its support or for specific facilities or services, levied upon incomes, property, sales,etc ”
For tax to be well calculated the farmer needs to keep proper records for their farm transactions. These records include accounting books or records of different transactions that took place in the farm for that particular farming year. The following are some obligations of a farming taxpayer
- File returns annually
- Keeps proper records of your farm
- Sales receipts or payment invoices should always be kept to be used as proof whenever requested to do so
Registering process for Tax
For a farmer to be eligible to register for tax the following threshold should be met:
- Livestock farming
- 300 Cattle
- 6 sheep/goats: 1head of cattle
- Dry land farming: cultivated land not exceeding 100 hectares
Importance of paying tax
- paying tax is a part of the law. Those who do not pay face trouble with criminal charges
- Every government needs money to perform civil operations and to administrate the running of the country. This money is generally collected from the citizens of the country in the name of the tax. So it becomes virtually impossible for the government to run without the tax. Every state has his own way of collecting tax from its citizen.
Explanation of some terms
- Value of livestock and produce to be included in tax return
Every person shall include in his or her tax return for each tax year the value of all livestock or produce held and not disposed of by him or her (hereinafter referred to as “the value of stock held”) at the beginning and end of each tax year: Provided that horses, donkeys and mules used as working animals or held for purposes other than for the business of farming shall not be included in the value of stock held.
Valuation of mafisa, matimela, donations and stock taken for own consumption
- Mafisa: This is livestock lent to another person for a certain period. These cattle form part of the owner`s herd and are taxable in his/her own hands
- Matimela: these are stray animals. These cattle reduce the farmer`s closing stock. If found they will be included in the opening stock as lost and found.
- Donations and own consumptions: this is treated as stock drawing. They are valued at the market price prevailing at the time of use.
- Value of stock held at beginning of tax year
The value of stock held at the beginning of a tax year shall be deemed to be-
- where the person carried on farming operations on the last day of the previous year, the value of stock held on that day: Provided that where a person, carrying on the business of farming, has used the relevant standard value in valuing any of his or her stock, such person may, in respect of any tax year, adopt the current standard value specified in paragraph 3 in valuing any such stock held by him or her at the beginning of the tax year; and
- where the person commenced farming during the tax year, the cost to him or her of any stock acquired prior to commencement of farming.
- Value of livestock held at end of tax year
the value of any livestock held by any person carrying on farming operations at the end of any tax year shall be ascertained in accordance with any of the following methods as the person may choose to adopt-
- where the livestock was acquired by the person by purchase, the value shall be-
- an amount equal to the purchase price of such livestock;
- an amount equal to the current market price of such live stock; or Copyright Government of Botswana
- an amount equal to the relevant standard value of such livestock; or
- where the livestock was acquired by the person otherwise than by purchase, the value shall be either-
- an amount equal to the current market price of such livestock; or
- an amount equal to the relevant standard value of such livestock.
- Revaluation of livestock at beginning of tax year
Any person whose livestock is affected by any amendment made in any tax year to the Table, shall revalue the livestock held by him or her at the beginning of that tax year by adopting the same method which he or she used in valuing his or her stock at the end of that tax year.
- Value of produce held at end of tax year
The value of any produce held by any person to whom this Schedule applies at the end of a tax year shall be such amount as, in the opinion of the Commissioner General, is reasonable.
- Livestock deemed to be held at end of tax year
For the purposes of this Part any livestock which is the subject of any agreement between the owner and any other person whereby the owner retains the right of ownership of such livestock or of any progeny thereof shall be deemed to be livestock held and not disposed of by such owner.
NB: to learn more about taxing and see some examples please see the Botswana Unified Revenue service pamphlet below