New tax rate targets top earners
Mbongeni Mguni | Monday February 9, 2026 06:21
BusinessWeek has learnt that new tax changes, including higher rates for corporate tax and International Financial Services Centre companies, are due to be tabled and debated in the upcoming sitting of Parliament.
The new changes will shore up government’s revenues at a time when other drivers, such as minerals, especially diamonds, are strained.
Documents accompanying a Government Gazette dated December 15 indicate that under changes to the Income Tax Bill, the highest earners would face a higher tax rate.
At present, the highest tax rate in the country under personal income tax is 25%, which starts from an income of P156,001 per year. Under the proposed changes, the 25% would apply to annual incomes of P156,001 to P400,000, whilst the new “super-tax” of 27.5% would kick in from P400,001 and above.
The latest developments come after years of national debate around a wealth tax and how current tax rates are perpetuating the country’s status as one of the world’s most unequal. In January 2022, a groundbreaking report by the World Inequality Lab estimated that the richest one percent of people in the country earned more than 20 times the average income of the rest of Batswana in 2021.
According to the report, the top one percent wealthiest in the country earned at least P142,601 per month in 2021 before tax, while Statistics Botswana’s estimated that, at that time, formal sector workers earned an average of P6,014.
At present, the highest rate taxable under PAYE is 25% for all amounts above P13,050, an amount legislators have said incorrectly or unfairly bundles together a vast range of income inequalities which range up to the P142,601 per month.
“This is not a wealth tax by any definition because that would involve all assets, not just incomes, but it is a higher tax rate based on higher incomes,” an analyst told BusinessWeek. “The latest developments have been in the works for five years, and at present, this is just a draft that legislators have to consider after they debate the budget this month.”
The analyst said even at 27.5%, Botswana would remain the second lowest in terms of personal income tax in the region, after Mauritius.
“In South Africa, they are being taxed 45%, which is quite higher than 27.5%,” the analyst said.
South Africa’s top personal income tax rate is 45%, which applies to taxable income exceeding R1,817,000.
Legislators such as current Bobirwa MP, Taolo Lucas, have long advocated for a change in the personal income tax rates.
“We should look at our tax rates, especially for those who are less privileged, to make sure that those at the top who can afford it are paying more and contributing more. “In other countries, those who are rich pay more taxes, and we should be looking at the upper tax rate because we could have more money if we target them,” he said previously.
Lucas repeated the sentiment in a debate featuring President Duma Boko late last year.
Meanwhile, the raft of tax changes also includes a proposed adjustment in corporate tax to 24.5% from the current 22%. The move is expected to prove contentious within the private sector, which is wary of tax increases, particularly in the midst of two years of economic contraction.
The proposed changes also include an increase in the tax rate paid by International Finance Services Centre (IFSC) companies from 15% to 17.5%. Under the IFSC incentives package, qualifying firms enjoy a 15% corporate tax rate (as opposed to 22%) and conditional exemptions on Capital Gains Tax, Withholding Tax and other rates.
The package, initially designed to help economic diversification by encouraging the growth of the financial services sector, was broadened over the years to include areas such as business process outsourcing and taxes on foreign incomes by a wide range of sectors.