Mineral slump forces tougher tax stance
Laone Choeunyane | Wednesday March 4, 2026 06:00
Mphoeng Mphoeng, Partner and Director at MP Consultants, told a recent panel discussion at the inaugural Budget Belief Dialogue hosted by First Capital Bank that the decline has left the Treasury with no choice but to look for options. “The government probably doesn’t have a choice,” Mphoeng said. “Twenty years ago mineral receipts funded 60 to 70% of our budget.” His remarks come as a P26.35 billion deficit is projected for the financial year 2026-27, which will mainly be unfinanced. Other incomes will be from SACU and non mining sector while mineral revenues (mainly diamonds), once the backbone of the economy, are expected to remain subdued, fundamentally altering Botswana’s fiscal model.
Against this backdrop, the Treasury has proposed a number of tax amendments mainly on the Value Added Tax, taxing the high earners and I International Financial Services Centre (IFSC) companies amongst others. Corporate tax will rise from 22% to 24.5% while IFSC tax rate or tax on qualifying activities profits increases from 15% to 17.5% and a new personal income tax bracket has been introduced for annual earnings of between P156,000 and P400,000 as part of efforts to strengthen domestic revenue mobilisation.
While a previously proposed 1.5 percent increase for top earners has not yet been implemented, the overall direction signals a broader tax base and tighter revenue collection. However, Mphoeng stated that the adjustment itself remains modest by international standards. “The number that the government suggested is low,” he said, referring to the tax changes. Compared to advanced markets, Botswana’s tax rates remain relatively restrained despite mounting fiscal pressure. For him, however, the real shift is not only in rates but in enforcement. “Twenty years ago we didn’t have to worry about how well we collected,” he said, noting that mineral income previously allowed Botswana to maintain some of the lowest corporate and income tax rates in the region. “Unfortunately that’s changed now, and as a country we have to get better at collecting,” he added.
During the dialogue, economic experts Chilo Ketlhoafetse and Onkokame Mothobi also collectively examined revenue reforms and tax administration challenges. Their discussions reflected a growing consensus that Botswana’s fiscal framework is undergoing a structural transition. As mineral receipts soften and deficits persist, the panel agreed that tax policy, and the efficiency with which it is enforced, will play a central role in sustaining public finances. Strengthening compliance, improving administration and reducing leakages were highlighted as immediate priorities. Meanwhile, Mphoeng has singled out tourism as one area of concern, warning that significant activity is structured and invoiced outside Botswana, raising transfer pricing risks and limiting domestic tax capture. Without tighter oversight, he suggested, substantial value could continue to escape the local tax net.
Attention is now turning to the upcoming Tax Pitso, which is expected to bring together policymakers, tax experts, business leaders and civil society to debate proposed reforms and build consensus around the next phase of revenue reforms. As Botswana recalibrates its fiscal model, the gathering is likely to sharpen focus on broadening the tax base, tightening enforcement and ensuring that domestic economic activity translates more effectively into public revenue.