Grant Thornton advises on new tax changes
staff writer | Wednesday July 29, 2026 11:18
The Income Tax Act changes, which took effect on July 1, include a new top individual tax bracket, greater clarity on taxation and valuation of employee benefits and details on tax treatment of employees of international organisations, embassies, amongst others.
“The Act preserves Botswana’s progressive individual tax brackets but introduces a new top bracket and a higher marginal tax rate of 27.5% on annual income exceeding P400,000. “Employers should therefore ensure that Pay As You Earn is withheld from all taxable employment income, including taxable non-cash benefits, in the pay period in which the income is paid or the benefit is provided or made available,” a note from Grant Thornton reads.
Under the new changes, the top tax rate for individual income changes from 25% to 27.5%. According to Grant Thornton, this means, for example, a resident employee with annual taxable income of P500,000 will have Pay As You Earn (PAYE) calculated as P74,050 plus 27.5% of P100,000, being the excess over P400,000. The total annual PAYE is therefore P101,550.
The advisory firm said while the Act does not materially expand employer obligations, it introduces greater certainty around the treatment of several employment-related benefits and payments and requires employers to ensure their systems and processes remain compliant.
“These developments reinforce the importance of robust payroll governance and accurate employment income reporting,” the note reads.
The Botswana Unified Revenue Service has said the latest reforms are part of a wider review of the country’s tax framework aimed at expanding the tax base, modernising tax administration and improving compliance amongst individuals and businesses.
In July, acting Commissioner Domestic Tax, Segametsi Radibe-Michael, said the amendments are intended to create a simpler, more efficient and internationally aligned tax system that supports economic growth while ensuring taxpayers meet their obligations.
“The changes seek to broaden the tax base, strengthen compliance and address gaps within the current tax system,” she said in an address to the media.