Introduction and overall fiscal outlook

With a P26.35 billion budget deficit and declining revenue sources, the Vice President and Minister of Finance, His Honour Ndaba Nkosinathi Gaolathe, delivered the 2026/27 budget under the theme - “A new era of economic transformation and fiscal prudence.”

Fiscal Outlook

  • Revenue is expected to increase by about 2% despite the decline in mining revenue. This increase is attributable to SACU revenue and other sources such as increasing tax rate and broadening the tax base.
  • Inflation increased from 2.5% in the previous year to 3.9% by December 2025.
  • Import cover is currently at 5 months only.
  • Forex reserves sat at BWP47.4 billion in December 2025. 

In the last seven fiscal years, Botswana ran on budget deficits, and this trend is continuing in the current budget. The budget deficit for 2025/26 was BWP22 billion while the maiden budget for the 2026/27 financial year is in deficit by BWP26.35 billion.  

BWP23.38 billion is set for the development budget.

 

2025/26 Budget (BWP billion)

2026/27 Budget (BWP billion)

Revenue and grants

75.49

 

77.22

 

Expenditure and net lending

(97.61)

 

(103.57)

 

Deficit

(22.12)

(26.35)

 

2026/27 Budget Strategy 

 

The strategy of the budget is to improve Botswana’s economic status and quality of life by:

  • Rehabilitating infrastructure mainly schools, health facilities, roads, government buildings, roads and wastewater treatment plants with a proposed BWP1.85 billion.
  • Driving the economy towards that of a more export-led  in meat products, mining products and other agricultural produce.
  • Establishment of a National Fund of Funds and MSME support. BWP1.31 billion is proposed for MSME financing.
  • Implementation of the Twelfth National Development Plan (NDP12) and the Botswana Economic Transformation Program (BETP) with identified 186 projects across all sectors.
  • Strengthening revenue collection through a reformed tax administration regime. A comprehensive review of the tax system is underway and is expected to broaden the tax base. For example, the introduction of taxation of remote services is expected to commence in April 2026. 

 

The following Tax bills were gazetted on the 15th December 2025 and will be tabled for deliberations in Parliament from February 2026:

  • Income Tax Bill No. 36 of 2025
  • VAT Bill No. 38 of 2025
  • Tax Administration Bill No. 37 of 2025
  • Customs (Amendment) Bill No. 39 of 2025

 

Allocations in BWP billions

 

 

 

TAX TYPE

 

CURRENT SITUATION

PROPOSED CHANGES

Value added tax

 

14% (Compulsory registration from BWP1million turnover per year)

 

The introduction of VAT electronic invoicing systems is expected to commence in April 2026. There will also be a reduction in the list of zero-rated items to raise the VAT effective rate.

Corporate income tax

 

  • 22% resident
  • Ensure accurate and timely declarations of beneficial ownership
  • 30% non-resident
  • 15% approved manufacturing
  • 5-10% in special economic zones
  • An increase of 3% to resident company tax to 25%
  • Ensure accurate and timely declarations of beneficial ownership
  • Branch tax will attract 10% withholding tax.

Personal income tax (PIT)

 

  • 0 to 25% on a structured basis
  • 25% applies to those earning P13,000 or more per month

 

Introduction of a Top Earners bracket at 27.5% for individuals earning P33,333.33 per month or P400,001 or more in a tax year.

Dividend tax

10%

No change

Transfer duty

 

  •  
  • 5% of the property value
  • 30% on agricultural land for non-citizens

 

No change

 

 

“Though the fiscal challenges are undeniable, the policies are sound and promising. The umbrella tax and increase in rates will still make Botswana an attractive destination for investment because investment in infrastructure, lack of foreign exchange controls, stable political climate, export-orientation caused by weakening Pula, and various projects that already commenced under BETP.” – Partners, RSM Botswana. 

 

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