Diamond slump spurs Botswana to propose raising income taxes

Botswana plans to raise corporate and personal taxes to offset a slump in diamond revenue and rein in a widening budget deficit.

Proposals submitted by the Finance Ministry to lawmakers this week include increasing company taxes by 2.5 percentage points to 24.5%, and the top rate for personal income tax by a similar margin to 27.5%. Budget data released by the ministry yesterday forecast a shortfall equivalent to 8.9% of gross domestic product — more than double the 4% limit in the country’s fiscal guidelines.

“Every nation needs adequate revenue to provide services effectively, and everyone has a responsibility to contribute their fair share,” Finance Minister Ndaba Gaolathe said in his budget speech on Monday. “Taxation is a not form of punishment. It is a collective investment in our shared development.”

Botswana was the world’s largest producer of diamonds by value before a drop in demand began in 2023, mainly because of the proliferation of synthetic gems. Unpolished stones previously accounted for a third of budget revenue and the bulk of the southern African nation’s foreign-currency income.

Debswana Diamond, the largest miner of the gems in Botswana, has scaled back output and cut costs amid the drop in demand. The company doesn’t expect a turnaround in the market any time soon.

“For 2026, we still expect the market to remain pretty tight,” Debswana Chief Executive Officer Andrew Maatla Motsomi said in an interview on Monday. “We are hoping that maybe in the latter half of 2027 things might start getting better.”

Mineral income is expected to contribute about 16% of budget revenue in the coming fiscal year, the finance minister said. Non-mineral income tax and value added tax are expected to contribute 45% of forecast revenue, he said.

The bills on the proposed tax changes will be debated in the current sitting of parliament, the minister said.

© 2026 Bloomberg

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