Republic of Botswana: Revenue Administration Gap Analysis Program: Value-Added Tax Top-Down Gap Estimation

Botswana’s VAT performance has been steady as a share of GDP, averaging about 3-4 percent of GDP annually. An IMF CD mission in 2025-26 applied the RA-GAP top-down VAT gap model to Botswana’s data for 2017-2024 to estimate both the VAT compliance gap and policy gap. Botswana’s overall VAT gap is significant and rising, reaching 5.8 percent of GDP in 2024 (up from 4.9 percent in 2017). The increase was driven by marked deterioration in the compliance gap after 2018, while the policy gap remained relatively stable. Much of the non-compliance is concentrated in a few sectors. These results imply considerable revenue at risk and underscore the need for strengthened revenue administration efforts. High-level recommendations include building analytic capacity, improving data quality, institutionalizing regular VAT gap estimation, and integrating gap results into compliance risk management.