Employers in Eswatini have a responsibility to contribute to the Eswatini National Provident Fund (ENPF). This contribution is calculated as 5% of the employee's gross salary. The contribution covers various benefits provided by the ENPF, including retirement, disability, and survivor benefits.

Other Mandatory Contributions

In addition to the ENPF, employers may also be required to contribute to a Skills Development Fund. This is applicable to employers with an annual salary bill exceeding E80,000. The contribution is usually around 1% of the total salary bill.

Reporting and Payment

Employers must register with the ENPF, withhold employee contributions, add their own, and remit payments on a regular basis. This is usually done on a monthly basis. It's important to note that these contributions are mandatory and failure to comply may result in penalties.

Eswatini operates a progressive tax system, where tax rates increase as income levels rise. This system is designed to ensure that individuals with higher incomes contribute more to the tax revenue than those with lower incomes.

Tax-Free Threshold

In Eswatini, there is a tax-free threshold. This means that individuals earning below a certain amount are not required to pay income tax. The current threshold is E41,000 per year. This threshold is achieved through a combination of the tax rebate and the lowest tax bracket.

Rebates

A tax rebate is a fixed amount that is subtracted from the calculated tax liability before arriving at the final tax payable. Every resident taxpayer in Eswatini is entitled to an annual tax rebate of E8,200. For those over 60, the rebate is E10,900. This effectively increases the tax-free threshold.

Deductible Contributions

Employees in Eswatini can claim deductions for certain contributions made throughout the year. These deductions reduce their taxable income. The contributions that can be deducted include:

Pension Fund Contributions

Employees can deduct up to 10% of their gross salary for contributions to a recognized pension fund.

Retirement Annuity Fund Contributions

Contributions to a retirement annuity fund are also deductible. The maximum limit for these deductions is 15% of the employee's taxable income. However, the total deduction is reduced by any contributions already made to a pension fund.

Businesses supplying taxable goods and services with a turnover exceeding E500,000 within a twelve-month period are required to register for VAT. Certain services are exempt from VAT. A comprehensive list of exempt supplies can be found in the VAT Act or through the Eswatini Revenue Service (ERS).

VAT Rates

Eswatini has a standard VAT rate of 15%. This rate applies to most taxable supplies of goods and services.

VAT Treatment for Service Providers

Businesses registered for VAT must charge VAT on their taxable supplies and account for the VAT they have paid on their business purchases (input VAT). They can then claim a credit for the input VAT incurred against the output VAT collected. Businesses that fall below the registration threshold or provide exempt supplies do not charge VAT on their services. However, they are also not entitled to claim input VAT credits.

VAT Treatment for Service Recipients

Businesses registered for VAT can claim input VAT credits for VAT incurred on taxable services they receive, provided the services are used for making taxable supplies. Consumers generally bear the burden of VAT as the final price they pay includes the VAT charged by the service provider.

Reverse Charge Mechanism

Eswatini employs a reverse charge mechanism for imported services. This means the responsibility for calculating and paying VAT on imported services shifts from the foreign supplier to the Swazi recipient. This ensures VAT is collected on imported services and creates a level playing field for local service providers who charge VAT on their services.

Eswatini offers a competitive corporate income tax rate of 27.5%, which may be reduced to as low as 12.5% for certain qualifying companies. This makes it competitive within the region. Companies that meet specific criteria can apply for development incentives like reduced corporate tax rates, customs duty exemptions, and other benefits.

Competitive Corporate Tax Rate

The corporate income tax rate in Eswatini is 27.5%, but it can be reduced to as low as 12.5% for certain qualifying companies. This makes it a competitive choice within the region.

Development Approval Order (DAO)

Companies that meet specific criteria can apply for development incentives. These incentives include reduced corporate tax rates, customs duty exemptions, and other benefits.

Specific Sector Incentives

Manufacturing and Export

Tax incentives are available to encourage investment in manufacturing and export-oriented activities. These incentives potentially include tax holidays and accelerated depreciation.

Agriculture

Incentives might exist to promote development in the agricultural sector.

Tourism

The tourism sector may also have incentives to attract investment and development.

Regional Incentives

Businesses located in designated development zones or less-developed regions may be eligible for additional incentives and benefits.

Important Considerations

Eligibility

Specific eligibility requirements and conditions apply to different incentives. It's important to ensure your business and proposed activities fall within the qualifying criteria.

Application Process

Tax incentives usually involve formal applications and approval processes through relevant government agencies.