EswatiniTax Obligations Detailed

In Eswatini, employers must withhold and remit employee income tax through the Pay-As-You-Earn (PAYE) system, and also manage other contributions like the Skills Development Levy and Workman's Compensation. No social security contributions are required.

Employer Obligations

• Pay-As-You-Earn (PAYE): Employers deduct income tax from employee salaries monthly based on graduated tax bands, remitting it to the Eswatini Revenue Authority (ERS) by the 7th of the following month. The tax bands and rates are progressive, starting at 0% for income up to SZL 41,000 annually and reaching 33% for income exceeding SZL 200,000. A tax rebate of SZL 8,200 (or SZL 10,900 for individuals over 60) applies.
• Skills Development Levy: Employers contribute 1% of each employee's salary towards this levy.
• Workman's Compensation: Employers must contribute to this fund, with rates varying depending on the industry's risk classification and the company's total payroll. This is calculated like an insurance premium.
• Graded Tax (Poll Tax): Employers deduct and remit SZL 1.50 monthly (SZL 18 annually) from each employee's salary as a graded tax, payable in full in advance on July 1st.
• Corporate Income Tax: Companies are taxed at a flat rate of 25% on income derived within Eswatini. Companies usually have a fiscal year-end of June 30th. Returns are due within 120 days of the year-end, often extended by 60 days. Provisional tax is paid in two installments – one within six months of the year-end, and the other by the last day of the fiscal year.

Employee Obligations

• Income Tax: Employees are subject to income tax as described in the PAYE section, paid through deductions from their salaries.
• Graded Tax (Poll Tax): Employees are subject to the graded tax of SZL 1.50 per month, paid through payroll deduction.

Tax Year and Deadlines

The tax year in Eswatini runs from July 1st to June 30th. Corporate tax returns are due within 120 days of June 30th (extendable). Provisional tax payments are due twice yearly, usually on December 31st and June 30th, though these dates may vary for companies with different fiscal year-ends. Individual tax returns are typically due by November 30th for those with employment income and other sources, and by October 31st for other non-VAT registered entities. VAT registered businesses and special groups usually file by December 31st. These deadlines are as of today's date, February 5, 2025, and could be subject to change.

Employee tax deductions in Eswatini are calculated based on earnings and include deductions for pension funds and other contributions as outlined in the Income Tax Order 1975.

PAYE (Pay As You Earn)

This is the primary method of income tax collection in Eswatini. Employers deduct tax directly from employee salaries and remit it monthly to the Eswatini Revenue Service (ERS). The due date is the 7th day of the following month.

Deductions

• Pension Fund Contributions: Employees can deduct contributions to approved pension funds. As of July 1, 2024, the deduction limit is 15% of the employee's pensionable salary.
• Retirement Annuity Fund Contributions: A deduction is allowed for contributions to retirement annuity funds, not exceeding 15% of taxable income from trade. This is reduced by any pension fund contributions already deducted.

Tax Rates and Rebates

While the corporate tax rate is changing to 25% for the 2025 tax year, individual income tax rates and brackets have not been amended for the 2024/2025 tax year. Tax tables, incorporating applicable rebates, are available for daily, weekly, and monthly wages to assist employers in calculating deductions. Consult the latest tax tables from the ERS for precise figures.

Tax Year and Deadlines

The tax year in Eswatini runs from July 1st to June 30th. PAYE remittances are due on the 7th day of the following month. Provisional tax payments for businesses are due twice yearly on December 31st and June 30th.

Additional Information

• Employers are responsible for deducting the correct amount of PAYE and remitting it to the ERS on time.
• Taxpayers can obtain a Tax Clearance Certificate from the ERS if their tax affairs are up-to-date, including PAYE remittances, assessed taxes, tax returns, and provisional tax payments. This certificate can be necessary for various administrative processes.

In Eswatini, the Value Added Tax (VAT) is levied on most goods and services at a standard rate of 15%.

VAT Rates in Eswatini

• Standard Rate: 15% (applicable to most goods and services)
• Zero Rate: 0% (applicable to exports, international transport, basic foodstuffs, petrol and paraffin, medicines, educational books, and certain agricultural supplies)
• Exempt: Financial services, land, gambling, water, charities, postal services, dwellings, education, health, and welfare.

VAT Registration

Businesses with an annual taxable turnover exceeding E500,000 are required to register for VAT. Those anticipating reaching this threshold should also register. Public institutions making taxable supplies must register regardless of turnover. Businesses dealing exclusively in exempt goods and services are not required to register. If a business supplies both exempt and taxable goods and services, registration is required only if their taxable supplies turnover reaches the E500,000 threshold. Businesses below the threshold may voluntarily register, provided they have a fixed place of business in Eswatini, maintain proper accounting records, and can submit regular returns. A fiscal representative is required for businesses operating in Eswatini but situated abroad.

VAT Filing and Payment

The VAT filing frequency can be monthly, bimonthly or quarterly. Large taxpayers usually have to file monthly returns. Filing returns is done electronically through the Eswatini Revenue Service (ERS) e-Tax system until November 30, 2023, after which the new Oracle Revenue Management and Billing (ORMB) system will be used as of December 2023. As of July 1, 2023, a detailed VAT Schedule is required as a supporting document for all VAT returns. Since December 1, 2023, taxpayers upload the new VAT schedule directly on ORMB.

Input Tax Deductions

Registered businesses can deduct input tax paid on goods purchased for resale, raw materials, and specific services linked to capital goods installation. Input tax on exempt supplies is not recoverable, nor is VAT on private or non-business-related purchases. Valid tax invoices or customs documentation is crucial for claiming input tax deductions.

VAT on Imports and Exports

Imported goods are subject to VAT. However, VAT paid on imported goods meant for business use can be reclaimed as input tax. Imports from SACU member states are considered imports into Eswatini upon physical entry, while non-SACU imports are considered as such upon entering Eswatini for domestic use. Exports are zero-rated for VAT.

General Information About VAT

VAT, or Value Added Tax, is a consumption tax levied on the value added at each stage of production and distribution. It's a common tax system used globally, with variations in implementation and rates. The intent is to distribute the tax burden across the supply chain, making it more equitable than a single-stage sales tax levied at the final point of sale. Consumers ultimately bear the VAT cost, but the burden is spread across multiple parties.

Eswatini offers a range of tax incentives aimed at attracting investment and promoting economic growth.

Corporate Tax Incentives

• Reduced Corporate Tax Rate: The standard corporate income tax rate is 25% as of July 1, 2024. A reduced rate of 10% is available for 10 years for development enterprises engaged in manufacturing, mining, international services, and tourism. This incentive may also include an exemption from withholding taxes on dividends during the same period.
• Tax Incentives for Development Enterprises: New businesses deemed beneficial to the Eswatini economy may be designated as "development enterprises" by the Minister of Finance, granting them concessions like the reduced 10% corporate tax rate for 10 years. Eligibility is determined based on the project's economic development potential and adherence to specific criteria.

Other Tax Incentives

• Accelerated Capital Allowances: Businesses can benefit from accelerated depreciation on certain capital expenditures, reducing their tax burden:
  • Hotels: 50% initial allowance and 4% annual allowance on construction and improvements.
  • Manufacturing Buildings: 40% initial allowance and 4% annual allowance.
  • Employee Housing: 20% in the first year and 10% annually for the next eight years.
  • Farming: Up to 30% of gross farming income can be deducted for certain capital expenditures, with unused amounts carried forward.
• Carry Forward of Losses: Businesses can carry forward losses indefinitely to offset against future profits.
• Employee Training Allowance: Companies can offset 100% of employee training costs against their tax liabilities.
• Exemptions from Customs Duties: Raw materials used for producing exported goods and capital goods imported as intermediate inputs are exempt from customs duties.

Special Economic Zones (SEZs)

• Companies operating within designated SEZs enjoy further incentives:
  • Corporate Tax Exemption: 20-year exemption from corporate tax, followed by a 5% rate.
  • Customs Duty, VAT, and Other Tax Refunds: Full refunds on raw materials, equipment, and machinery.
  • Exemption from Foreign Exchange Controls.

General Investment Incentives

• Repatriation of Profits and Dividends: Full repatriation of profits, dividends, expatriate salaries, and capital is allowed after tax payments.
• Work and Residence Permits: Five-year work and residence permits are available for expatriate directors, senior management, and key technical personnel of new enterprises.
• Double Taxation Agreements: Eswatini has double taxation agreements with various countries to avoid double taxation on income.

Withholding Tax

• Withholding Tax on Dividends and Interest to Non-Residents: The rate is 15% for dividends and interest paid to non-residents. However, a reduced 10% rate under the double taxation treaty with South Africa applies to interest and dividends paid to shareholders owning at least 25% of the company. The Eswatini Revenue Authority (ERS) handles tax-related matters.

Please note: This information is current as of February 5, 2025, and may be subject to change. Consult with a tax professional or the Eswatini Revenue Service for the most up-to-date details and specific eligibility requirements.