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Eswatini

Country Name: Kingdom of Eswatini (formerly Swaziland)
Currency: Eswatini Lilangeni (SZL), pegged to the South African Rand (ZAR)
Primary Tax Authority: Eswatini Revenue Authority (SRA)
Key Legislation:

  • Income Tax Order of 1975 (as amended)
  • Value Added Tax (VAT) Act of 2011
  • Customs and Excise Act
  • Investment Promotion Act

Fiscal Authority Allocation

Centralized Fiscal System:
Eswatini operates a centralized tax system, with the Eswatini Revenue Authority (SRA) under the Ministry of Finance responsible for administering and collecting taxes, including corporate income tax (CIT), personal income tax (PIT), value-added tax (VAT), and customs duties. Local taxes are minimal.

Corporate Income Tax (CIT)

Standard Rate: 27.5%
Eswatini imposes a flat corporate income tax rate of 27.5% on the net taxable income of resident companies and foreign companies with a permanent establishment in Eswatini. A reduced rate of 10% applies to manufacturing companies and certain priority industries.

Corporate Forms and Taxation:

  1. Resident Companies: Taxed on worldwide income.
  2. Non-Resident Companies: Taxed only on Eswatini-sourced income.

Exemptions and Incentives:

  • Investment Incentives: Eswatini offers tax holidays and reduced CIT rates for companies investing in manufacturing, agriculture, and infrastructure development. These incentives include reduced CIT rates, customs duty exemptions, and VAT deferrals for up to 10 years.
  • Export Incentives: Companies exporting goods produced in Eswatini may benefit from preferential CIT rates and customs duty exemptions on imported inputs.

Goods and Services Tax (GST) / Value-Added Tax (VAT)

Standard Rate: 15%
Eswatini imposes VAT at a standard rate of 15% on most goods and services. VAT is applied to both domestic production and imports.

Exemptions:
Certain goods and services, such as healthcare, education, financial services, and exports, are VAT-exempt. Exports are zero-rated, allowing businesses to reclaim VAT on inputs used in producing export goods.

Personal Income Tax (PIT)

Progressive Rates:
Eswatini applies a progressive personal income tax system to residents’ worldwide income and non-residents’ Eswatini-sourced income.

Resident Tax Rates for 2023 (Annual Income):

  • Up to SZL 100,000: 20%
  • Above SZL 100,000: 33%

Non-Resident Tax Rate:
Non-residents are taxed at a flat rate of 33% on Eswatini-sourced income.

Deductions and Allowances:
Deductions are available for pension fund contributions, medical expenses, and charitable donations.

Additional Mandatory Contributions

Social Security Contributions:
Eswatini has a National Provident Fund to which both employers and employees must contribute. This fund provides retirement, disability, and survivor benefits.

  • Employer Contribution: 5% of gross salary.
  • Employee Contribution: 5% of gross salary.

Withholding Taxes

  • Dividends: 10%
  • Interest: 10%
  • Royalties: 15%
    Eswatini imposes withholding taxes on payments to non-residents. These rates may be reduced under Eswatini’s double taxation agreements (DTAs).

Transfer Pricing Rules

Eswatini follows the arm’s-length principle for related-party transactions. Companies engaged in cross-border transactions must ensure that prices reflect market value. Transfer pricing documentation may be required for significant transactions between related parties.

Special Tax Regimes

  • Export-Oriented Manufacturing: Exporters of manufactured goods enjoy reduced CIT rates, customs duty exemptions, and VAT zero-rating for inputs used in production.
  • Investment Incentives: Companies investing in manufacturing, agriculture, and renewable energy can benefit from CIT holidays, VAT exemptions, and customs duty deferrals.

Other Taxes

  • Customs Duties: Eswatini, as a member of the Southern African Customs Union (SACU), follows SACU’s customs policies, with duty rates varying based on the type of goods. Some essential goods, such as food and raw materials, benefit from reduced or zero customs duties.
  • Excise Taxes: Excise taxes are levied on alcohol, tobacco, fuel, and luxury goods. Rates vary depending on the product.
  • Capital Gains Tax: Capital gains from the sale of assets, including real estate and securities, are subject to taxation at a maximum rate of 33%.

Double Taxation Agreements (DTAs)

Eswatini has signed several double taxation agreements (DTAs) with countries, including South Africa, the United Kingdom, and Mauritius. These agreements help reduce withholding taxes on cross-border income and prevent the double taxation of income earned in Eswatini and other jurisdictions.

Local Taxes

Local governments in Eswatini impose minimal local taxes, such as property rates and business license fees. Most significant taxes, including CIT, PIT, and VAT, are centrally administered by the Eswatini Revenue Authority (SRA).

Compliance and Reporting

Annual Filing:
Corporate tax returns must be filed within 120 days after the end of the company’s financial year. Personal income tax returns are generally due by March 31st. VAT returns are filed monthly or quarterly, depending on turnover.

Penalties for Late Filing:
Penalties for non-compliance or late filing include fines and interest on unpaid taxes. The standard penalty for late payments is 10% of the unpaid tax amount, plus interest charged at 1.5% per month.

Recent Developments

Focus on Renewable Energy:
Eswatini is encouraging investment in renewable energy, particularly in solar and wind energy. Tax incentives, including reduced CIT rates and VAT exemptions, are available for companies involved in renewable energy projects.

Digital Taxation:
Eswatini is working to update its tax framework to address the growing digital economy. The government is exploring new tax policies to regulate e-commerce and online services, ensuring compliance and taxation of digital transactions.

Infrastructure and Agricultural Development:
To promote economic growth, Eswatini has introduced new tax incentives for companies investing in infrastructure and agriculture. These sectors are seen as key to reducing unemployment and driving sustainable development in the country.

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