Companies to pay less tax than SA

This, after Minister of Finance Majozi Sithole reviewed corporate tax from 30 per cent to 27.5 per cent.

South Africa’s corporate tax currently stands at 28 per cent.

This has been viewed as a development that is likely to see more investors flocking into the country, especially because government has also made it a priority to make the investment climate as friendly as possible.

Nick Jackson, Royal Swazi-land Sugar Corporation (RSSC) Managing Director, said this was a step in the right direction by government and they were absolutely happy about it.

"We certainly need to be more competitive with South Africa, so we are excited about this development. We are quite keen on any tax reviews that will allow us to make more money. This is a great step by government to make the environment more conducive," he said in an interview.

Jackson, who is also Chairman of the Board of the Swaziland Investment Promotion Authority (SIPA), said he would like to see government further lowering the rate, stating that in Mauritius, the tax rate was as low as 15 per cent.

"We need to be bold in the short-term to benefit in the long-term. Yes, government’s revenue might be lowered but this will be countered by more companies wanting to invest in the country," he said.

President of the Federation of Swaziland Employers and Chamber of Commerce (FSE& CC) Fikile Nkosi said this was a welcomed development to business in terms of competitiveness.

She said the country will be able to attract more investors who will sustain their business due to the payment of less tax.

"We believe people will plough back through expanding their businesses and employing more people. The whole understanding of lowering taxes is to make businesses more profitable and increase productivity. We are likely to see more businesses moving from the informal sector and start paying taxes, something that will foster compliance on tax payment," she said.

However, players in the Small and Medium Enterprise (SME) are not quite impressed.

President of the Federation of the Swazi Business Community (FESBC), Hezekiel Mabuza, said even though they appreciate this move, it was not enough.

"The tax (corporate) is still high because costs of doing business are still high. The decrease is quite insignificant when compared to other countries. This will affect foreign direct investors because they want to be competitive. We benefit from FDI inflows through linkages that are formed. We are happy but could have wished for a lower rate," he said.

Sithole, when presenting the budget speech said private sector companies were the future of growth in Swaziland and already, this sector employed nearly twice as many people as the public sector.

"To demonstrate our commitment to competitiveness, government will table legislation to cut the corporate tax rate from 30 per cent to 27.5 per cent. The lower rate will be accompanied by amendments to corporate tax allowances to make the tax system simpler to understand and to manage.

"Our decision to reduce the corporate tax rate by 2.5 percentage points will not reduce cash collections. This set of taxes is still expected to bring in around E55 million more than in 2012/13 with higher economic activity," he explained.

Post your comment

Your name:

Your e-mail address:

Add your comments:

Please enter the code you see in the image:

Image:

Code: