ONLY 5% OR NO TAX - GOVT

 MBABANE – A proposed tax relief, which could see Small and Medium Enterprises (SME’s) paying either three or five per cent of their yearly income or nothing at all, now lies in the hands of Cabinet.

If a business makes less than E41 000 in their yearly assessment, they will be expected to pay nothing at all to the Swaziland Revenue Authority (SRA). However, if the business makes more than E41 000 but not more than E500 000, they will be expected to pay five per cent of their income after a review of their yearly assessment as stipulated in the draft Income Tax Amendment of 2017.  Principal Secretary in the Ministry of Finance, Bheki Bhembe, said the draft amendment which will only apply to businesses registered under presumptive tax with the SRA in terms of the act, would soon be deliberated by Cabinet where it would be decided as to whether the recommendation to further reduce it to three per cent is adopted.

Thereafter, the bill will be tabled to Parliament for further deliberations, which will culminate in Royal assent.   
“We will have to wait until such time when Cabinet has approved a reduction of the (presumptive tax),” briefly said Bhembe when asked whether government had approved the proposed further reduction of the five per cent presumptive tax.  

It should be mentioned that SMES or ‘small business’ in accordance with the proposed amendment means any taxpayer who is ordinarily resident or carrying on business in Swaziland whose turnover derived from carrying on of that business was less than E500 000 in a year of assessment, unless the Commissioner in a particular case otherwise directs.
It should be mentioned that following consultations with all relevant stakeholders that included the business community, there had been a strong recommendation to reducing the tax rate for businesses under presumptive tax to three per cent.

This was in line with the government’s intention to widen the tax base by making it easier for SME’s to be tax compliant. 
A tax expert advised that the cost of tax collection should not exceed collections and could likely be a disincentive for SME’s.  “The SME tax payer regime should be better off under a presumptive regime and as such the proposed amendments would only be productive if there is actually savings of both time and cash by taxpayers and simultaneously a widening of the country’s tax base. The government would need to carefully consider tax thresholds and rates,” he said.

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