PRESUMPTIVE TAX TO BE INTRODUCED

 MBABANE – Small and Medium Enterprises (SMEs) have been assured of an administrative costs relief expected to boost their profit margins.

This will be courtesy of an undertaking that was made by Minister of Finance Neal Rijkenberg in the 2019/20 budget. The minister acknowledged that the role played by small and medium enterprises in stimulating economic growth was significant.

“The introduction of a presumptive tax system will promote the growth of small and medium-sized business,” explained Rijkenberg.

Distribution

Investorwords, an online search engine, defines presumptive tax as a form of assessing tax liability using indirect methods such as income reconstruction or by applying base-line taxation across the entire tax base.
It was explained that presumptive methods of taxation are thought to be effective in reducing tax avoidance as well as equalising the distribution of the tax burden.

An example of the presumptive tax model is; if a business makes less than E50 000 in their yearly assessment, they will be expected to pay nothing at all to the Eswatini Revenue Authority (SRA). However, if the business makes more than E50 000 but no more than E500 000, they will be expected to pay probably four per cent of their income after a review of their yearly assessment. It should, however, be mentioned that Principal Secretary Bheki Bhembe clarified that the thresholds to be used for the Eswatini presumptive tax model would be announced in due course.

Business Eswatini President Andrew le Roux commended government for taking the stance to introduce presumptive tax. He said this move would greatly improve SMEs in the kingdom and ultimately have a positive impact on the country’s economy.

“The introduction of presumptive tax is good for the SME industry because it will reduce an administrative burden,” said le Roux.
A tax practitioner in Eswatini for over 20 years, said in time of high unemployment, low Growth Domestic Product (GDP) and high inflation, there was an urgent need to create an entrepreneurial society and as such the presumptive tax should not result in disincentives for persons otherwise unemployed not to earn a living.

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