GOVT LOSES E883M IN UNPAID MSME TAXES

EZULWINI – Only 34 per cent of Micro, Small and Medium Enterprises in the Kingdom of Eswatini are voluntarily tax-compliant.

Independent calculations by the Business Desk unearthed that this effectively means over 45 000 MSMEs do not pay what is due as taxes.
This figure came about on the basis of Eswatini Revenue Authority (SRA) Commissioner General Dumisani Masilela’s disclosure to the effect that the tax compliance rate among MSMEs was currently at 34 per cent. Therefore, on the basis of the fact that the 2017 FinScope survey stated that there were about 69 000 MSMEs in the kingdom, this translates to an approximate 23 460 businesses which pay what is due to the State.

Existent

When the number of businesses which religiously pay their taxes against the total number of existent MSMEs was calculated, this translated to around 45 540 entities which do not give ‘Ceaser what is due to Ceaser’- as the biblical adage goes. At present, businesses are expected to pay 27.5 per cent corporate tax from their profits. The SRA explained that according to a study undertaken in 2017, the MSME non-compliance amounts to E272 million unpaid income taxes, E327 million due Pay As You Earn (PAYE) and E284 million owed Value Added Tax (currently at 15 per cent), which adds up to E883 million.     

“There is an urgent need to upscale the number of businesses which voluntarily pay their taxes,” Masilela emphasised   during the signing of the Memorandum of Understanding (MoU) between the authority and Junior Achievement (JA) Eswatini at the headquarters in Ezulwini yesterday.
Masilela stated that one of the major reasons why they had entered into a MoU with JA was to inculcate a culture of diligent tax compliance among the citizenry especially the youth.

Important

He said it was important that the upcoming generation appreciate the value of paying their taxes in order to ensure that they happily comply. The CG said it was impressive to note that JA had found it important to help educate the youth to pay their taxes at a school-going age.
“We hope teaching the youth at a tender age about the importance of paying taxes will help ensure that we breed a fully tax-complaint nation,” said Masilela.

JA Executive Director Siboniso Madlopha explained that the tax training would be incorporated as part of their entrepreneurial programmes which focus on both in-school and out-of-school youth. He mentioned that about 5 000 youth would get an opportunity on how to file their taxes, when to submit their taxes to the SRA and how to manage their accounting books.

“We are confident that incorporating tax lessons as part of the JA programmes will have a positive effect on the kingdom’s overall tax compliance rates,” said Madlopha.      
It should be mentioned that although Eswatini has 75 per cent of the 69 000 Micro, Small and Medium Enterprises (MSMEs) which are not registered or licensed to operate, it ranks among the best when compared to four countries in the Southern African Development Community (SADC).

With 25 per cent registered MSMEs, the kingdom has a relatively higher number of registered businesses when compared to Malawi, which has only three per cent registered businesses out of one million in existence and Mozambique with only 14 per cent out of 4.9 million entities.

Unregistered

Eswatini, which has over 14 000 unregistered businesses, also ranks fairly well when compared to Lesotho, which has 18 per cent registered businesses out a total of 85 000 MSMEs. Further, the country also surpasses Zimbabwe, which has 15 per cent registered businesses from a total of 2.8 million functional MSMEs. 

    
MSME Director at the Ministry of Commerce, Industry and Trade Mluleki Dlamini recently explained that the main factors for the lack of business registration in the kingdom was the lack of knowledge and a general feeling by some entrepreneurs that their businesses were too small to be counted among players in the formal economy.

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