ESWATINI CORPORATE TAX AMONG HIGHEST IN REGION

 MBABANE – It seems the uproar over corporate income tax is justified. Eswatini companies are taxed higher as compared to most countries in the SADC region.

SADC is an acronym for the Southern African Development Community and it consists of 16 countries.  Eswatini’s corporate tax still stands at 27.50 per cent. There is a bid to slash it down to 12.5.

This is direct tax imposed on the income of corporations or equivalent legal entities. The country’s figure is higher than that of its SADC counterparts which include Lesotho (25), Zimbabwe (24.72), Madagascar (20) and Mauritius (15).
Some of these countries have an almost similar economy to Eswatini.

Countries with higher figures in comparison to Eswatini include Mozambique, Namibia (both 32), Malawi (30), Zambia (35) and Seychelles (33), among others.
In the Budget Speech of the past year (2019), government had committed to improving the Ease of Doing Business by significantly reducing Corporate Tax. Fast forward to 2020, the dream of the tax reduction is yet to be realised. Member of Parliament Marwick Khumalo, who is Finance Portfolio Committee Chairman, had suggested that the reduction of the tax could take longer.

Seminar

He was speaking during a Central Bank of Eswatini (CBE) Post-Budget seminar at Happy Valley Resort in Ezulwini last Thursday.
Minister of Finance Neal Rijkenberg was last Friday sought for comment on the update in effecting the eagerly-awaited changes.
“The proposed reduction is in the Income Tax Amendment Bill that has just passed the AG’s (Attorney General’s) Office and it will be tabled soon,” said the minister.

Reducing the corporate income tax, according to an economic expert, will benefit workers as new investments boost productivity and lead to wage growth.
“Lowering the corporate income tax incentivises new investment, leading to an increase of the capital stock. A corporate tax rate that is more in line with our competitors reduces the incentives for firms to realise their profits in lower-tax jurisdictions and encourages companies to invest in the country,” shared an economic expert.

Meanwhile, the high corporate tax is partly the cause of Eswatini’s unwelcome rank on the Ease of Doing Business Index.
The World Bank currently ranks Eswatini 121 out of 190 economies on Ease of Doing Business.

Eswatini Revenue Authority’s (SRA) annual report for 2018/19, on the other hand, showed that companies brought in E1.458 billion in revenue. 
It was an increment of 6.1 per cent as compared to the past year.

Generally, revenue collection showed an upward growth trend of six per cent in 2018/19 financial year.

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