PM WANTS ESWATINI’S CORPORATE TAX LOWEST IN AFRICA

mfanukhona@times.co.sz

MBABANE –Ambrose Mandvulo Dlamini’s administration has a new tax plan that looks like it’s going to attract foreign direct investment (FDI).
In his economic analysis published by Business Live in South Africa, the prime minister announced that government was planning to reduce corporate tax from 27.5 per cent to 12.5 per cent.

Dlamini’s intention is to make Eswatini’s corporate tax the lowest in Africa. 
In the midst of the Covid-19 outbreak that’s rapidly changing the global landscape, Dlamini pointed out that the country was transforming its corporate environment to make it easier for businesses to operate. “We are gunning for the lead position on ease of doing business in Africa,” Dlamini said. He said though the kingdom was in a coronavirus-induced lockdown, it was confident of using every opportunity to bring business into the country when the dust had settled.

advantage

Dlamini declared the country’s readiness to increase its competitive advantage in Africa and improve the conditions conducive to doing business. In this respect, he said trading across Eswatini’s borders would become easier for investors as government and all stakeholders worked to fulfill the goals of the Kingdom of Eswatini’s Strategic Roadmap 2019-2022.

He explained that the roadmap was initially crafted to push the kingdom into double-digit growth and attract further foreign direct investment. However, with the Covid-19 pandemic significantly affecting the global economy, he said government was bracing for lower-than-anticipated growth and preparing for recovery.

complaints

As it stands, he pointed out that government had acknowledged the complaints of potential investors — including procedures that affected and prolonged the launch of businesses, delays in securing permits and trading licences, and the high corporate tax rate.

He revealed that his administration had also noted that investors sometimes did not recognise the vast value that each country on the continent could offer, with Africa being treated as a single entity, leading to major setbacks in investment by multinationals.

To remedy this, he suggested that the country would re-educate the world on what Eswatini could offer. He elucidated that Eswatini wanted to use this as an opportunity to show the world that the kingdom was open for business.

“We plan to reduce corporate tax from 27.5 per cent to 12.5 per cent, making ours the lowest corporate tax-rated nation in Africa,” he said.
He also mentioned that the country would have reduced registration times for businesses as well as quick turnaround times for trading licences, among many other interventions.

He explained that the corporate tax rate had a significant influence on investors, both local and foreign, as it affected the cost of their projects.
The prime minister said investors were already reacting positively to the upcoming reduction in corporate tax. “We’re receiving a slew of inquiries, and investment leads are coming to consider Eswatini an ideal location,” he stated.

Furthermore, he stated that existing companies could now consider retaining their investments and expanding their operations locally instead of repatriating profits to their home countries or to lower-tax jurisdictions. He mentioned that government was committed to paving the way for businesses to come into the country, adding that the kingdom would implement the changes in phases.

Benefiting the community

The prime minister said Eswatini has already established foreign direct investment leads worth E1.39billion with the existing conditions, and expected to increase it to E2billion when business conditions were loosened.
“This bodes well for the emaSwati communities who will benefit the most from these measures,” he explained.

He further explained that the country had an unemployment rate of 23 per cent, with young people the most affected. He expressed government’s commitment to reducing high youth unemployment and creating an environment that would retain the technical talent it had.

“While we recognise that the ease-of-doing-business measures will not be the silver bullet to address all our challenges, we are encouraged by the progress we are making in becoming a top business destination,” he said.

commitment

He also expressed the country’s commitment to the advancement of its efforts that would drive growth and jobs for all emaSwati.
Andrew Le Roux, the President of Business Eswatini, said his association was pleased to see a reaffirmation of this proposal, which was announced by the minister of finance last year.

While seen in isolation, he said the country’s tax rates were not the highest, but taking all business costs into account, including regulations and cross-border, he said Eswatini was not a business friendly investor destination.

He said corporate tax reduction would go a long way to address the aforementioned shortcomings. In addition, Le Roux mentioned that the country needed all economic stimulus it could get in the aftermath of the Covid-19 pandemic.
He said tax collection would be low in any event and it was perfect time to make this fact known.

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