PROJECTED COMPANY TAX REVENUE DECLINES

MBABANE - Government, through the Ministry of Finance, projects a revenue fall of between two and 23 per cent in some of the income taxes at the end of the current financial year.

The current financial year will end on the last day of this month. The projections are detailed in the ministry’s 2020/21 annual performance report covering the period ending December 31, 2020. According to the report, revenue from income taxes which include company, individual, graded tax and other income taxes is projected to decline to E5.49 billion compared to an annual target of E6.14 billion. The projected revenue indicates 89 per cent collection of the annual budget. “Company, individuals, and graded tax reflect 12. 2 and 23 per cent, respectively, which is decline compared to the previous year’s collection,” reads the report in part.

The negative performance is mainly attributed to the national partial lockdown, which has weakened the economy. This has resulted in many payments delayed by taxpayers while others are said to have defaulted in respect of payment arrangements. “In addition, many employees earned less or no income during the lockdown, resulting in reduced payment of individual taxes. “Other income tax is expected to record a 15 per cent increase compared to the previous financial year and its collection to exceed the annual target by eight per cent. This is attributed to increased dividends paid by major taxpayers; increased payments received from the manufacturing sector,” highlighted the report.

decline

The decline is a blow for the country, as the highest share of tax revenues usually comes from personal income tax. In 2017, for instance, the highest share of tax revenues in Eswatini was contributed by personal income tax (31 per cent). The second-highest share of tax revenues in 2017 was derived from value added tax (VAT (25 per cent). Revenue from taxes on goods and services, on the other hand, is expected to amount to E13.1 billion. The initial budget was E13.7 billion. The figures indicate a 96 per cent collection of the annual budget and a 22 per cent increase compared to the 2019/20 financial year.

Revenue items that show a decline in the current financial year compared to the previous one include lotteries and gaming; licencees and other taxes; and road toll, which is six, 33 and four per cent, respectively. “This is mainly attributable to the COVID-19 pandemic through border shutdown; closure of hotels; and halt of operations for most businesses due to the COVID-19 regulations,” reads the report. Revenues that increased in 2020/21 compared to the previous financial year include value added tax (VAT), Southern African Customs Union (SACU) receipts, fuel tax, motor vehicle levy, as well as alcohol and tobacco levy. They reflect increases of between eight and 91 per cent.

report

“VAT performed well because of COVID-19 relief incentive provided to taxpayers with so many taxpayers showing up to exploit the opportunity,” shared the report. Fuel tax performed better because of the revised rates in 2019 from E3 to E3.85. Motor vehicle levy, on the other hand, also improved due to uncertainty caused by the review of the Import Control Order which resulted in more second hand cars imported before the deadline which was later revoked. Initially, government had said that used motor vehicles that are seven years or below were the only one eligible for an import permit.  After much uproar there was a review and then it was stipulated that a used motor vehicle requiring a permit shall not be older than 11 years old from December 1, 2020.

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