ERS CRACKS DOWN ON RAMPANT TAX EVASION, STRENGTHENS COMPLIANCE

MBABANE – As tax evasion remains a major challenge in Eswatini, the Eswatini Revenue Service (ERS) has ramped up efforts to detect non-compliance through digital tax systems and data-matching tools.

These are some of the positives noted by the World Bank through its latest public finance review report launched on Wednesday. It was noted that Customs scanners have been deployed to curb illicit trade and the Oracle Revenue Management and Billing (ORMB) system is being used to track taxpayers more effectively.

Finance Minister Neal Rijkenberg, in his 2025 Budget Speech, warned that businesses engaging in tax evasion will face stricter penalties. Government is also embedding tax education into the school curriculum to instill a culture of compliance among future taxpayers. Despite these efforts, Eswatini continues to lose significant revenue due to fraudulent practices, particularly within the informal sector and among high-earning individuals who underreport their income.

Obligations

In a bid to improve tax compliance and attract investment, government has reduced corporate income tax from 27.5 to 25 per cent. This move aligns with Eswatini’s broader strategy to ease the tax burden on businesses while encouraging them to meet their obligations. ERS anticipates that corporate tax revenue will increase by 23.6 per cent in the 2025/26 financial year due to stronger enforcement and improved compliance.

Additionally, a presumptive tax regime has been introduced for small businesses to simplify compliance, while the VAT registration threshold has been raised from E500 000 to E900 000. These measures are expected to formalise more businesses, bringing them into the tax net. To further expand the tax base, government has proposed an increase in excise taxes on alcohol and tobacco. The objective is twofold—generates additional revenue and discourages excessive consumption of these products. The move is also aimed at offsetting the rising healthcare costs linked to alcohol abuse and smoking-related illnesses.

It was further highlighted that Eswatini is facing a decline in Southern African Customs Union (SACU) receipts, which will drop from E13.07 billion in 2024/25 to E10.40 billion in 2025/26. In response, the government will draw from the SACU Stabilization Fund and focus on boosting domestic tax collection. Non-SACU revenue is projected to grow by E2 billion, largely driven by stricter enforcement of corporate and personal income taxes, VAT, and fuel levies. Personal income tax revenue alone is expected to increase by 10.3 per cent to E5.80 billion.

Government’s approach to taxation in 2025 signals a clear shift towards tightening enforcement while offering businesses incentives to comply. With SACU revenues declining, Eswatini is banking on improved tax collection to sustain government operations. However, the effectiveness of these measures will depend on how well ERS can curb tax evasion while maintaining a fair and business-friendly tax environment.

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