VAT HIKES: ESWATINI TO EXPAND ZERO-RATED GOODS LIST

MBABANE – The Minister for Finance, Neal Rijkenberg, has announced that Eswatini will expand its list of zero-rated goods to cushion consumers.

He explained that the removal of VAT from these products would result in a price reduction of 15 per cent, making them more affordable for consumers.

He said this will particularly help cushion the poor, should South Africa’s proposed VAT increase take effect on May 1, 2025.

The South African Government is currently debating a 0.5 per cent increase in VAT, which, if implemented, would see the rate rise from 15 per cent to 15.5 per cent in the financial year 2025/2026 and another 0.5 per cent the following year.

This will see VAT increasing to 16 per cent in 2026/27.  The proposal has met significant opposition in SA and if approved, Eswatini must prepare for the possibility that it will be implemented. He noted that due to the country’s economic ties with its larger neighbour, Eswatini would have no choice but to follow suit to avoid complications at the border. He noted that 70 per cent of goods and services are imported from South Africa and similarly with exports, as 70 per cent goes to South Africa as well.  “If South Africa goes ahead with the VAT increase, we will expand our zero-rated bracket to ensure emaSwati, especially the poor, do not bear the full impact,” the minister said.

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The minister revealed that government has identified several key items that will be moved from being taxed to the zero-rated category.

However, in an effort to balance tax revenues, Rijkenberg announced that condensed milk, which is currently not taxed, will now attract VAT. While he did not provide details on the rationale behind this decision, it suggests a shift in government priorities regarding taxable goods.

The minister highlighted that Eswatini already has the longest list of zero-rated goods in the region. He stated that this was a deliberate policy by government to protect low-income households from the full impact of VAT.

“Our goal is to ensure that the man on the street does not suffer much due to VAT. That is why we have prioritised essential goods when expanding the zero-rated list,” he said.

Additionally, he noted that while VAT is charged on electricity in Eswatini, domestic users are exempt, a measure aimed at reducing the cost of living for households.

Rijkenberg emphasised that the proposed VAT adjustments have already been submitted to Cabinet and will, in due course, be presented to Parliament. He underscored that government remains committed to minimising economic hardships while aligning Eswatini’s tax policies with regional developments.

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