Times Of Swaziland: PROJECTED COMPANY TAX REVENUE DECLINES

PROJECTED COMPANY TAX REVENUE DECLINES
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Ashmond Nzima on 09/03/2021 10:01:00


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.