Times Of Swaziland: 2024 BUDGET OVERVIEW – EASE OF DOING BUSINESS 2024 BUDGET OVERVIEW – EASE OF DOING BUSINESS ================================================================================ Nhlanganiso Mkhonta on 28/02/2024 08:33:00 MBABANE – The budget speech presented by the Minister of Finance, Neal Rijkenberg, on Monday will see several changes coming into effect for the local business sector. The minister said he was presenting a budget that would enable and equip Eswatini to hit the ground running for economic growth and service delivery. In his budget speech, presented to the First Session of the 12th Parliament of the Kingdom of Eswatini, the minister announced some changes to the local tax landscape. The good news for taxpayers is that there is a reduction in the corporate income tax rate from 27.5 to 25 per cent. A close look into the minister’s speech indicates that there would also be other changes coming up, that will bring significant changes in the local business landscape. Government will be executing a number of changes with the aim of improving the ease of doing business in Eswatini. Rijkenberg said these improvements were meant to address the discontinuation of the Ease of Doing Business Index by the World Bank Group in September of 2021. 1. Corporate tax reduction from 27.5 to 25 per cent: The minister announced that the coming fiscal year will see the coming into effect of the Income Tax Order Amendment, 2023. He said this legislation will bring changes that will improve effectiveness in administration while simultaneously providing relief to businesses. Among other changes brought about by the amendment that will come into effect on July 1, 2024, is the reduction of the corporate tax rate from 27.5 to 25 per cent. Rijkenberg said this was a move that they believe would stimulate new investment and encourage the growth of existing investments. 2. State Business Relations (SBR) Framework: The minister stated that in partnership with the European Union (EU), the International Trade Centre (ITC) and Business Eswatini (BE), the prime minister officially launched the State Business Relations initiative, with the primary objective of establishing a Competitiveness Council in Eswatini. Rijkenberg said as was evident in the Post-COVID-19 Recovery Plan, if rolled out effectively; the State Business Relations initiative should give the country a 0.25 per cent gross domestic product (GDP) growth in 2024, and at least 0.5 per cent growth annually thereafter. 3. Amendment of the Special Economic Zones Act: According to Rijkenberg, government was currently spearheading the amendment of the Special Economic Zones (SEZ) Act. He said a diagnostic process had been carried out by the Export Processing Zones Authority (EPZA) from the Republic of China (Taiwan) who, through an intergovernmental cooperation arrangement, agreed to assist Eswatini in reforming the SEZ legislation. 4. Introduction of capital gains on business assets and provisions on transfer pricing: He said the review of capital allowances, introduction of capital gains on business assets and provisions on transfer pricing were among the main changes that the Income Tax Order Amendment is bringing. “Overall, these changes will improve efficiency in tax administration while providing relief that will encourage economic growth,” the minister said. A capital gain refers to the increase in the value of a capital asset when it is sold. Put simply, a capital gain occurs when one sells an asset for more than what they originally paid for it. Almost any type of asset one owns is a capital asset. This can include a type of investment (like a stock, bond, or real estate) or something purchased for personal use (like furniture or a boat). 5. The completion of factory shell structures: Rijkenberg said government remained committed to building factory shells to stimulate the entry of new investors into the local market and to create jobs. He said the government will pursue the completion of two factory shell structures at Ngwenya and commence construction of the Bulandzeni Factory Shell. “If we continue with an aggressive rollout of factory shells, this should add at least 0.5 per cent growth in GDP every year,” he said. He stated that the construction of the Gamula and Hlatikhulu factory shells has been completed. He said these factory shells were expected to employ 1 000 and 450 people, respectively. Moreover, the factory shell that was purchased at Ngwenya currently employs over 900 people. The Ndzevane and Johnson Work Wear factory shells are under construction and are anticipated to be completed this year. 6. Increase in VAT registration threshold smaller taxpayers: The government will review the VAT threshold from the current E500 000 to E900 000. Businesses that would like to remain registered for VAT yet find themselves below the threshold will continue to apply for voluntary registration and remain registered for VAT should they be interested in utilising the benefits of VAT. These changes aim at reducing compliance costs and encourage growth for small businesses, in support of broad-based economic growth. The minister said this will be aligned with the reduction in the costs associated with taxation, especially on the smaller taxpayers, the government will implement the Presumptive Tax regime that was approved as part of the Income Tax Order Amendment in 2023.