MBABANE – The Eswatini Revenue Service (ERS) is intensifying its enforcement efforts against widespread value-added tax (VAT) non-compliance in the wholesale and retail sector.
This follows revelations that the industry is among the leading contributors to tax evasion and fraudulent practices in the country.
Minister for Finance Neal Rijkenberg announced on Monday evening that government has enlisted the support of tax compliance experts from Uganda to assist ERS in curbing VAT fraud, particularly within the retail sector where revenue leakages have become increasingly concerning.
The Ugandan specialists, who have already arrived in the country, are expected to play a critical role in strengthening tax administration systems, enhancing enforcement mechanisms and supporting investigations into suspected fraudulent activities.
Recent findings from ERS’ tax gap analysis reveal that an estimated E4.4 billion in taxes remain unpaid, representing a significant loss of revenue that could otherwise have been invested in essential development priorities such as healthcare, education, infrastructure and social services.
Of this amount, VAT accounts for approximately E1.3 billion, making it the single largest contributor to the tax gap. The wholesale and retail sector alone is responsible for about E600 million in unpaid VAT, followed by the manufacturing sector at E305 million and the construction sector with E127 million.
Addressing the nation during the Finance in Focus programme on Monday evening, Rijkenberg said government has grown increasingly concerned about declining VAT collections from retailers, despite overall improvements in tax revenue performance.
“While we have seen double-digit growth in tax collection due to digitalisation and improved compliance, VAT from the retail and wholesale sector is moving in the opposite direction,” he said.
“Instead of increasing, VAT collections from shops and wholesalers are on a downward trajectory. We believe there is some level of fraud or VAT being withheld by certain retailers.”
The minister stressed that the trend is alarming, particularly given the steady expansion of the retail sector and rising consumer spending in recent years.
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No more leniency on tax evasion
MBABANE – Finance Minister Neal Rijkenberg warned that government will adopt a tougher stance on VAT compliance, particularly in sectors where abuse has been persistent.
“We are going to be strict on this line. Everyone must pull their weight when it comes to paying tax,” he said.
He added that while government has worked to balance tax policy with economic growth, VAT non-compliance has undermined these efforts.
“In recent years, some tax thresholds have not increased, and in some cases, they have even been reduced. Certain items have been removed from VAT or made tax-exempt. Despite this, VAT collections in retail are still declining,” he said.
“This suggests that the problem is not policy – it is compliance.”
The scale of the tax gap has raised serious concerns within government, particularly given the country’s development needs.
Rijkenberg said the unpaid taxes represent lost opportunities to improve public services and infrastructure.
*Full article available on Pressreader*

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