MBABANE – The High Court has delivered a significant judgment clarifying the extent to which company directors can be held personally liable for tax debts.
The court has ruled in favour of 2 directors whom the Eswatini Revenue Service (ERS) had sought to pursue over an unpaid Value Added Tax (VAT) bill exceeding E12 million.
In a judgment delivered on June 24, 2026, Justice Bongani Dlamini upheld a special plea brought by Ndiphethe Justice Ncongwane and Charles Mathew Farrel, who had been cited alongside Regional Consulting Engineers (Pty) Ltd in a tax recovery action instituted by ERS.
The tax collector had argued that the 2 directors should be held personally liable for VAT allegedly collected by the company but not remitted to the State.
However, the court found that the relevant provisions of the Value Added Tax Act do not create a basis for civil liability against company directors in such circumstances.
According to court papers, ERS instituted proceedings against Regional Consulting Engineers (Pty) Ltd and its directors over an alleged VAT liability amounting to E12 869 683.66 million.
ERS relied principally on Section 69 of the VAT Act, arguing that directors and other officers of a company can be held personally responsible when a company commits tax-related offences.
ERS maintained that because the directors were responsible for the management of the company and because VAT had allegedly been collected and not paid over to the tax authority, they should be personally liable for the outstanding tax obligations.
The revenue service further argued that allowing directors to escape liability would undermine the purpose of the legislation and leave the State without recourse where companies have insufficient assets to settle tax debts.
The directors disputed ERS’ interpretation of the law and raised a special plea challenging their inclusion in the proceedings.
They argued that the VAT debt belonged to the company and not to them personally. According to their submissions, the VAT Act provisions relied upon by ERS do not impose personal civil liability on directors for a company’s unpaid tax obligations.
The directors contended that Sections 68 and 69 of the VAT Act deal specifically with criminal offences and penalties rather than civil debt recovery.
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