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Eswatini - Indirect Tax Guide

Eswatini - Indirect Tax Guide

Explore the requirements and rules that apply to indirect taxes in Eswatini (formerly Swaziland).

Explore the requirements and rules that apply to indirect taxes in Eswatini (formerly Swaz

Mud huts in a village

General

Types of indirect taxes (VAT/GST)

VAT.

What is standard VAT/GST rate?

15 percent effective 1 August 2018 (previously 14 percent).

Are there any reduced rates, zero rates or exemptions?

Zero-rated supplies include:

  • goods or services exported
  • international transportation of goods or passengers or connected goods or services
  • maize meal, maize, beans, milk, brown bread, samp, rice, fresh fruit and vegetables and fresh eggs, vegetable oil (except olive oil), paraffin and animal feeds
  • farming input such as fertilizers, seeds (excluding flower seeds) and pesticides
  • prescription drugs and medicines
  • school textbooks
  • petrol, diesel and liquid gas. 

Exempt supplies include:

  • financial and insurance services (both long and short term
  • postage stamps
  • land and buildings not used for commercial and industrial purposes
  • lease or letting of residential immovable property
  • education, burial, cremation, medical, dental, nursing and social welfare services
  • betting and gambling 
  • goods supplied as part of the sale of a business as a going concern 
  • precious metals and other valuables supplied to the Central Bank of Swaziland for the Treasury
  • passenger transportation services, excluding those provided by registered tour operators
  • electricity, tap water and sewage services
  • services and goods linked to welfare and social security work, including those supplied by retirement homes, bodies governed by public law or other social well-being bodies
  • sporting activities by amateur sporting organizations
  • non-profit making cultural activities and services 
  • goods and services supplied in a charity arrangement.

What are the general and specific place of supply rules, if applicable?

The place of supply of:

  • Goods: where goods are delivered or made available by the supplier.
  • Services: where the services are rendered by the supplier. Different types of rules apply to different type of services.

VAT/GST registration

Who is required to register for VAT/GST?

All business with an annual turnover of taxable supplies exceeding 500,000 Swazi Emalangeni (SZL) or that expects to exceed this threshold.

Is voluntary VAT/GST registration possible for an overseas company?

Yes but only at the discretion of the Commissioner- General.

Does an overseas company need to appoint a fiscal representative?

Yes, however, the nominated person/public officer must be a resident.

Is VAT/GST grouping* possible?

Yes but only at the discretion of the Commissioner General.

VAT/GST compliance

How frequently are VAT/GST and other indirect tax returns submitted?

  • Monthly if turnover exceeds SZL20 million.
  • Quarterly (if monthly submission does not apply).

Can returns be filed and payments be made electronically?

Yes.

What are the exchange rate rules?

Where an amount is expressed in a currency other than SZL, the amounts must be converted into SZL at the average daily selling exchange rates of the previous month for the currency concerned.

VAT/GST recovery

Can an overseas company recover VAT/GST and other indirect taxes if not registered for VAT/GST locally?

No.

Is it a prerequisite that output tax be charged before input tax can be claimed?

No.

Are there any exemptions with the right to recover or deduct input VAT?

Yes.

The following expenditures are prohibited deductions:

  • entertainment
  • motor vehicle with a body mass of less than 3 500kg
  • 50 percent of mobile telephone services.

For what period of time may input tax not previously claimed be claimed (i.e. prescription)?

5 years.

Where a VAT return reflects a refund due to the taxpayer, is the refund paid to the taxpayer or is the taxpayer required to utilize the refund as a credit against future payments?

The taxpayer can elect to be refunded or to offset the credit against other taxes or future VAT payments. Prior to refund the Eswatini Revenue Authority may conduct an audit.

Invoices

Is a business required to issue tax invoices?

Yes.

Is it possible/mandatory to issue invoices electronically?

Yes, it’s possible.

Is it possible to issue recipient-created tax invoices?

Yes

Audits

Do tax audits take place on a regular basis?

Yes, tax audits are driven mostly by taxpayer’s risk profile and refunds.

Are audits done electronically in your country/territory (i.e. e-audit)? If so, what system is in use?

No.

What penalties can arise from non-compliance?

Fines up to SZL15,000 and/or up to 3 years imprisonment for non-compliance.

Late submission and payment: 2 percent interest per month on tax payable.

Additional tax up to a maximum of 200 percent.

Special indirect tax rules

Are there unique country/territory-specific indirect tax rules that differ from 'standard' indirect tax rules in other jurisdictions?

No.

Does a reverse charge mechanism apply?

Yes.

Can VAT on reverse charges be claimed as input tax, to the extent that the expense on which the reverse charge VAT is accounted for, is used for taxable purposes?

Yes.

Can non-residents appoint local agents in order to avoid reverse charge VAT by virtue of charging standard rate VAT and accounting for such VAT through the agent?

Yes, but subject to the approval by the Eswatini revenue authority.

Are there indirect tax incentives available (e.g. reduced tax, tax holidays)?

No.

Rulings

Is it possible to apply for formal or informal advance rulings from the tax authority?

Yes.

Are rulings and decisions issued by the tax authorities publically available?

No.

Other indirect taxes

Are there other indirect taxes not commented on above?

Yes, other indirect taxes include:

  • customs and excise duty
  • transfer duty
  • stamp duty.

For further information please contact:

Rob Webb
Partner
KPMG in Swaziland
T: +268 24 05 7000
E: rob.webb@kpmg.co.sz

Footnote

*By ‘grouping’ we mean: either a consolidation mechanism between taxpayers belonging to the same group (payment and refund are compensated but taxpayers remain distinct) or a fiscal unity for VAT/GST purposes (several taxpayers are regarded as a single taxpayer).

Disclaimer

All information contained in this document is summarized by KPMG in Eswatini, a member firm affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

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