ERS collects over E12bn in tax revenue
MBABANE – The Eswatini Revenue Service (ERS) collected over E12 billion in tax revenues for the financial year 2022/23.
The ERS recorded the highest tax revenue growth since 2017/18, which saw a tax revenue increasing by 11.6 per cent compared to the previous year, where the figure stood at E10. 786 billion.
The exact tax collection revenue amounted to E12.037 billion against a target of E12.323 billion, which reflects a two-per cent below target performance.
The revenue collections to target shortfallwas E0.285 billion. However, the collections were E1.250 billion above the previous year.
This was detailed in the ERS Integrated Annual Report tabled by Minister of Finance, Neal Rijkenberg during the House of Assembly sitting on Friday.
The figures contained in the institutions annual report reflects that the 11.6 per cent tax revenue increase was higher than the six per cent nominal gross domestic product (GDP) increase projected by the Central Bank of Eswatini (CBE) and the Ministry of Economic Planning and Development and this is characteristic of an improving revenue administration.
The integrated report reflects the performance of the ERS against its strategy and annual performance targets, compiled in line with the institution’s legislative governance framework.
DEMONSTRATES
The report covers the financial year beginning April 1, 2022, to March 31, 2023, and demonstrates value created by the organisation and matters material to creating value in the short, medium and long term.
The report detailed that major tax types such as company and fuel tax recorded significant below target performance during the period under review.
Company tax collections were negatively affected by a reduction in taxable incomes, from major contributing economic sectors such as the manufacturing, information and communication and agriculture sectors.
On the other hand, the report elaborated that fuel taxes were impacted by the supply changes experienced during the financial year.
On the positive, value added tax (VAT), road toll and other income taxes (OIT) recorded above target performances against their respective targetswhen compared to the previous year, mainly due to the improved administrative measures put in place during the year to enhance revenue collection. In his foreword contained in the report, ERS Commissioner General, Brightwell Nkambule attributed the high tax revenue collection to, in part, the deliberate efforts taken by the organisation to improve customer service and effective revenue improvement initiatives. Nkambule said the revenue improvement drive also resulted in a reduction in debt stock by 20.8 per cent.
The total debt stock was E7.422 billion at the end of the financial year from an opening balance of E9.171 billion at the beginning of the year.
He said the organisation continued to implement its Strategic Plan for 2021/22 – 2023/24 guided by the vision to attain a 100 per cent voluntary compliance for a better Kingdom of Eswatini and the theme to be a digitalised and data-driven organisation with their partners.
PRIORITISED
“In 2022/23 we prioritised programmes that laid the foundation for digitalisation of the customs and tax value chain. We expect that with this theme, the organisation shall improve collaboration with ecosystem partners, adopt a data-driven decision making culture and digitalise processes to reduce the costs of compliance, as well as simplify compliance processes for our clients. The ultimate outcome is to improve voluntary compliance,” he said.
Nkambule acknowledged the support and assistance they continued to receive from their international and regional partners. These include the International Monetary Fund (IMF), the IMF’s Technical Assistance Centre responsible for Southern Africa (AFRITAC South), the World Bank, the African Tax Administration Forum (ATAF), the World Customs Organisation (WCO), the Common Market for Eastern and Southern Africa (COMESA), the United Nations Conference of Trade and Development (UNCTAD), the Southern African Customs Union (SACU), the Southern African Development Community (SADC), Tax Inspectors Without Borders (TIWB), the Organisation for Economic Cooperation and Development (OECD), the Global Forum, the International Centre for Tax and Development (ICTD), the South African Revenue Services (SARS), the Korean Customs and all the ERS in-country partners.
He relayed that during the year under review, they rebranded the organisation from Eswatini Revenue Authority to Eswatini Revenue Service.
COMPLIANCE
The rebranding, he said, was a culmination of a long journey to shift their methods to focus on improving compliance through better customer service, simplification of compliance processes and client education.
“We noted a positive response to this shift by our clients. The Net Promoter Score, a performance measure to customer service improved from 6.73 to 49.4 over the financial year,” said Nkambule.
He said the ERS engaged extensively with their ecosystem partners to improve collaboration, solicit their feedback and buy-in to the long lasting of new revenue and trade facilitation initiatives that were lined up for implementation in the year and coming years.
Also, he said, the ERS also strengthened their relationship with partners that included Business Eswatini (BE), the Federation of Eswatini Business Community (FESBC), Commercial Amadoda and the Bankers Association.
He said as the ERS, they were looking ahead with optimism and sent his deepest appreciation to the ERS employees.
“Their high level of engagement delivered the positive results. They have remained committed and showed enthusiasm towards attaining the revenue target despite the uncertainties in our operating environment,” he said.
The commissioner general also extended gratitude to the governing Board and the minister of Finance and government for the continued guidance and support the ERS received as they delivered on their mandate.
INTEGRITY
He further committed to improve revenue mobilisation and trade facilitation through simplified processes, world class customer service and effective client education, guided by their values that included integrity, innovation and transparency and performance excellence.
Meanwhile, ERS Board Chairperson, David Dlamini noted in the same report that the year began with the implementation of their digital transformation journey, which included the procurement of a vendor to implement the new Integrated Revenue Administration System (IRAS). He said this was expected to transform the administration of tax and provide efficiencies that would make compliance easier for their clients.
Dlamini said the year 2022/23 was also the year when the transformation from an authority to a service was fully embraced within the organisation.
“We have made progress with this change, not only in the naming but our behaviour toward our clients. We have also adopted tools to gauge client satisfaction and receive regular feedback on our client services. I wish to express my heartfelt appreciation to our staff for adopting this direction so effortlessly and wholeheartedly,” he said.
Dlamini added that the organisation continued to struggle with a significant amount of debt, which may be attributed not only to non-compliance, but also acknowledged the difficult economic circumstances in which the country operated.
To this end, he said a relief programme was introduced where qualifying clients could have their penalties and interest waived on the principal debt.
Though there was a significant uptake of the relief, it was at the desired levels; it did, however, provide relief to those clients who enrolled successfully, said Dlamini.
INITIATIVE
The chairperson said together with this initiative, all staff came together in an unprecedented manner to ensure that the revenue target for the year was achieved.
“Although the target was missed by a mere two per cent, the Board was encouraged by the overall performance in the year under review, as both revenue and other key performance indicators (KPIs) made more considerable improvements.’’
Furthermore, Dlamini said their customs digitalisation initiative yielded an unprecedented 102 per cent growth in the SACU receipts moderately easing the fiscus challenges.
He said attaining the domestic revenue target would always be a challenge, and in the year under review, the organisation went above and beyond to try and achieve this, especially in the last half of the year.
He stated that the ERS also reached the end of the current strategy and looked forward to reviewing its performance and devising improvements where warranted.
ACHIEVEMENT
“As an ever-evolving or agile organisation, we expect to meet clients’ needs in a more efficient manner, while driving the achievement of our mandate,” he said.
He said another notable development was the appointment of a different commissioner general for the first time since inception of the organisation in October 2010, following the departure of the then Commissioner General, Dumisani Masilela.
He said the appointment of the current, Brightwell Nkambule, has ensured that the performance culture continued to prevail, and this could be seen in the outturn in overall performance.
Dlamini relayed that in the coming year, they expected to improvement in the efficiencies through the digital transformation and continued support to their clients to encourage and enable them to comply.
He said the Board must be applauded for continuously showing its support, even beyond what was expected of them in terms of convening meetings.
Also, he said their contribution in pushing the ERS’s initiative had again been invaluable.