Corporate income tax declines by 8%

MBABANE – The changes in corporate tax policy have led to a decline of eight per cent in revenue collected.

All companies generating income within Eswatini are taxed on that income at a flat rate of 27.5 per cent.

Income taxes comprise Corporate Income Tax (CIT), Personal Income Tax (PIT), Other Income Taxes (OIT) and graded tax. CIT revenue amounted to E1.68 billion, which reflects an eight per cent decline compared to collections made in the prior fiscal year.

Performance

Minister of Finance Neal Rijkenberg said in the 2023 annual report for the ministry that this was mainly due to a decline in corporate profits following the COVID-19-induced nationwide lockdown. “Current projected performance indicates a collection of 80 per cent of the target, which is mainly due to the non-implementation of policy changes that were assumed,” he said. PIT’s projected performance in the fiscal year portrayed a collection of E4.05 billion, which is a 20 per cent decline compared to the fiscal year 2021/22 performance. This performance indicates an 80 per cent collection of the annual target of E4.29 billion. The minister said the performance below target was due to the non-implementation of expected policy changes, in particular reviewing the income tax thresholds for tax purposes. OIT in the year performed exceptionally well with a collection of E672 million, which is 22 per cent above the prior year’s collection and 18 per cent above the target. Rijkenberg said there were a few companies that made once-off payments that were not anticipated and were not expected to.

Amount

the fiscal year 2022/23, which is a 35 per cent increase compared to the last fiscal year.

The minister said the positive performance was due to the implementation of new policies that include, among others, the review of the schedule for exempt and zero-rated commodities, which was implemented on September 1, 2022. He said the collection in the current year was expected to exceed the annual target by nine per cent. The above target performance is due to the unanticipated introduction of a debt relief programme. Fuel tax collected in the quarter amounted to E331 million, indicating a one per cent increase in the collection made for the same period last year. This performance is due to increased quantities of fuel sold. He said this performance was due to the global fuel crisis; however, the impact was minimal due to the prices falling, especially in the quarter under review.

Revenue

The projected total non-tax revenue amounted to E533 million, with a variance of two per cent below the prior fiscal year’s actual and against a target of E392 million, which is 36 per cent above target. The minister said the above target performance was attributed to the unanticipated growth of property income by 51 per cent in the fiscal year, which was due to increased dividends received from some enterprises. Total income taxes (the sum of company tax, PAYE, OIT, and graded tax) collected in the period under review amounted to E1.46 billion indicating a 20 per cent decline from the collection made in the same period last year. The minister said the underperformance in the quarter is attributed to a 66 per cent decline in company tax.