Eswatini GMT +2
Please direct all queries regarding Eswatini to the person listed below in the Gaborone, Botswana office.
Indirect tax contact
Cleverent M. Mhandu +267 397-4078 (resident in Gaborone, Botswana) +257 365-4045 cleverent.mhandu@za.ey.com
A. At a glance
Name of the tax
Value-added tax (VAT)
Local name Value-added tax (VAT)
Date introduced 1 April 2012
Trading bloc membership Southern African Customs Union (SACU)
Southern African Development Community (SADC)
African Continental Free Trade Area (AfCFTA)
Administered by Swaziland Revenue Authority (SRA)
VAT rates
Standard 15%
Other Zero-rated (0%) and exempt
VAT number format Taxable person identity number (xxx-xxx-xxx)
VAT return periods Monthly Quarterly
Thresholds
Registration SZL500,000
Recovery of VAT by non-established businesses No
B. Scope of the tax
VAT is collected on “taxable supplies” of goods and services consumed in Eswatini (i.e., domes tic supplies), as well as on importation of goods and services into Eswatini.
There are other transactions by a taxable person that are treated as taxable supplies, and these include goods taken for own use, goods given away as gifts and hire purchase leases.
C. Who is liable
Anyone who is making taxable supplies and meets the registration threshold (SZL500,000) is liable to register for VAT in Eswatini. The registration threshold only applies for domestic sup plies. For importation of goods, everyone is charged VAT, and there is no requirement to register, as the VAT is collected directly by the Revenue.
Exemption from registration. The VAT law in Eswatini does not contain any provision for exemp tion from registration.
Voluntary registration and small businesses. At the Commissioner’s discretion with regard to the following:
• Taxable person needs to have a fixed place of business
• Taxable person to evidence ability to maintain proper accounting and record keeping
• Taxable person must be providing taxable supplies as defined
Any other person that wishes to register, but doesn’t meet the registration threshold, may apply to the Commissioner, showing that they have a physical place of business in Eswatini and that they are making taxable supplies in Eswatini. The registration is approved at the Commissioner’s discretion.
Group of individuals (not businesses), especially associations and clubs, can be registered for VAT under a single VAT registration at the discretion of the Commissioner General.
Group registration. Group VAT registration is not allowed in Eswatini.
Non-established businesses. Non-established businesses can register for VAT in Eswatini through a resident agent with a resident public officer. A non-established business is only required to register for VAT in Eswatini once it exceeds the registration threshold.
Tax representatives. Tax representatives are allowed, but not compulsory. However, the supply of the service by the agent on behalf of the principal is deemed to be supply by the principal.
Reverse charge. The reverse charge applies in Eswatini for business-to-business (B2B) supplies of services from a non-established service provider. VAT is due on the supply of imported ser vices, where the importer of the services self-accounts for VAT. It only applies where the importer of the services does not have a requirement to register for VAT in Eswatini, because it does not exceed the registration threshold or it only makes exempt supplies in Eswatini. The importer of the services is not required to register, but required to pay the VAT due, 30 days from the date of receipt of the invoice from the foreign supplier. It must complete a special form to the tax authorities for the payment due.
Where the importer of the services is registered for VAT in Eswatini, and they are making fully taxable supplies, they are not required to account for VAT on the imported services from the non-established business.
Domestic reverse charge. There are no domestic reverse charges in Eswatini.
Digital economy. There are no special VAT rules for supplies within the digital economy. Normal VAT rules apply.
There is, however, in the VAT law a special place of supply rule for electronically supplied services, which covers the provision of websites, software, images, distance trading, etc. The place of supply for such services is deemed to be where the recipient uses/obtains advantage of the service, i.e., in Eswatini.
Nonresidents providing electronically supplied services for business-to-consumer (B2C) sup plies are required to register and account for VAT in Eswatini, only if such supplies exceed the registration threshold. Otherwise, there is no requirement to register and account for VAT on such supplies.
Nonresidents providing electronically supplied services for B2B supplies are not required to register and account for VAT in Eswatini. Instead, the customer is required to self-account for the VAT due via the reverse-charge mechanism (see the Reverse-charge subsection above).
There are no other specific e-commerce rules for imported goods in Eswatini.
Online marketplaces and platforms. No special rules exist for online marketplaces and platforms in Eswatini.
Registration procedures. Businesses must apply for VAT registration by completing and submit ting a TIN registration form (RG01(a)) and attach (where/if applicable) the following:
• Certified copy of a Certificate of Incorporation (for companies only)
• Certified copy of Form J (for companies only)
• Certified copy of Power of Attorney (where applicable)
• Certified copy of personal identity document (of the Public Officer)
• Certified copy of partnership deed (if the business is a partnership)
• Deed of trust (where applicable)
• Deed of sale (if it is a takeover)
• Constitution (only for NGOs and welfare organizations)
• Certified copy of Trading License
The TIN registration form may be collected from the nearest Swaziland Revenue Authority (SRA) office or downloaded from the SRA website. The SRA will review the application and inform the taxable person of the outcome within 30 days. Where necessary, the SRA may conduct inspection of taxable person businesses. When registered, a taxable person will be issued a registration certificate with a taxable person identification number (TIN) to be quoted in all correspondences with the SRA.
VAT registration can be done online or manually, i.e., physically submitting an application form at the tax authorities.
Deregistration. A taxable person is required to complete and submit the VAT deregistration form and indicate the reason for applying for deregistration. The form can be submitted to the nearest SRA office. Deregistration for VAT is on a voluntary basis, but normally arises from a tax audit. The Commissioner can deregister a business if it is determined that a business is no longer meeting the registration requirements, i.e., not meeting the registration threshold.
Changes to VAT registration details. Any changes to a taxable person’s VAT registration details must be communicated to the tax authorities in writing within 14 days of the changes. Such changes include:
• Any changes to the business physical location, contact details and bank details
• Change in the circumstances that made one qualify for registration
• Changes in the business activities
D. Rates
The term “taxable supplies” refers to supplies of goods and services that are liable to a rate of VAT, including the zero rate.
The VAT rates are:
• Standard rate: 15%
• Zero-rate: 0%
The standard rate of VAT applies to all supplies of goods or services unless a specific measure provides for the zero rate or an exemption.
Examples of goods and services taxable at 0%
• 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
The term “exempt” refers to supplies of goods and services that are not liable to tax and that do not qualify for input tax deduction.
Examples of exempt supplies of goods and services
• 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
Option to tax for exempt supplies. The option to tax exempt supplies is not available in Eswatini.
E. Time of supply
The time when VAT becomes due is called the “time of supply” or “tax point.”
The tax point for services is the earlier of when the invoice is issued or payment is received. The basic tax point for goods is the earlier of when the goods are delivered, the issuance of the invoice or when payment is received.
If no invoice and no receipt of income is received, then there is no VAT liability.
Deposits and prepayments. The time of supply for deposits and prepayments is the receipt of the deposit/prepayment.
Continuous supplies of services. The time of supply for continuous supplies of services is the earlier of receipt of the payment for service being consumed or the issuing of an invoice.
Goods sent on approval for sale or return. The time of supply for goods sent on approval for sale or return is the earlier of the date of change of ownership, receipt of payment or issuing of invoice.
Reverse-charge services. The time of supply for reverse-charge services is time the service is consumed/received by the customer.
Leased assets. The time of supply for leased assets is the time the assets are made available under the lease agreement.
Imported goods. The time of supply for imported goods is the time the goods are cleared by Customs for use in Eswatini.
F. Recovery of VAT by taxable persons
For input tax recovery, a valid VAT invoice must be issued for the supply. A taxable person can only claim a refund upon a submission of a VAT return and where the input tax is more than the output tax.
The time limit for a taxable person to reclaim input tax in Eswatini is five years. Input tax can only be claimed in the period in which the tax invoice is issued. However, a VAT return can be amended within five years from the date the return was lodged.
Nondeductible input tax. The underlying principle is that input tax is claimable only where it has been paid on taxable supplies and charged by a registered taxable person. As such, input tax credits on the purchases attributable to the supply of exempt goods or services are prohibited.
Examples of items for which input tax is nondeductible
• Entertainment (includes expenses relating to hotel accommodation, food and beverages, hospi tality)
• Passenger motor vehicle
• 50% of mobile telephone services
Examples of items for which input tax is deductible (if related to a taxable business use)
• Entertainment (if the taxable person is in the business of providing entertainment), for example, hotels, food and beverages
• Passenger motor vehicles (if the taxable person is in the business of car sales and hire)
Partial exemption. Partially exempt businesses are not allowed to claim input tax credits on the pur chases attributable to the supply of exempt goods or services. Consequently, mixed supply busi nesses are required to apportion input tax claim based on the portion of their taxable supplies.
There is no requirement to apply to use the partial exemption standard method. However, the Commissioner reserves the right to approve the apportionment calculation, hence it is advisable to seek the Commissioner’s approval.
Special methods are not allowed in Eswatini.
Capital goods. Input tax credit is allowed to a taxable person, on becoming registered, for input tax paid or payable in respect of all taxable supplies of capital assets, made to the person prior to the person becoming registered; or, imports of capital assets, made by the person prior to becoming registered, where the supply or import was for use in the business of the taxable person, provided the goods are on hand at the date of registration and provided that the supply or import occurred not more than six months before the date of registration.
Refunds. If for any tax period, a taxable person is due a VAT refund, the Commissioner-General must refund the excess within two months of the due date of the return or within two months of the date when the return was filed if the return was not filed by the due date.
Pre-registration costs. Input tax credit is allowed to a taxable person, on becoming registered, for input tax paid or payable in respect of all taxable supplies of goods (not services) made to the person prior to the person becoming registered; or, imports of goods, made by the person prior to becoming registered, where the supply or import was for use in the business of the taxable person, provided the goods are on hand at the date of registration and provided that the supply or import occurred not more than four months before the date of registration.
Bad debts. Where a taxable person has supplied goods or services for a consideration and has paid the full tax on the supply to the Commissioner-General but has not received payment, in whole or in part, from the person to whom the goods or services are supplied; and has taken all reasonable steps to the satisfaction of the Commissioner-General, to pursue payment and reasonably believes that they will not be paid, the taxable person may reduce the output tax by that portion of the tax paid for which payment has not been received. Further provision is made to define reasonable steps and they include:
(a) Creditors own letters of demand to debtor, in vain.
(b) Engagement of external debt collector who failed to collect the debt.
(c) The debt must be non-disputable and final.
(d) There must be a reasonable relation between the monetary size of the debt and the costs implication in connection with the recovery attempts.
(e) The business relations with the debtor must have ceased.
Noneconomic activities. Input tax incurred on purchases that are used for noneconomic activities is not recoverable in Eswatini.
G. Recovery of VAT by non-established businesses
Input tax incurred by non-established businesses in Eswatini is not recoverable.
H. Invoicing
VAT invoices. Only a valid tax invoice will be considered for the purposes of the VAT Act, and this tax invoice must be issued within 30 days of the supply being made and the seller must retain a copy of the invoice.
The seller may issue a duplicate invoice clearly marked “COPY” where the buyer has lost the original invoice.
Credit notes. A credit note is issued to correct a genuine mistake or to give a credit to your cus tomer under the following situations:
(a) Goods invoiced as standard-rated that should have been exempt or zero rated
(b) If the supply did not take place
(c) If the nature of that supply has been fundamentally varied or altered
(d) If the previously agreed consideration is being altered by agreement with the recipient (includ ing a discount)
(e) If substandard goods are accepted by the customer at a reduced price
(f) If goods are returned or services are not accepted
(g) If goods and services are supplied for an unconfirmed consideration
Electronic invoicing. Electronic invoicing is allowed in Eswatini, but not mandatory. However, there is no provision in the VAT Act for electronic invoicing.
Simplified VAT invoices. Simplified VAT invoicing is allowed in Eswatini for supplies that are less than SZL3,000. The simplified invoice must contain the seller’s details, including address and TIN, date of invoice, description and quantity of goods, value of supply and VAT charged.
Self-billing. Self-billing is allowed in Eswatini only for sugar mills that purchase sugar cane from sugar cane farmers. Self-billing is only allowed upon application and approval with the tax authorities. There is no requirement for an agreement to be in place between seller and buyer.
Proof of exports. For an export to qualify for a zero rating, a registered taxable person must obtain and be able to show as proof of export in every export transaction:
(a) A copy of the bill of entry or export certified by the customs authorities
(b) A copy of the invoice issued to the foreign purchasers with tax shown at zero rate
(c) Evidence sufficient to satisfy the Commissioner-General that the goods have been exported, in the form of an order form, or signed contract with a foreign purchaser, or transport docu mentation that identifies the goods as follows:
(i) Transit order or consignment note issued by the Swaziland Railways for goods exported by rail
(ii) Copy of an airway bill for goods exported by air
(iii) Copy of a transport document for goods exported by road
Foreign currency supplies. All amounts on VAT invoices are to be expressed in the domestic currency, which is the Swazi lilangeni (SZL). Where an amount is expressed in a currency other than Swazi lilangeni, the amount must be converted into Swazi lilangeni at the average daily selling exchange rates of the previous month for the currency concerned.
Supplies to nontaxable persons. A full VAT invoice is not required to be issued for supplies to nontaxable persons, unless requested by the consumer.
Records. Key documentation that must be retained are invoices (original invoices must be kept for supplies made and copies of invoices must be kept for purchase invoices), VAT account, general financial documents, financial statements, accounting documents.
In Eswatini, VAT books and records must be held within the country.
Record retention period. All records and accounts, including tax invoices, debit and credit notes must be kept for a minimum of five years and made available for inspection to an authorized officer of the SRA on demand.
Electronic archiving. No specific provision on electronic archiving. However, it is important to retain sufficient records and accounts in formats that enable the SRA officers to examine them effectively.
I. Returns and payment
Periodic returns. “Category A” returns are filed monthly and the turnover of the registered person must not be less than SZL20 million per annum. “Category B” returns are filed quarterly and the registered person in this category is anyone that does not qualify to be in Category A.
Returns are due before the 20th of the following month for both Category A and B returns.
Periodic payments. For taxable persons in Category A or B, payment of tax must be made on or before the date the return is due to be filed. Where payment is in terms of a notice from the SRA, the due date must be as specified in that notice. However, the Commissioner-General has, through Practice Note No. DT-VAT/011-14, author-ized the payments of tax in advance of the VAT return due date.
Electronic filing. Electronic filing is allowed in Eswatini, but not mandatory. Taxable persons have the option to file VAT returns electronically or manually. To access the online filing portal, a taxable person must be registered for online filing with the tax authorities.
Payments on account. Payments on account are not required in Eswatini.
Special schemes. Cash accounting. Taxable persons, who are permitted to use the cash basis, are required to account for VAT to the extent that payment has been made or received. Only businesses whose annual value of taxable supplies does not exceed SZL3 million are allowed to be on the cash basis of accounting. Regardless, even if a taxable person is on the cash basis method, tax invoices must still be issued.
Annual returns. Annual returns are not required in Eswatini.
Supplementary filings. No supplementary filings are required in Eswatini.
Correcting errors in previous returns. An amended return may be submitted together with a notification detailing the reasons why the return is being amended. The notification amendment must be submitted within five years after the return was filed.
Digital tax administration. There are no transactional reporting requirements in Eswatini.
J. Penalties
Penalties for late registration. A taxable person is liable to pay an additional tax equal to double the VAT payable during the period for which he failed to register for VAT on time. The VAT pay able is to be calculated from the time the taxable person was supposed to register.
Penalties for late payment and filings. Failure to submit a VAT payment on time and for late filings is an offense and additional tax at 2% per month will be payable. Furthermore, the taxable person may be liable, on conviction, to fines or imprisonment or both.
Penalties for errors. Registered persons will be liable to a penalty of SZL2,000 to SZL6,000 or imprisonment for a term not exceeding three years, or to both. There is no specific description of what an “error” is for such penalties and will depend on the Commissioner’s view.
Failure to notify or late notification of changes to a taxable person’s VAT registration details may result in a penalty of no less than SZL2,000 but no more than SZL6,000 or imprisonment of not more than three years or both such fine and imprisonment. Where failure to notify the Commissioner is deliberate or reckless, a fine of no less than SZL6,000 but no more than SZL15,000 or imprisonment of up to six years or both such fine and imprisonment may be imposed. For further details, please see the subsection above Changes to VAT registration details.
Penalties for fraud. Registered persons will be liable to a penalty of SZL6,000 to SZL15,000 or imprisonment for a term not exceeding six years, or to both. There is no specific description of how fraud is defined for such penalties and will depend on the Commissioner’s view.
Personal liability for company officers. Any person acting in the capacity of a company representa tive as a nominated officer, director, general manager, company secretary or similar position will be held liable for the company’s offenses and will be liable to the specified penalties above, and/ or imprisonment.
Statute of limitations. The statute of limitations in Eswatini is five years. The Commissioner is empowered to issue an assessment within a period of five years from the date the return was lodged. However, in case of fraud, gross or willful negligence, an assessment can be made any time.