Setting up Business in Swaziland 02. Taxation of Profits
2.1 Company
2.1.1 How is a company taxed on its income? What is the rate? Are there different rates for different industries? Are there any tax incentives?
· Income tax is imposed on a source or a deemed source basis. Income Tax is therefore levied on taxable income, which is received or accrues from a source within Swaziland or a source deemed to be within Swaziland. Profits of a capital nature are generally not taxable. Excluded from taxable income are dividends received by a company. To be eligible for deduction, expenditure must be incurred in the production of income, must be wholly and exclusively for the purposes of trade and must not be of a capital nature. A number of special allowances are taken into account in calculating taxable income (see below).
· Companies, other than mining companies, pay tax at a rate of 30%.
· Assessed losses may be carried forward indefinitely.
· In computing taxable income, expenses actually incurred in Swaziland in the production of income are deductible by the taxpayer. The Swaziland Income Tax (Consolidation) Order provides for specific allowances and include:
an additional deduction of 33% of approved export promotion expenditure by an approved company in the handicraft and cottage industry sector; and
an additional deduction of 50% of approved export promotion expenditure by an approved trading house; and
50% initial allowances on buildings or plant and machinery used in a manufacturing process.
Attractive tax incentives and concessions are available to new businesses beneficial to the development of the Swaziland economy under the Development Approval Order Notice, 2000 and the salient features are:
- only apply to approved new investment, business or development enterprises in the manufacturing, mining, international services and tourism sectors and is available to both local and foreign direct investment;
- tax concession given provided the concession does not unfairly discriminate against existing competing enterprises or business;
- expansion of existing enterprises shall be eligible for consideration;
- a tax concession on corporate tax at a minimum rate of 10% for a period of 10 years;
- an exemption from withholding tax on dividends during the 10-year period.
2.1.2 In addition to the normal tax on income are there other taxes in the form of local taxes? What other taxes are there?
No
2.1.3 What statutory registration is required?
A company must register as a provisional taxpayer (see 2.1.5 below) and also for PAYE and graded tax.
2.1.4 What are the filing requirements? (i.e. filing of tax returns)
· Unless further time has been allowed, tax returns must be submitted within 30 days of the notice given by the Commissioner for Taxes.
· The Swaziland tax system requires taxpayers to obtain clearance certificates from the tax authorities for, inter alia:
- the issue, renewal or transfer of any licence for any trade or profession;
- the first registration of a motor vehicle;
- for the directors for the registration of a company;
- the transfer of immovable property,
- the transfer of funds
- application for work permits
- for submission of government tenders.(restricted to one month renewable, supporting documentation required specifying the tender)
The clearance certificate is granted on condition that all tax returns have been submitted and taxes duly paid.
2.1.5 Is tax payable in instalments? What are the requirements?
· The tax year in Swaziland is from 1 July to 30 June. Corporate taxpayers may obtain permission to pay tax on the basis of a different period (in order to coincide with the company's financial year).
· Taxpayers are required to estimate their annual income tax liability and to make provisional tax payments in each of two six month periods of an amount equal to 50% of the total estimated tax due during the year of assessment. A third provisional tax payment must be paid within 6 months of the financial year-end so that at least 90% of the actual final tax liability is paid by that date.
· Any additional tax assessed is payable on the due dates announced by the Commissioner of Taxes. Any late payments are subject to interest (18%pa not exceeding the capital amount) and penalties (which could be 20% to 100% of tax)
2.1.6 Can you assist in meeting the filing requirements, and if so, at what cost? If not, can you recommend someone in this regard?
Our office in Mbabane can assist in the filing requirements.
2.2 Branch
2.2.1 How is a branch taxed on its income? What is the rate? Are there different rates for different industries? Are there any tax incentives?
The taxable income of a non-resident (i.e. a branch of a foreign company) is generally calculated in a manner similar to that of a resident company (see 2.1.1 above).
2.2.2 Is the branch subject to local taxes or any taxes other than normal tax on profits?
An additional tax (known as branch profits tax) is charged at the rate of 15% on the deemed repatriated income, (being the after tax income of the branch). If the foreign registered company is incorporated in a neighbouring country, then the rate is only 12.5%
2.2.3 What are the statutory registration requirements?
See 2.1.3 above.
2.2.4 What are the filing requirements?
See 2.1.4 above.
2.2.5 Is tax payable in instalments?
See 2.1.5 above.
2.2.6 Can you assist in meeting the filing requirements, and if so, at what cost? If not, can you
recommend someone in this regard?
Our office in Mbabane can assist in the filing requirements.
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