Home | Business | CAPITAL GAINS TAX: SACU COUNTRIES’ OVER 20% RATE

CAPITAL GAINS TAX: SACU COUNTRIES’ OVER 20% RATE

Font size: Decrease font Enlarge font

MBABANE – If rates for capital gains tax rates for SACU are anything to go by, then local property owners should be ready to pay not less than 20 per cent.

In his budget speech in Parliament this past month, the Minister of Finance Neal Rijkenberg said government was introducing a capital gains tax for businesses that is aimed at closing loopholes that entities were using to pay less tax. However, the ministry is yet to give a full breakdown of the proposed tax including the percentage.

Investment

Capital gains tax is levied on profits made from the sale of an ‘investment asset’ owned by a business, such as property. Comparisons done by this publication show that Eswatini is the fourth Southern African Customs Union (SACU) country to introduce capital gains tax after Botswana, Lesotho and South Africa. There is currently no donations tax, estate duty or capital gains tax in Namibia.

In Botswana, any capital gain realised by an individual with respect to the disposal of the selected assets is included in the calculation of the taxable income of the individual. This refers to any property including residential property and any shares or debentures held in a company. Income of over E180 000 under this category is taxed at 25 per cent.

Taxes

In Lesotho, taxes on income, profits and capital gains (percentage of revenue) in Lesotho was reported at 24.62 per cent in 2019, according to the World Bank collection of development indicators, compiled from officially recognised sources.

Profits

Taxes on income, profits, and capital gains are levied on the actual or presumptive net income of individuals, on the profits of corporations and enterprises, and on capital gains, whether realised or not, on land, securities, and other assets. In South Africa, capital gains tax applies to individuals, trusts and companies. A resident, as defined in the Income Tax Act 58 of 1962, is liable for the assets on assets located both in and outside South Africa.  A non-resident is liable to capital tax gains only on immovable property in South Africa or assets of a ‘permanent establishment’ (branch) in South Africa. Certain indirect interests in immovable property such as shares in a property company are deemed to be immovable property.

Trusts

The rate for capital gains tax in South Africa can rise up to 36 per cent for other trusts, with the lowest for individuals and special trusts. The latter pay 18 per cent. Companies pay 22.4 per cent, with a drop to 21.6 per cent expected next year. This publication recently reported that the proposed capital gains tax is set to affect mainly commercial property owners. Sought for his reaction to the development, Business  Eswatini CEO, Nathi Dlamini shared that capital gains tax was now a ubiquitous (everwhere) tax, but said he was unsure of the minister’s timing given that Eswatini was trying very hard to woo new direct investors at the moment to a geographical location whose beauty was destroyed by political unrest and violence.

Affairs

“Ours is a sad state of affairs, whose outcome is as unpredictable as the price of fuel in the country. With that being said, however, I currently have no reason to believe the minister was unmindful of these issues when introducing the capital gains tax. As a general rule, any form of tax, whether justified or not, will always be met with resistance,” Dlamini had told this publication. A questionnaire sent to Setsabile Dlamini, who is Communications Officer in the Ministry of Finance had still not be replied to by noon yesterday. This publication wanted to establish, among other things, the proposed implementation date of the tax. In an earlier questionnaire, she said no percentage was stipulated in the budget speech, as the new tax introduction was still a plan.

Comments (0 posted):

Post your comment comment

Please enter the code you see in the image: