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VAT COULD INCREASE TO 15%

22/02/2018 01:02:00 BY KWANELE DHLADHLA

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MBABANE – Government is playing its cards close to the chest with regard to providing a precise answer as to whether VAT will be hiked or not.

With only a few days before the budget is presented, Minister of Finance Martin Dlamini could not decisively make a pronouncement as to whether the country would follow in South Africa’s footsteps when it comes to increasing Value Added Tax (VAT) to 15 per cent.

Soon after SA Finance Minister Malusi Gigaba confirmed the increase in the VAT from 14 to 15 per cent in his maiden budget speech to Parliament yesterday, describing the increase as ‘unavoidable if we are to maintain the integrity of our public finances’, Dlamini could only say: “We are still weighing the options before making any official announcement.”

For both Swaziland and South Africa, VAT previously stood at 14 per cent.
Asked as to whether it would be feasible not to hike VAT locally, considering the fact that the Swaziland Revenue Authority (SRA) operates the Sekulula VAT Easy programme, which aims to simplify the process of paying import VAT in Swaziland for goods purchased from South Africa, the minister was again non-committal. Dlamini insisted that they would not hike VAT before weighing all the pros and cons.

An economist interviewed by the Business Desk on condition of anonymity said government’s decision not to increase VAT would only be in the short-term. He said considering Swaziland’s reliance on the South African economy, which includes the local currency being pegged to the Rand, the country would eventually follow suit by also hiking VAT.

“Even if VAT is not hiked by the country to 15 per cent, the relief will only be for a short while. Considering the fact that government has cash flow challenges, it will definitely consider hiking VAT, especially now that South Africa has increased it,” he said.
Meanwhile, the Finance minister emphasised; “Officials who will advise on the matter are in a meeting even now. I will be joining them tomorrow to find a way forward.”