WHY TAX DONATIONS?

MBABANE – A pound of flesh for acts of generosity. This is the observation of a businessman whose kind gesture to rescue pupils faced with dropping out of school for lack of money is being impeded by the tax legislation.

The businessman has been approached by several pupils whose parents are either deceased, unemployed or just poverty stricken to afford the soaring education costs. He has opened his heart and is willing to lend a helping hand, if only such a gesture would be regarded as an expense and not be taxed.

Currently, school fees in government owned high schools is approximately E7 000, excluding uniforms and transportation costs. The Income Tax Order of 1975, as amended, allows for taxation of donations made from profit making companies, something that is considered an impediment by potential businesspeople who want to make donations.

Eswatini Revenue Authority (SRA) Director of Communications Vusi Dlamini said the law stipulates certain conditions for donations made from private companies.
“The first condition for the donation to be considered as an allowable deduction is that it must be made to certain institutions i.e. to an amateur sporting association, charity or educational institution of a public character within the definition of “exempt organisation (Section 14 (u)—Incoming Tax Order.

“The second is that the donation may not exceed five per cent of the taxable income of the donor company. For example, if the taxable income of that company is E1 000 000, they can donate up to E50 000, which can be considered as an allowable deduction (expense) to the donor company,” he said.

The Mbabane businessman, who asked not to be named for fear of attracting an influx of requests for sponsorships for school fees is, however, not convinced.
“I do not have a lot of money, but I am willing to help the needy with the little I have. If only I could be allowed to make a donation to the needy without paying tax for this, I would be pleased,” he said.

The donor said though government had, in the past announced that there would be no top-up fees, such was just an illusion on the part of the State.
“I have used my personal salary to pay for the school fees of children in the past, because head teachers disregard the ministry’s directive and no punitive measures are taken. I also have never seen government paying for other school expenses such as uniform, school shoes and the like.

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