GOVT TO WRITE OFF E3BN IN TAX PENALTIES FOR BUSINESSES, PARASTATALS

MBABANE – Government will write off E3 billion in tax penalties and interests owed by businesses and parastatals in the country.

The Minister of Finance, Neal Rijkenberg, said this follows the announcement by the Eswatini Revenue Service (ERS) of the Tax Debt Relief Programme. This initiative will allow taxpayers with outstanding tax liabilities to pay the principal debt or make a payment arrangement to liquidate the principal debt. Rijkenberg said there were a number of parastatals that would benefit from the initiative and businesses as well. He said they needed to approach the ERS and make a commitment to pay their outstanding taxes.

Commitment

This period, he said, was valid for three months. After registering their intent and commitment with the ERS, Rijkenberg said the entities would have to exhibit good behaviour in terms of commitment to their undertaking to pay off their debts. “Government is writing off E3 billion in interest and penalties which are in the books of government,” Rijkenberg said. The minister said this amount did not include the principal taxes, but was for the penalties and interests that were accumulated by business establishments due to their failure to remit taxes on time.

He said government’s debt book reflected that over E9 billion and a third of that, which was from interest and penalties, would be written off in the next three months. He said all the companies and parastatals needed to do was to make an arrangement to pay their principal tax debts between a period of six to 12 months. “During this programme, all taxpayers who enrol for this programme are expected to fully comply with all tax obligations,” he said. He said under exceptional circumstances, the payment period could be extended, if the entities stuck to their arrangement. This, he said, was a massive way of ensuring that businesses were able to thrive and come out of their debt (penalties and interest) scot-free. The minister said this initiative was also aimed at encouraging people to declare their taxes. He said those who had not declared tax, but would do so in the next three months, would get amnesty. Rijkenberg said the ministry was aware that the prevailing economic conditions were making it even more difficult for most businesses, and all personnel expected to contribute to the fiscus through payment of taxes.

Complicated

The minister said this was more complicated for those who were contending with debts with the ERS, particularly due to penalties and escalating interest. During the launch of the Tax Debt Relief Programme, the minister said he had made a commitment that the ERS would develop such an initiative meant to assist taxpayers who found themselves with debts that were very difficult to repay. Rijkenberg said this programme would provide relief on interest and penalties, having considered taxpayers’ different circumstances. He said the ministry was empathising with taxpayers with heavy debts since they could not absolve any taxpayer from paying the principal tax debt. The minister said this programme was available to all taxpayers with outstanding tax liabilities as of March 31, 2022. He said the programme would be open for a period of three months from today.

Taxpayers are expected to pay the principal debt or make a payment arrangement to liquidate the principal debt and, thereafter, will have the interest and penalties waived. The minister also mentioned that any taxpayer who failed to meet these conditions would be disqualified from the programme and all outstanding taxes, including all penalties and interest, would become due and payable.

Arrears

It is worth noting that tax arrears in Eswatini have increased by 29 per cent to E9.369 billion from E7.262 billion in 2020/21. This was attributed to the COVID-19 pandemic, coupled with other economic and social disturbances weighed on current and future growth prospects. This challenge, according to the minister, continued to threaten government’s ability to maintain its tax revenue mobilisation goals. The minister said with the weaker than expected revenue collection, domestic taxes to gross domestic product (GDP) ratio declined by 0.3 percentage points in 2021/22 to reach 14.9 per cent.

Increase

Rijkenberg was quoted by our Business Desk saying the increase in tax arrears was a concern for the ERS and government and the introduction of the Tax Debt Relief Programme was one of their efforts to contain the increase that averaged 25.1 per cent per year. It is on record that a number of parastatals have been failing to remit tax to ERS and this dates back to 2018, where among others, Busangani Mkhaliphi, the Director of the Public Enterprise Unit (PEU), highlighted in her December 31, 2018 report that the University of Eswatini’s (UNESWA) current liabilities exceeded its current assets, which led to the institution’s inability to remit PAYE. Recently, the Good Shepherd Catholic Hospital and College of Health Sciences (GSCH&CHS), had relief as its E156 million tax debt was written off by government.This was done through the collaboration of the Ministry of Health and that of Finance, in conjunction with the ERS.

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