GOVT CANCELS ESTVA’S E113M TAX DEBT

MBABANE – Government has written off a tax debt for the Eswatini Television Authority (ESTVA) amounting to E113 million.

The decision was reportedly sanctioned by the Ministry of Finance. ESTVA owed the Eswatini Revenue Services (ERS) in Pay As You Earn (PAYE). It could not be ascertained whether management has been deducting money from salaries from staff to honour the PAYE tax obligations but ended up not remitting it. However, records indicated that employees were not honouring the statutory taxation obligation as the employer was not remitting money to the ERS. It must be said that it is the responsibility of the employer to remit the taxes to ERS in terms of the tax laws. ERS is under the Ministry of Finance. Nation Debtline says if a creditor writes off a debt, it means that no further payments are due. In addition, the balance should be set to zero on credit reference agency reports; the debt will be registered as a default on credit reference agency reports.

spillovers

Sources said ESTVA appeared to have benefitted from spillovers arising from the positive outcome of the negotiations on the University of Eswatini (UNESWA)’s request for debt relief.
Arguably, the university is the first institution or entity to receive a huge PAYE debt relief. A total of E1.36 billion in respect of PAYE arrears was written off in March 2023. This write-off has seen a decline in current liabilities from E1.36 billion to E494.67 million by March 31, 2023. On the other hand, it has been learnt that ESTVA, a taxpayer-funded public enterprise, had debts amounting to E160.7 million by December 2022. The debts included outstanding statutory remittances and sundry creditors for the revenue service’s operations. It is said that the reduction in creditors to E66.3 million was due to the ministry’s adjustment of the P.A.Y.E debt. Financials for ESTVA reveal that it received a subvention of E12.77 million for the quarter beginning from January to March 31, 2023, but the revenue service ended up getting E6.97 million. The Ministry of Finance deducted E5.8 million from ESTVA’s subvention and remitted it to ERS for PAYE for the period of January 2023 to March 31, 2023.

questionnaire

Notably, the public enterprise’s internal income generating streams are TV licences and advertising sales. The company was able to raise E22.3 million in TV licences and other related incomes, while advertising sales and programme sponsorships contributed a sum of E1.4 million. Nomcebo Malinga, the Senior Communications and Branding Officer for ESTVA, acknowledged and welcomed the questionnaire as forwarded by this publication. She said they were unable to respond to the questionnaire at that moment, owing to the short time frame.
“We will, however, forward a comprehensive response once all the relevant offices have been contacted,” Malinga said. The public enterprise had been asked two questions – how has this clemency helped ESTVA as a public enterprise and what led ESTVA to have such a huge debt?

Minister of Finance Neal Rijkenberg was also asked some questions on the debt relief: “Honourable minister, does this not affect government revenue since UNESWA also had its debt cancelled?” Rijkenberg responded: “ERS is still on target to collect the budgeted E13 billion for the year.” Vusi Norman Dlamini, Director Marketing Communications, said ERS could only comment on such matters when it has been mandated to do so by the Ministry of Finance. An economist, who preferred to remain anonymously, said such debt reliefs were discriminatory because the private sector was not given such clemencies. He said it was wrong of government to cancel its companies debts. He said it was an unfair practice that should be condemned in the strongest possible terms.

interest-bearing

South African Government amended its debt-relief terms for struggling state power utility Eskom so that loans to the company would be interest-bearing rather than interest-free, the National Treasury said at a mid-term budget review. In February, the treasury said the SA Government would take on E254 billion of Eskom’s debt over the medium-term, with strict conditions. These included that the advance funding would take the form of an interest-free subordinated loan from the National Revenue Fund to be settled in Eskom shares rather than cash. ESTVA is a broadcaster established in 1983 through an Act of Parliament. It owns the Eswatini TV. Before it was established by the Act of Parliament, it was known as the Swaziland Television Broadcasting Corporation (STBC). It is not only ESTVA and UNESWA that received joy, it has been learnt that the Eswatini Nazarene Health Institutions (ENHI) also had its PAYE debts written off in March 2023. It is not clear how much money was owed by ENHI in PAYE. It has to be said though that the Public Enterprise Unit (PEU) observed a robust statement of financial position after the debt cancellation.

write-off

PAYE arrears recorded prior to April 1, 2022 were cancelled and the write-off was reportedly a huge relief to the ENHI as it cancelled out the accumulated deficit that was incurred since March 31, 2013. Though the amount of the debt has not been ascertained, the Times SUNDAY can reveal that the deficit for ENHI stood at E327 818 289 (E327.818 million) by December 31, 2022. Observably, the deficit sharply decreased to E119 363 417.00 by March 31, 2023. It decreased by E208.5 million. This is not to say ENHI owed ERS a sum of E208.5 million in PAYE.

auditors

PricewaterCoopers (PwC), acclaimed international auditors with a presence in Eswatini, says income tax is levied on all income derived from a source within or deemed to be within the country, irrespective of whether its recipient is actually a resident in Eswatini.

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