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TAX RELIEF FOR PRIVATE SECTOR POSSIBLE

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Mbabane – FESBC has an MoU with ERS that seeks to assist local private companies to get out of tax debts.

It also assists the companies on how to honour tax obligations. The Memorandum of Understanding (MoU) has helped companies struggling to pay tax to access options for tax relief or programmes to reduce debt. This was confirmed by both Vusi Norman Dlamini, the Director Marketing Communications at the Eswatini Revenue Service (ERS) and Mavela Sigwane, the Federation of Eswatini Business Community (FESBC). The ERS-FESBC relationship is two years old. Sigwane said the terms of references for MoU has three main concentrations:
* Creating easiness to comply with tax obligations;
* Making it easy for ERS to collect tax;
* Looking into tax debts incurred by private companies.

He said they looked at the financial situation of a business to assess affordability to pay the debt. Sigwane mentioned that it happened in the past, where a company would owe E2 million in taxes, but need the capacity to pay E1 million to reduce the debt. He said it was better for ERS to negotiate a win-win settlement, which, perhaps, entailed taking the E1 million and writing off the balance.

than to lose all

Sigwane said it was better to take the E1 million than to lose the whole E2 million. The business transformation manager said it was possible that some companies owed taxes because government did not pay them. He urged directors to join FESBC, as it was difficult for them to work in silos or shout in the wilderness. He advised them to join the federation. Sigwane made it clear though that FESBC assisted even non-members. He said they had two types of members: registered and non-registered members. Sigwane said it was pointless for companies to close down because they owed tax. He said it might happen that the debt was on company tax yet the business honoured Pay-As-You-Earn (PAYE) taxes.

If the company closes down, he said, ERS only lost revenue that was derived from PAYE. He said it was for this reason that FESBC’s relationship with ERS was crucial. “We are not saying people must not pay tax. We are saying to them we can pay tax. But come to us when you face difficulties,” he said. Sigwane said they have helped many small and medium businesses in the country. He mentioned that FESBC held a ‘Vusumnotfo Expo’ every year. Vusumnotfo means resuscitate the economy. He explained that the expo formed part of the business healing process. Sigwane said it was beneficial to businesses. He disclosed that FESBC had access to funding to assist people with viable business ideas.

Vusi Dlamini, ERS’s Director Marketing Communication, said the public entity has a programme styled ‘Sondzela Sikhulume’ (come closer so that we can talk). He said this programme helped a lot of Eswatini businesses. Dlamini said business owners should not hide or run away from ERS, as it was also a key stakeholder, a partner in developing the economy of the country. Sanele Mashwama, the ex-Managing Director of liquidated Pots Construction, lamented how his company, which had employed 270 people ceased to operate against his will.

invaded his company

Mashwama said ERS officers accompanied by armed police invaded his company head office and took everything that was inside, including computers which contained sensitive and vital information for the business. The businessman said he would never forget the day when he had to tell his employees that he was liquidating the business. “Police and ERS ordered us out of the offices,” he narrated. “I feel like I have been castrated.” He said he tried everything in his powers to save his business and jobs but failed. “I wrote several letters to ERS explaining that we were incapacitated in 2013 to have all audited statements in place but we wanted to cooperate,” he said. He said they appealed to the minister and did everything possible to survive in the construction industry, where his company had made its name.

Reacting to this predicament, Sigwane said they wanted to approach Mashwama as part of their programme to transform businesses and heal directors with broken hearts. He said there was still a lot that Pots Construction could offer to the construction space. Despite that the company was liquidated, he said there was an alternative, insisting that there was a way out.
He said they would find some means to get hold of Mashwama as his story is a painful one. Last week, this publication reported that 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 ERS in 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.

taxation obligation

However, records indicated that employees were not honouring statutory taxation obligation as the employer was not remitting the 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.
Sources said ESTVA appeared to have benefited from spillovers arising from the positive outcome of the negotiations on the University of Eswatini’s (UNESWA) 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 reported 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 Authority’s operations.

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Should exam questions be in both English and siSwati?