www.pwc.com/sz/en Global Mobility Services: Taxation of International Assignees - Swaziland People and Organisation Global Mobility Country Guide (Folio)
Last Updated: June 2018 This document was not intended or written to be used, and it cannot be used for the purpose of avoiding tax penalties that may be imposed on the taxpayer.
Country: Swaziland Introduction: International assignees working in Swaziland 4 Step 1: Understanding basic principles 5 Step 2: Understanding the Swaziland tax system 6 Step 3: What to do before you arrive in Swaziland 9 Step 4: What to do when you arrive in Swaziland 10 Step 5: What to do when you leave Swaziland 12 Appendix A: Rates of tax 13 Appendix B: Double-taxation agreements 14 Appendix C: Swaziland contacts and offices 15 Additional Country Folios can be located at the following website: Global Mobility Country Guides Global Mobility Country Guide (Folio) 3
Introduction: International assignees working in Swaziland PwC is the world's leading provider of professional services. The People and Organisation group works together with its clients to find solutions for the challenges they encounter when transferring people from one country to another. This brochure is intended to inform foreign nationals and their employers about tax, social security and immigration issues in Swaziland. This guide is not exhaustive and cannot be regarded as a substitute for professional advice addressing individual circumstances. Nevertheless, answers will be found to most of the common questions raised by an expatriate or his/her employer. More detailed advice should be sought before any specific decisions are made about these issues. More information can be obtained from our Swaziland office staff specializing in People and Organisation, Global Mobility (see Appendices). 4 People and Organisation
Step 1: Understanding basic principles The scope of taxation in Swaziland 1. Swaziland operates on a source basis. Residents and non residents doing business in Swaziland are therefore only subject to tax on income earned in Swaziland and therefore not subject to tax on income earned outside Swaziland. The main taxes and levies that affect employees are: Remuneration for services performed Interest income Dividends Rental income The tax year 2. The Income Tax year in Swaziland runs from 1st July to 30 June. Partners 3. Every individual is assessed separately regardless of marital status. Determination of residence 4. Swazi Tax residence is determined by source of income. Global Mobility Country Guide (Folio) 5
Step 2: Understanding the Swaziland tax system Residence vs Non Residence 5. All non-residents taxpayers, including individuals, have to submit a tax return in respect of their Swaziland source income. 6. Where a double tax agreement ( DTA ) is in place and all the requirements of the DTA are met. Tax will be charged on income earned in Swaziland. The DTA prevents double taxation. Usually where the rate is higher in the other country the individual will be required to top up i.e. having been given credit for the Swazi tax paid. 7. Determining tax residence in terms of a double tax agreement is complex and professional advice should be sought in this regard. Employment income 8. Any amount, including a voluntary award, received by or accrued to a person in respect of or by virtue of rendering services or employment or the holding of office, will be considered employment income. It also includes the value of benefits or advantages granted in respect of services, employment or the holding of office. The benefits or advantages are generally referred to as fringe benefits. Employment income (remuneration) thus includes salaries, wages, bonuses, allowances, pensions, certain commissions, fee and annuities, gratuities, retiring allowance or lump sum payments and fringe benefits. Common examples of taxable fringe benefits include, amongst others: Assets acquired from the employer at a value less than market value; Personal or private usage use of employer owned assets; The settlement by the employer of an employee s debt; The use of employer owned motor vehicles. Short-term temporary employment 9. Foreign nationals working in Swaziland on a temporary basis may not be subject to Swazi taxation on their employment income provided certain conditions are met. 10. The tax exemption is provided under a DTA and would therefore only apply where a DTA has been concluded between the foreign country concerned and Swaziland. Generally speaking, all of the following conditions must be met before the exemption would apply: The employee remains a treaty resident in their home country, and The employee is not present in Swaziland for more than 183 days in a twelve month period beginning or ending during the fiscal year concerned, and The remuneration is paid by non resident employer, and The remuneration is not borne by a permanent establishment that the non resident employer has in Swaziland. Source of employment income 11. Non-resident employees will be taxed on employment income derived from a Swazi source, irrespective of where, when and by whom their remuneration is 6 People and Organisation
paid. As a general rule, the source of employment income is where the relevant employment or services have been physically rendered. Where it is considered that the duties performed overseas are merely incidental to those performed in Swaziland, income may be regarded as being Swazi source. 12. Where a non-resident employee works both in Swaziland and abroad, then generally only income relating to Swaziland will be taxable in Swaziland (unless the services rendered abroad are incidental to the Swazi services). Withholding taxes 13. Employers are required to deduct Income Tax from the earnings of their employees (Pay As You Earn-PAYE) and to remit that monthly to the SRA. Provisional Tax 14. All businesses are required to make provisional tax payments twice annually; these advance payments are due on the 31st December and 30th June for each tax year. Companies are now required to submit tax returns under the Self Assessment System (The return becomes the assessment). Any shortfall of tax must be paid on or before the submission of the tax return. Important tax compliance dates to remember 15. Tax returns should be filed 120 days after the end of the tax year. 16. The due date for PAYE remittances is the 7th day of the following month. Taxation of investment income 17. Foreign nationals working in Swaziland are not taxed on their non Swazi source investment income. Swazi source investment income will be subject to Swazi income tax. Subject to certain limitations, credit for foreign taxes paid on such income may be claimed against the Swazi tax liability or protection claimed under a DTA. Interest 18. Interest paid to a Swazi tax non-resident from a Swazi source are, subject to a withholding tax of 10%. Dividends 19. Swazi sourced dividends paid to a resident individual are subject to a withholding tax of 10%. Non residents are subject to withholding tax at 15%. Rental income 20. For residents, rental income is fully taxable after expenses have been deducted. However a 10% withholding tax is required to be deducted from the gross rental income when payable to an individual. The general rule is that the source of rental income is where the relevant property is located. 21. Foreign rental income will not be taxable in Swaziland for resident individuals. 22. Generally speaking, expenditure incurred to produce rental income will only be deductible in so far as the rental income is taxable. Capital gains 23. Swaziland does not currently levy capital gains tax. Customs and temporary residents 24. Foreign nationals working in Swaziland temporarily or on a contract basis may import their personal effects into the country without any customs duty and VAT being levied. These include general household appliances. All of these items must be imported for their personal use only, and must not be disposed off within a period of six months from the date of entry into Swaziland. These goods may also not remain in Swaziland on a permanent basis and must be returned overseas upon departure from Swaziland, unless the foreign national obtains citizenship in Swaziland during this period. Global Mobility Country Guide (Folio) 7
25. An inventory of all imported personal belongings must be furnished and submitted to the Swaziland Revenue Authority - Customs Office ( SRA Customs ) located at the port of entry. The goods will subsequently be cleared. This clearance is normally obtained by a shipping agent arranging the transfer of the assets and must be obtained prior to the goods arriving in Swaziland. 26. Pets may not enter Swaziland unless a permit has been issued by the Department of Agriculture. 27. Should a foreign national wish to bring a second hand motor vehicle (at least 12 months old and only one per family) into Swaziland for personal use, it is necessary to apply to the Swaziland Revenue Authority ( SRA ) for permission to import the vehicle on a temporary basis (i.e. the duration of stay in Swaziland). 8 People and Organisation
Step 3: What to do before you arrive in Swaziland Immigration 28. All foreign nationals wishing to work in Swaziland should apply for a work permit from their country of residence and must await the outcome of the application in their country of residence prior to entering the country, or apply for a permit from inside Swaziland. Individuals are not entitled to work in Swaziland prior to obtaining a work permit. Such application should be accompanied by applications for the rest of the family that will be accompanying the individual. Work permits are issued for up to 2 years at a time and must be kept valid at all times. They are issued company and position specific and are not transferable. 29. Applications for work permits may take up to 2 months to prepare, as a result of new requirements, which can cause delays. These include the evaluation of foreign qualifications by a single authority in Swaziland, police clearance and the advertisement requirement. 30. Documents required for applying for a Temporary Residence Permit: Letter of appointment Copy of qualifications (employee) Copy of local position advertisement (employee) Five year plan of company Completed application form Copy of picture page of passport Two passport photographs Police clearance report from home town Medical certificate from a Swazi doctor This list is not exhaustive. Global Mobility Country Guide (Folio) 9
Step 4: What to do when you arrive in Swaziland 31. Income tax returns in Swaziland are issued annually in the first week of July to all those liable for taxation, and need to be filed within thirty days after the date of notice. Registration as a provisional taxpayer 32. Certain taxpayers are required to register as provisional taxpayers. 33. A provisional taxpayer includes: Any person notified by SRA that he or she is a provisional taxpayer; Directors of local companies; Any person who derives taxable income, in excess of a certain threshold, which is not employment income. 34. In some cases, certain exemptions to register may be applicable. Employees' tax (PAYE) 35. All Swazi employers paying remuneration have an obligation to account for employees tax - PAYE (pay as you earn). 36. The amount of PAYE tax deducted is calculated in accordance with prescribed tables. 37. In the case of an employer who is not resident in Swaziland, any representative entity authorized to pay remuneration to its employees is required to assume the obligations of the non-resident employer. Penalties and interest may be imposed by SRA if employees tax is not paid timeously. Social Security 38. Not applicable in Swaziland. Important tax compliance dates to remember 39. Submission of annual income tax return (IT12): 120 days from the end of the tax year. 40. Submission of 1st provisional tax return (PT 4 b): 31 December (six months before the end of the year of assessment). 41. Submission of 2nd provisional tax return (PT 4 b): 30 June (end of the year of assessment and must be to within 90% of the finally determined tax charge for the year). 42. See above regarding self assessment and payment of balance of tax. 43. Failure to account for provisional tax in a timely manner can lead to penalties in the region of 20% of the amount not paid. What to do at the end of the tax year Tax returns 44. Individuals should collate all records necessary to complete the tax return including those forms detailing remuneration for the tax year (form IRP5). Even if an individual is not paid in Swaziland there may still be a requirement for the employer to prepare and submit these, and other year-end forms to SRA. 45. Your PwC tax consultant will prepare the tax return for you, if authorised to do so. In order to prepare the tax return, the tax questionnaire should be completed and returned to your PwC tax consultant. 10 People and Organisation
Notice of assessment 46. An income tax assessment should be issued by SRA after submission of an income tax return. (See self assessment note above). 47. Objections may be lodged against the assessment, within 30 days of the date of assessment, if the individual does not agree with the calculation of the taxable income, the tax assessed or the tax rebates allowed. Each notice of objection should clearly state the grounds for the objection. Payment of taxes 48. Where the final tax liability in the notice of assessment exceeds the tax paid, the balance of the tax will be due and payable within 30 days from the 'first date' shown on the assessment. If the outstanding amount is not settled by that date, interest will be charged by SRA on the outstanding amount at a rate of 1.5% per month). (See payment of tax due under self assessment above). Global Mobility Country Guide (Folio) 11
Step 5: What to do when you leave Swaziland Reporting departure 49. If the individual is purely under PAYE then there is no need to report departure to the SRA. If a director, then deregistration is required. Return of work permit 50. The permit should be returned to the Immigration Department upon departure. Tax Clearance Certificate 51. Tax clearances are issued for specific reasons such as motor vehicle registration, foreign funds transfer, property transfer etc. clearances are not required as a matter of course. 12 People and Organisation
Appendix A: Rates of tax Personal income tax rates With effect from 1 July 2014 Rates of Tax in the case of Persons other than Companies Rates of normal tax for individuals for 2013/2014 Taxable income exceeds But does not exceed Rates E0 E100 000 0 + 20% of the excess of E0 E100 000 E150 000 E20 000 + 25% of the excess of E100 000 E150 000 E200 000 E32 500 + 30% of the excess of E150 000 E200 000 E47 500 + 33% of the excess of E200 000 A rebate of E8 200 per annum to be applied to the annualized tax calculated (over 60 s receive an additional annual rebate of E 2 700.00per annum. Global Mobility Country Guide (Folio) 13
Appendix B: Double-taxation agreements Mauritius South Africa United Kingdom 14 People and Organisation
Appendix C: Swaziland contacts and offices Contacts Theo Mason Partner Andrew Linsey Manager Tel: +268 2404 2861 Tel: +268 2404 3143 Email: theo.mason@pwc.com Email: andrew.linsey@pwc.com Global Mobility Country Guide (Folio) 15
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