MBABANE – The Eswatini Revenue Service (ERS) has urged individuals, companies and institutions responsible for deducting taxes at source to comply with withholding tax regulations, warning that failure to do so attracts penalties.
The guidance was delivered during a televised discussion featuring presenter Notsile Sithole and ERS officials Ntobeko Dlamini, Director of Communications and Marketing, and Cebolenkhosi Mahlalela, Manager for Taxpayer Education and Information.
Dlamini explained that withholding tax, also known as retention tax, is a legal requirement compelling a payer to deduct tax from an income before releasing payment to the recipient and then remit it to the ERS on behalf of that taxpayer.
“This is a legislative requirement for the payer of an income to withhold or deduct tax on the payment before they pay to the taxpayer,” she said. “And this limited pay tax should be paid to the Eswatini Revenue Service on behalf of the taxpayer.”
She said any person or entity making payments can register, including government institutions, companies, trusts and individuals.
“In terms of who can register for withholding tax really any person can register for withholding tax for as long as they are making payments,” she said.
Registration follows the same process as obtaining a Tax Identification Number. Applicants first register as income taxpayers before being enrolled for withholding tax obligations.
Mahlalela said the tax is collected by whoever makes the payment, such as employers, banks or companies, who must deduct the tax immediately and later submit returns to the ERS.
“The tax is deducted when the payment is made and then the payer is expected or responsible for submitting a return and remitting that withheld tax back to the ERS,” she said. “The payer is also responsible for issuing of a tax certificate to the payee.”
ERS officials outlined several types of withholding taxes applied in Eswatini, divided between resident and non resident categories.
For residents, taxes include interest, dividends and rental income, each charged at 10 percent, while distributions to trust beneficiaries attract a higher rate of 33 percent. There is also withholding directed under Section 59B of the Income Tax Act.
Non resident payments attract higher rates. Royalties, services including consulting and entertainment, interest, dividends, repatriated branch profits and management fees are generally taxed at 15 percent.
“If you find yourself having to consult someone coming out of the country in terms of entertainment, we expect that you remit a sum of 15 percent of the amount that you will be paying to that individual,” Mahlalela said.
Once deductions are made, the payer must submit a return and remit the funds by the 15th day of the following month using the ERS self service platform.
“They can utilize our self service platform which is tax ease,” Dlamini said, adding that the system requires uploading a schedule detailing the withheld amounts before payment is made.
After payment, the payer must issue a tax certificate to the recipient as proof that the tax was deducted and paid.
Officials warned that non compliance carries significant financial consequences. Late remittances attract penalties starting at 10 percent of the unpaid tax for delays of up to 30 days, rising progressively to 25 percent for delays exceeding 180 days.
A separate failure penalty applies when payers do not submit the required withholding schedules, calculated at E25 per day.
“We really want to encourage all our clients to avoid these penalties by doing things on time,” Mahlalela said, urging taxpayers to seek guidance from the ERS if unsure about obligations.
Dlamini advised those handling withholding tax to ensure correct deduction rates for residents and non residents, submit returns promptly, pay on time and issue certificates to payees.
“The deadline to note there is the 15th of the following month,” she said, adding that taxpayers should also keep track of rate changes introduced under the 2024 Income Tax Order.
ERS officials indicated the topic will be revisited in a future broadcast to provide practical examples and further clarification for taxpayers across the country.
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