Eswatini operates a progressive tax system where both individuals and companies are subject to income tax. Employers play a crucial role in this system by withholding income tax from employee salaries and wages under the Pay As You Earn (PAYE) system and remitting it to the Eswatini Revenue Service (ERS). Compliance with these obligations is essential for businesses operating within the country.
Understanding the specific requirements for employer contributions, income tax withholding, and employee entitlements is vital for accurate payroll processing and avoiding penalties. This guide outlines the key tax obligations for employers and deductions for employees in Eswatini, based on current regulations expected to be applicable in 2025.
Employer Social Security and Payroll Tax Obligations
Employers in Eswatini are primarily responsible for administering the Pay As You Earn (PAYE) system for income tax withholding and contributing to the Swaziland National Provident Fund (SNPF).
- Pay As You Earn (PAYE): This is not a separate employer tax but the mechanism by which employers collect income tax from employees on behalf of the ERS. Employers are responsible for calculating the correct amount of tax based on the employee's income and the prevailing tax rates and remitting it monthly.
- Swaziland National Provident Fund (SNPF): Both employers and employees are required to contribute to the SNPF, which is a mandatory retirement savings scheme. The contribution rate is a percentage of the employee's monthly gross earnings, subject to a maximum earnings ceiling. The employer is responsible for deducting the employee's portion and adding their own contribution before remitting the total amount to the SNPF.
| Contribution Type | Contributor | Rate (as % of Gross Earnings) | Maximum Monthly Earnings Ceiling |
|---|---|---|---|
| SNPF | Employee | 5% | E 10,000 |
| SNPF | Employer | 5% | E 10,000 |
| Total | 10% |
Note: The maximum monthly contribution is 10% of E 10,000, which is E 1,000 per employee per month.
Income Tax Withholding Requirements
Employers must withhold income tax from employees' remuneration based on the progressive tax rates applicable in Eswatini. The PAYE system requires employers to calculate the tax due on a monthly basis, taking into account the employee's total taxable income and any applicable tax credits or allowances.
The income tax rates for individuals are structured in brackets, with higher income levels attracting higher tax rates. The following table outlines the expected tax brackets and rates for the 2025 tax year:
| Taxable Income (E) | Tax Rate (%) |
|---|---|
| 0 - 70,000 | 0% |
| 70,001 - 100,000 | 10% |
| 100,001 - 150,000 | 20% |
| 150,001 - 200,000 | 25% |
| 200,001 - 300,000 | 30% |
| Above 300,000 | 33% |
Employers must use these brackets to calculate the correct amount of PAYE to be deducted from each employee's monthly salary. The calculation involves annualizing the monthly income, applying the tax rates to the relevant portions of the income, and then dividing the annual tax liability by 12 to arrive at the monthly PAYE amount.
Employee Tax Deductions and Allowances
Employees in Eswatini may be eligible for certain deductions and allowances that can reduce their taxable income. Employers need to consider these when calculating PAYE, provided the employee has submitted the necessary documentation.
Common deductions and allowances may include:
- Tax Credit: A fixed annual tax credit is available to resident individuals, which is deducted from the calculated annual tax liability. This credit effectively raises the tax-free threshold.
- Retirement Fund Contributions: Contributions made by the employee to approved retirement funds (like SNPF above the mandatory portion, or other approved pension/provident funds) may be deductible up to certain limits.
- Medical Expenses: Certain qualifying medical expenses incurred by the employee or their dependents may be deductible, often subject to limitations or thresholds.
- Donations: Donations made to approved charitable organizations may be deductible, typically up to a certain percentage of taxable income.
It is crucial for employers to verify the eligibility and documentation for any deductions or allowances claimed by employees before applying them in the PAYE calculation.
Tax Compliance and Reporting Deadlines
Employers in Eswatini have specific deadlines for remitting PAYE and SNPF contributions and for submitting required reports to the ERS and SNPF.
- Monthly PAYE and SNPF Remittance: PAYE withheld and SNPF contributions (both employer and employee portions) must be remitted to the ERS and SNPF respectively by the 7th day of the month following the month in which the remuneration was paid. Late payments attract penalties and interest.
- Annual PAYE Reconciliation: Employers are required to submit an annual reconciliation of all PAYE deducted from employees during the tax year. This report, often accompanied by employee tax certificates (P9 forms), is typically due by January 31st following the end of the tax year (which aligns with the calendar year).
- Employee Tax Certificates (P9 Forms): Employers must issue P9 forms to each employee by the annual reconciliation deadline, detailing their total remuneration and the total PAYE deducted during the year.
Maintaining accurate payroll records is essential for meeting these compliance requirements.
Special Tax Considerations for Foreign Workers and Companies
Foreign workers and companies operating in Eswatini may face specific tax considerations.
- Tax Residence: The tax treatment of foreign workers depends on their tax residence status in Eswatini. Individuals are generally considered resident if they are ordinarily resident in the country or meet certain physical presence tests. Residents are taxed on their worldwide income, while non-residents are generally taxed only on income sourced in Eswatini.
- Expatriate Employees: Employers hiring expatriates must ensure compliance with immigration regulations in addition to tax obligations. The PAYE system applies to the Eswatini-sourced income of expatriate employees.
- Foreign Companies: Foreign companies operating in Eswatini may be subject to corporate income tax on their Eswatini-sourced profits. If a foreign company establishes a permanent establishment in Eswatini, it will be taxed similarly to a domestic company.
- Double Taxation Agreements (DTAs): Eswatini has entered into Double Taxation Agreements with several countries. These agreements can affect the tax liability of foreign workers and companies by providing relief from double taxation on the same income in both Eswatini and their home country. Employers should consider the provisions of relevant DTAs when dealing with employees from treaty countries.
Navigating the tax landscape for foreign workers and entities requires careful consideration of residence rules, source of income, and applicable tax treaties.
