Investor's Guide To Eswatini

Capital Allowances and Other Incentives: 44 • • • • • Plant and Machinery: For those used in the process of manufacturing, 50% initial allowance in the first year of use and a 10% annual allowance, using the reducing balance method, over the lifetime of the asset. Hotel Construction and Improvement Allowance: 50% of the cost is deductible in the year in which it is incurred on the construction of a new hotel or beneficial improvements are made to an existing hotel. In addition, an annual allowance of 4% of such expenditure is allowed. Building Initial Allowance: In respect of building other than hotels and improvements, if such building is wholly/mainly used for the purpose of housing machinery or plant for the year of assessment during which the building is first used. An allowance is given at the rate of 50% of the actual cost of the building plus 4% annual allowance on costs remaining after the initial allowance. Immovable Property Allowance: In respect of a taxpayer other than one whose sole trade is in immovable property, for an expenditure to be used for the erection of any dwelling that will be occupied solely by his staff for the purpose of his own business. The allowance shall be at the rate of 20% during the first year the expenditure is incurred and 10% for the next succeeding years. The allowance shall not exceed E12,000.00 for the first year and E6,000 for the succeeding eight years. The expenditure does not include the cost of the land on which the dwelling is erected. The dwelling should be occupied exclusively by persons or households who are the taxpayer's employees (other employees engaged in managerial or supervisory capacity). The taxpayer must be engaged in the business of manufacturing. Hotel Initial Allowance: In respect of capital expenditure in connection with the erection or beneficial improvement of a hotel. During the year of assessment for the first use of the hotel or beneficial improvements on an existing one, the allowance shall be at the rate of 50% of the actual cost incurred plus 4% annual allowance given for the succeeding years. Such allowance shall not exceed the expenditure Capital Expenditure in Mining Operations: The Income Tax Order provides for the immediate deduction of the amounts from the income derived by a taxpayer from mining operations including shift sinking building, works or equipment including any renewals or replacement of equipment. Development, general adminis- tration and management (including any interest payable on loans utilised for mining purposes) prior to the commencement of production or during any period of non-production but excluding the cost of acquiring mineral rights. “Expenditure in shift sinking" includes the expenditure on sumps, pump chambers, stations and bins, as Investor's Guide To Eswatini • well as any accessories to a shaft. Building refers to offices, storage houses and other related buildings located where the mining operations are taking place. Offices not located at the mining area and residential are excluded. If separate and distinct mining operations are carried in mines that are not connected, the allowance for capital expenditure shall be computed separately for each mine. The amount of capital expenditure determined in respect of any year of assessment in relation to any one mine shall not exceed the taxable income. Duty Free Access on Capital Goods: Capital goods imported into the country as intermediate goods (to be used as inputs for final products) are exempted from import duties, subject to the SACU Common External Tariff Classification. Import Duty Rebates for Raw Materials (only applicable for export outside SACU common market): Raw materials imported into Eswatini for the production of goods destined beyond SACU as exports also receive rebates from import taxes. Agricultural Capital Development Expenditure (CDE) In terms of this, capital development expenditure is allowed as an incentive for agriculture subject to the following conditions: . CDE may not cause or increase a loss. CDE, which has not been allowed in the current year of assessment, is carried forward to the next year of assessment to be set off against future profits. If a farmer ceases to carry on farming operations, he loses all the CDE which has accumulated during the previous year of assessment. CDE may be allowed on the listed farming implements: Dipping tanks. • Dams. • Irrigation schemes. • • • • Wells and boreholes. Pumping machinery. Erection of/additions or improvements to farm buildings, including dwellings for employees. Establishment of orchards and vineyards. Building of roads and bridges used in farming operations. Carrying of electric power from the main transmission lines to farm apparatus. Special Economic Zones (SEZ) Incentives Eswatini has joined other COMESA member states to legislate the Special Economic Zones Act to bolster economic development and job creation. Primarily, companies located in the areas designated as SEZs benefit from a number of incentives which include but are not limited to: Exemption from corporate taxes for the first 20 years, thereafter a corporate tax shall be charged • at a rate of 5%. Remissions of customs duty, value added tax and any other tax payable on raw materials, equipment and machinery. Exemption from foreign exchange controls or restrictions for activities carried out in an SEZ. Promoting Investments in Eswatini-The Swaziland Investment Promotion Authority (SIPA) The Swaziland Investment Promotion Authority (SIPA) was created through an Act of Parliament, the Swaziland Investment Promotion Act 1998, and was officially launched in April of the same year. SIPA is a gateway for investors to Eswatini as well as a support centre for export companies operating in Eswatini. SIPA'S MISSION To promote, facilitate and coordinate foreign and local investment and trade in Eswatini, with the objective of creating wealth necessary to enhance the economic development of the kingdom and its people. SIPA VISION "SIPA aims to be the leader in investor confidence in the Kingdom of Eswatini and the region". SIPA Objectives Are: • • • • To attract, encourage, facilitate and promote local and foreign investment and trade in Eswatini. To initiate, coordinate and facilitate the imple- mentation of government policies and strategies on investment and trade. To provide a one-stop information and support facility to local and foreign investors and exporters. To advise the Minister on investment policies, strategies, proposals and suitable incentives for investors and exporters. SIPA's strategies are geared towards the attainment of these broad objectives through providing a single window facility for investors. Execution of these strategies is undertaken through the two key departments which include: Investment Promotion Department This department is responsible for the execution of the investment promotion strategic objectives for investment generation from both local investors and foreign direct investment for job creation and economic growth. In doing so, it disseminates investment information and opportunities as well as related approval formalities. The department plays the front-line role in marketing the country as an ideal investment base through undertaking outward investment missions and facilitating inward investment missions for specific sectors, as well as arranging an array of meetings with regulatory and government entities for approval formalities. Once an investor has decided to invest in Eswatini, the department facilitates the pre-establishment phase including registration, operating space acquisition, licenses and permits. It offers post-establishment aftercare services for compliance-related issues, addresses investor's concerns and encourages re-investment and expansion. The department also assists local entrepreneurs with their expansion plans by facilitating links with foreign direct investors either in joint-ventures or in sub-supply functions. Trade Department The trade department is responsible for executing policies and strategies related to trade promotion including domestic and international trade. To achieve this goal, the department organises national expos comprising sectoral and regional expos and the main Eswatini International Trade Fair. The department also organises and arranges international inward buyer missions for products made in Eswatini and facilitates and subsidies the participation of Eswatini companies in targeted international expos. The implementation of trade-related agreements is undertaken by this department. The department also profiles products and companies that are (getting) ready for export and supports them with an export assistance programme. 55 Investor's Guide To Eswatini 45