Eswatini

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Eswatini 2026 Budget: VAT Reforms and Compliance Focus

March 30, 2026

Conseillers en matière de TVA

The Eswatini, formerly known as Swaziland, Ministry of Finance, published the 2026 Budget Speech titled “Agape Love - Love in Action for Economic Transformation," framing fiscal policy as a moral commitment to the nation's citizens. The main focus of the Budget Speech concerning indirect tax measures includes an overview of the results of already implemented measures and general plans to close the compliance gap.

Indirect Tax Measures and Performance

The Ministry of Finance underlined that the government introduced targeted VAT reforms to ease the cost of living and improve fairness in the tax system. Main measures introduced include increasing the VAT-exempt threshold for goods brought into the country at the border from E 1,000 (around USD 58) to E 10,000 (around USD 580), expanding the list of exempt goods, and zero-rating essential items such as sanitary products, reusable nappies, and certain medical supplies.

In addition to reducing financial burden on households while also encouraging more honest declarations and better compliance, these measures are expected to support stronger revenue performance, with overall tax collections projected to grow by 13.2% in the 2025/26 financial year. Nonetheless, a vital compliance gap estimated at around E 4 billion (around USD 232.8 million) annually remains. Moreover, VAT in the wholesale and retail sectors is particularly vulnerable.

Notably, the government's focus is on improving enforcement and compliance rather than increasing tax rates, aiming for a fairer system that does not penalize already compliant taxable persons. The Ministry also expects VAT collections to increase by 24.8%, from E 5.85 billion (around USD 340.5 million) in 2025/26 to E 7.30 billion (around USD 425 million) in 2026/27, a nearly USD 84 million increase.

The only new measure announced is a 3.39% increase in excise duties on alcohol and tobacco products, applied immediately to align with South Africa as part of the Southern African Customs Union (SACU) revenue pool. However, this decision should be viewed more as a necessary move rather than a domestic policy choice.

Conclusion

The result presented in the 2026 Budget Speech shows that Eswatini's policy on indirect tax is broadly neutral to slightly progressive. The overall message is that there will be no rate increases, that zero-rating of essentials will be maintained, and that the focus will be on closing the compliance gap rather than raising taxes on already-compliant businesses and consumers.

Source: Eswatini 2026 State Budget

What are the key VAT reforms in Eswatini’s 2026 Budget?

The 2026 Budget introduces targeted VAT reforms aimed at reducing the cost of living and improving fairness. These include increasing the VAT-exempt threshold for goods brought into the country, expanding the list of exempt goods, and zero-rating essential items like sanitary products and medical supplies.

How does the VAT-exempt threshold change affect consumers?

The increase in the VAT-exempt threshold from E1,000 to E10,000 allows individuals to bring in higher-value goods without paying VAT, which reduces costs for households and encourages more accurate declarations at the border.

What is the government’s approach to improving VAT compliance?

Instead of raising tax rates, the government is focusing on closing the compliance gap through better enforcement and encouraging honest reporting, particularly in sectors like wholesale and retail where VAT leakage is more common.

Are there any tax rate increases in the 2026 Budget?

There are no increases in VAT rates. The only adjustment is a 3.39% rise in excise duties on alcohol and tobacco, which aligns with regional requirements under the Southern African Customs Union rather than domestic policy changes.

What impact are these measures expected to have on tax revenue?

The government expects overall tax revenue to grow by 13.2% in the 2025/26 financial year, with VAT collections projected to increase significantly from E5.85 billion to E7.30 billion in 2026/27.

What does it mean that Eswatini’s indirect tax policy is “neutral to slightly progressive”?

This means the policy avoids increasing tax rates while providing relief through exemptions and zero-rating on essential goods. At the same time, it aims to improve fairness by targeting non-compliance rather than placing additional burden on already compliant taxable persons.

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Chercheur en fiscalité de la TVA, spécialisé dans la fourniture d'informations claires et actualisées sur les réglementations et la conformité en matière de fiscalité indirecte pour notre site web. Rasmus Laan

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