By Phiwa Sikhondze
The Eswatini Revenue Service (ERS) has intensified its efforts to combat tax evasion, with 16 individuals currently undergoing lifestyle audits.
This was revealed by Vusi Ngcamphalala, Commissioner for Domestic Taxes at ERS, during the launch of the 2024 Tax Filing Season.
According to the South African Revenue Service, a lifestyle audit aims to see if a taxpayer’s income matches his lifestyle. The tax agency may investigate homes, vehicles, clothing, vacations, and even charitable donations to see if the taxpayer could realistically afford his or her spending habits.
Ngcamphalala stated that lifestyle audits are thorough but time-consuming, as they require detailed assessments of financial activities.
“These audits are not fast or quick because we give individuals the opportunity to explain their sources of income. If they cooperate and justify the funds in their accounts, no further action is taken. However, if they fail to explain the monies, those amounts will be taxed,” Ngcamphalala explained.
The ERS emphasized that the goal of the audits is not to immediately penalize individuals but to ensure that all income is properly declared and subjected to taxation where necessary. The 16 individuals currently under review are believed to have wealth that exceeds their declared earnings, prompting investigations into the legitimacy of their financial activities.
“We don’t disclose these audits early on, but as long as people cooperate, we assess their declarations and eventually collect what is due to the tax authority,” Ngcamphalala said.
In addition to lifestyle audits, the ERS addressed the issue of “black tax,” a term used to describe financial support provided to extended families. The ERS clarified that black tax itself is not subject to taxation, but any unexplained funds in a person’s account would be taxed if they could not be properly justified.
“We allow taxpayers to explain the source of their income. If it has passed through the tax system, we do not tax it. However, if the source of funds cannot be explained, those funds will be subjected to tax,” Ngcamphalala said.
The ongoing lifestyle audits are part of the ERS’s broader strategy to enforce tax compliance across Eswatini. While the process can take time, officials reassured the public that several assessments have already been completed.
“We encourage everyone who is supposed to file their income tax returns to declare their earnings accurately. We review these declarations carefully and ensure that all income is accounted for,” Ngcamphalala said.