The Government of Eswatini has enlisted a team of tax experts from Uganda to assist the Eswatini Revenue Service (ERS) in tightening Value Added Tax (VAT) compliance in the retail sector, following concerns over declining VAT collections despite strong overall tax revenue growth.
Minister of Finance, Neal Rijkenberg, said the move comes after sustained underperformance in VAT receipts from retailers, wholesalers, and shops, a trend Treasury believes is largely driven by fraud, under-declaration, and unlawful VAT refund claims.
Speaking during this week’s Finance in Focus episode, Rijkenberg said while Eswatini continues to record double-digit growth in overall tax collections without increasing tax rates or thresholds, VAT performance in the retail sector has moved in the opposite direction.
“Taxation in general has gone up quite well, and ERS is doing a good job in collecting taxes. But we have one area that is really causing trouble for us as a country, and that is VAT collections in the retail sector,” he said.
According to the Minister, evidence suggests that some businesses collect VAT from consumers but fail to remit it to the fiscus, while others submit fictitious or inflated VAT claims. This, he said, undermines fiscal fairness and deprives the country of resources needed for public services.
“We definitely believe that there is a certain amount of fraud taking place, where VAT is being kept by shops or being claimed unrighteously. That behaviour is causing serious harm to the country,” Rijkenberg said.
Uganda Team Arrives
He explained that while ERS has been actively working to address the problem, the scale and sophistication of the fraud necessitated external expertise. Uganda was identified due to its proven track record in combating tax fraud and strengthening VAT administration.
The Ugandan team has already arrived in Eswatini and is working alongside ERS officials to identify non-compliant businesses, investigate fraudulent practices, and enforce the law.
“They are starting straight away. The focus is to go into the retail sector and ensure that companies that are not paying VAT, or are being fraudulent, are identified and brought to book,” Rijkenberg said.
The Minister warned that the government will take a firm stance, including pursuing historic tax liabilities where fraud is uncovered.
“If companies have been naughty and have been committing tax fraud, they will be held accountable, even for historic fraud. We are going to be quite strict on this front,” he said.
Rijkenberg stressed that VAT is ultimately paid by consumers, not businesses, and that failure to remit it amounts to unfairly depriving emaSwati of funds meant for national development.
“As a country, we all need to pull our weight. The tax system is designed so that the poor do not pay tax, but we cannot have a sector that collects VAT from the public and then keeps it for itself,” he said.
He added that improved VAT compliance will directly benefit the public through enhanced service delivery.
“This is money that goes towards building roads, funding schools, supporting hospitals, and improving service delivery. This is not a negative exercise; it is something very positive for the country,” he said.
Beyond VAT enforcement, the Minister linked the initiative to broader government efforts to prevent corruption through system reforms and technology-driven controls. He cited the rollout of a tightly managed government vehicle fleet, which has already reduced fuel consumption by about 40 per cent, as well as the implementation of the Integrated Financial Management information System (IFMIS), a fully paperless platform aimed at improving transparency and accountability in public finances.
“The best way to deal with corruption is not just catching people, but preventing it from happening in the first place,” Rijkenberg said.
He called on the business community to cooperate with ERS and the visiting experts, emphasising that the objective is to create a fair, accountable, and sustainable tax system that supports national development.
“If people hear about experts from Uganda coming in, they must understand it is for the right reasons. When taxation works properly, the entire country benefits,” he said.