Rental income in the country is treated as Paye As You Earn (PAYE) which is currently from 0-33 percent. However, if individuals have registered their residential properties under companies then they will have to pay corporate tax which is from 0-27.5%.

By Ntokozo Nkambule

There are a number of EmaSwati who have ventured into the rental property market. Understanding how their investments tie up with tax obligations is critical if they are to succeed and thrive in their investment endeavours.

Eswatini Property Review caught up with the Head of Corporate Communication at the Eswatini Revenue Service (ERS), Vusie Dlamini to find out the relationship between property and tax in the country. Dlamini notes that residential rental property income in the country is regarded as Income and emaSwati receiving rental income should declare it and file it under Income Tax Returns at the end of each financial year.

The seasoned communications practitioner further noted that rental income in the country is treated as Paye As You Earn (PAYE) which is currently from 0-33 percent in the country. He clarified that tax is only paid if there is profit from the rental income. “It is important that we clarify that tax is only paid to the ERS if property owners have made a profit from their rentals. If for instance investors can justify that income made has gone to pay for a mortgage bond or repairs, then they are not liable to pay tax” he noted.

Dlamini, however, did state that if an individual has registered their residential property units under companies then they will have to pay company tax which is from 0-27.5% of that profit in the country. 

Capital Gains Tax which has been proposed by the Minister of Finance, Neal Rijkenberg is anticipated to shake up the property sector. On a positive note, it is comforting to know that the ministry of finance is more focused on businesses, not individual CGT. In a recent seminar, the minister vehemently stated that they are not comfortable with introducing individual CGT.

Dlamini from the ERS noted that as things stand CGT is not functional in the country and it would be premature for them to comment on it in relation to the property. He said as the ERS they are an implementing authority but do not make laws in the country, they can only start engaging on CGT once there is a clear policy formulation.

Rental Income Tax in South Africa

At the present moment, rental income in South Africa is also considered an Income Tax just like in Eswatini. However, the South African Revenue Service (SARS) has created a provision whereby South Africans receiving rental income can pay minimal tax or no tax at all. The Companies Act in South Africa allows for individuals to create a micro business which then qualifies them for turnover tax. According to the PPS, a financial planning firm in South Africa, earnings from R0-R350 000, lead to 0% in tax payments, the only thing individuals should do is file tax returns. From E350 000-E500 000 they then pay 1% in tax, from E500 000- E750 000 they then pay 2% and from E750 000-E1 000 000 its 3%. It is important however to clarify that this applies to South African residents only.

Note: This article was first published by Eswatini Property Review, our sister publication.

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