Swaziland Info
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Posts: 13
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 Posted: Wed Mar 07, 2007 4:08 am Post subject: DOING BUSINESS IN SWAZILAND / SWAZILAND BUSINESS GUIDE |
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DOING BUSINESS IN SWAZILAND
STARTING A BUSINESS
STANDARDIZED COMPANY
Legal Form: Limited Liability Company
Minimum Capital Requirement: 0
City: Mbabane
Registration Requirements:
Procedure 1. Reserve name at the company registry
Time to complete: 5 days
Cost to complete: SZL 10
Comment: The investor writes a letter to the registrar of companies with 3 possible company names. The database of company names is handwritten. The fee is paid at the revenue office.
Procedure 2. Pay fee for reserving a name
Time to complete: 1 day
Cost to complete: included in previous procedure
Procedure 3. Obtain tax clearance for company directors
Time to complete: 1 day
Cost to complete: no charge
Comment: To register a new company, a tax clearance statement for each of the directors is necessary.
Procedure 4. Pay registration fee at revenue office
Time to complete: 1 day
Cost to complete: included in next procedure
Procedure 5. Preparation of articles of association and memorandum by a lawyer
Time to complete: 2 days
Cost to complete: SZL 2000
Comment: the lawyer's fee varies between E 1500 and E 3000
Procedure 6. Registration with the Company Registrar
Time to complete: 21 days
Cost to complete: SZL 360
Comment: The investor needs to submit the articles of association and memorandum, the tax clearance and the receipt proving that the fee was paid. The articles of association and memorandum must be prepared by a lawyer. The registrar revised the document and issues a certificate of registration.
The fee depends on the share capital of the company. Since there is no minimum capital requirement all new companies pay the minimum fee. The time may vary from 10 days to 2 months.
Procedure 7. Request trading license from the Ministry of Enterprise and Employment
Time to complete: 30 days
Cost to complete: SZL 50 to SZL 10,000 (most likely a general services or manufacturing company would pay a license of SZL 3,000 to SZL 5,000, therefore SZL 4,000 is a reasonable estimate for this fee)
Comment: The company requests a hearing to Ministry. In this hearing it will be decided in the company should be issued the trading license. There is a 21-day notice period before the hearing. During this time individuals and companies can make their objections regarding the creation of a new company. The Ministry publishes the notice in a daily newspaper (The Observer) at least 21 days before the hearing. There are several documents that need to be submitted until the hearing and can be obtained while waiting for the hearing.
The list of documents is as follows:
• Bank statement proving that the directors have enough funds to run the company
• Lease agreement (for the company location)
• Company tax registration
• Certificate of inspection by health department or city council
• Memorandum and articles of association
• Certificate of incorporation (this document must be submitted when the hearing is requested).
• Receipt of license fee payment
All companies (except for professional companies which have a different licensing system) need a trading license. A company might need more than one trading license if they do more than one activity. For instance, if the company produces and sales their goods to the public. Each activity has a different license fee.
Procedure 8*. Pay trading license fee
Time to complete: 1 day (simultaneous with procedure 6)
Cost to complete: included in previous procedure
Procedure 9*. Obtain bank statement
Time to complete: 1 day (simultaneous with procedure 6)
Cost to complete: no charge
Procedure 10*. Obtain company tax id
Time to complete: 1 day (simultaneous with procedure 6)
Cost to complete: no charge
Comment: You have to inform the tax authority about the new company.
Procedure 11*. Certificate of inspection by health department or city council
Time to complete: 1 day (simultaneous with procedure 6)
Cost to complete: included in license cost
Comment: For the trading license to be issued there must first be a an inspection on the business location either done by the city council or health department (depending on which agency has jurisdiction)
Procedure 12*. Register workers with Provident Fund
Time to complete: 1 day (simultaneous with procedure 6)
Cost to complete: no charge
Comment: As soon as the workers are hired the company must inform the Swazi Provident Fund (similar to Social Security)
Procedure 13*. Enroll workers in workmen compensation insurance
Time to complete: 1 day (simultaneous with procedure 6)
Cost to complete: no charge
Comment: The company must enroll the workers with this insurance at the Royal Swazi Insurance Corporation. The rates vary by industry, but all companies have to enroll in some form of workers compensation insurance
Note: Procedures sometimes take place simultaneously. Instances of this are marked with an asterisk (*).
FORMS OF BUSINESS ORGANISATION
Companies
The Companies Act of 1912, as amended, governs the legislations regarding the formation of companies in Swaziland and distiguishes between partnerships, foreign companies, public and private companies. This legislation is in the process of being revised (The Companies Amendment Bill 2001). Public and private companies are limited by their share capital. Public companies have the letters "Limited" after their name whereas, private companies have the letters "(Proprietary) Limited". The most common type of investment is through private companies.
The Articles of Association of such companies include the following clauses:
* a restriction of the right to transfer shares
* membership is limited to a maximum of 50, excluding employees of the company
* any offer for subscriptions of any shares or debentures to the public is not allowed
All other companies are public and are therefore not subject to the above restrictions.
With a private company, the minimum number of shareholders is two and one director. However, in a public company, the requirement is a minimum of two directors and seven shareholders. So far, there is no requirement with regard to the nationality of the directors or shareholders. However, in some cases, exclusion of Swazi nationals may be considered as political.
Partnerships
Membership of a partnership is restricted to 20 persons, who can be either a natural or furistic person, except for some recognised professionals such as lawyers and accountants.
Foreign Companies
Instead of operating through a subsidiary, a foreign company may operate through a branch in Swaziland, and as such is classified as an "external company". It is obligatory to register with the Registrar of Companies and copmanies must comply with the provisions of the Companies Act.
TAXATION
Principal Taxes
Direct Taxes
The Income Tax Order, 1975 (Income Tax Amendment 2001), provides that all companies, individuals and other taxable entinties are liable for normal tax on taxable income derived from a source within or which is deemed to be within Swaziland.
Direct taxes may be summarised as follows:
* individual income tax - an annual tax on the income of partnerships and individuals
* company tax - an annual tax on the income of companies
* graded tax - tax payable by all persons resident and domiciled in Swaziland
Indirect Taxes
Swaziland imposes the following indirect taxes:
* sales tax - a tax levied at the final point of sale of certain products and services, and at the point of entry into the country on goods imported
* excise and customs duty
* stamp duty - charges levied on certain documentary instruments
Administration
Company tax is payable for the fiscal year from 1 July to 30 June. However, corporate taxpayers may obtain permission to pay tax to coincide with the company's financial year, if different.
The tax year of individuals ends on the last day of June in each year.
Tax returns are due within 30 days of the notice given by the Commissioner of Taxes. Taxpayers unable to submit returns within 30 days must apply for an extension and submit an estimate of their income for the year.
Employers are required to deduct employee's tax from their employee's remuneration and to pay such amounts over to the authorities on a monthly basis. Employee's tax thus deducted is allowed as a credit against the total amount of an employee's liability for tax as finally assessed on the basis of their annual return. Employers must ensure that the correct PAYE, as calculated on the employees' remuneration and benefits in kind scales, is deducted from the employees. The employers will be responsible for making good any shortfall.
Employers are also required to pay the graded tax of their employees on a monthly basis. The Swaziland tax system requires taxpayers to obtain clearance certificates from the tax authorities.
The clearance certificates are presently required for the following cases:
* the issue, renewal or transfer of any licence for any trade or profession
* the first registration of a motor vehicle
* the registration or de-registration of a company
* the transfer of immovable property
* the tendering for the provision of goods and services to the Government
The clearance certificate is granted on condition that all tax returns have been submitted, and taxes duly paid or satisfactory arrangements have been made regarding any outstandings.
Corporate Tax
Rates
Companies are taxed at the following rates:
* where a sole or principal business is mining, 27% where taxable income does not exceed E20 000 and 33% where taxable income exceeds E20 000
* all other businesses, 33%
Determination of Taxable Income
The assessment is based on taxable income in accordance with the Income Tax Order. Taxable income normally coincides profit calculated in accordance with Generally Accepted Accounting Practice. Capital receipts are excluded from gross income. To be eligible for deduction, expenditure must be incurred in the production of income, must be wholly and exclisively for the purposes of trade and must not be of a capital nature. A number of special allowances are taken into account in calculating taxable income.
Individual Tax
Individuals are taxed progressive rates on their income deemed to be from a Swaziland source. An individual's tax year ends on the last day of June in each year. In accordance with the source rules, temporary residents' remuneration from services rendered in Swaziland is taxable in Swaziland.Annual income of up to E14 000 are tax exempted. Deductions start at 12% - 33% on annual income above E12 000. Fringe benefits (housing, car allowance, education allowance etc) which were previously exempt, are now taxed under Practice note 157 from 20% to 100% in five years. A 25% tax-free gratuity payable to expatriets at the end of their contracts was phased out in July 2001.
Withholding Tax
A 15% withholding tax is payable on royalties and non-resident management fees. Residents also pay 10% withholding tax on interest earned.
Other Taxes
Sales Tax
Sales tax is charged on certain transactions, including the importing of goods, the sale of lacally manufactured goods and the rendering of services.
The rates are as follows:
* the first sale of the undermentioned goods imported into Swaziland:
o alcoholic beverages and manufactured tobacco - 25%
o all other goods - 14%
* the first sale of the undermentioned goods manufactured in Swaziland:
o alcoholic beverages and manufactured tobacco - 25%
o all other goods - 14%
* accomodation let and food supplied by hotels and restaurants - 10%
* goods imported or manufactured by persons which are applied for own use - 10%
* taxable services - 5%
Graded Tax
Graded tax amounting to E1.50 per month is payable by each individual. This amount is not refundable.
Transfer Duty
Transfer duty is payable on the value of any fixed property or lease by the purchaser of such at the following rates:
* 2% on the first E40 000
* 4% on the next E20 000, and
* 6% on the amount exceeding E60 000
Stamp Duties
Certain legal documents require stamping with varying rates of stamp duties. These include company shares, stock and debanture certificates and share transfer forms, for which the current rate is 1% of the value of the consideration given.
Customs and Excise Duties
Varying rates of customs and excise duties are levied on a wide range of products manufactured in, or imported to, the Kindom of Swaziland. Swaziland is a member of SACU together with Namibia, Botswana, Lesotho and South Africa. |
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