Eswatini has been ranked among the top 10 most taxed countries globally, with a tax-to-GDP ratio of 30.7%, placing it eighth worldwide. This ranking, based on International Monetary Fund data, positions Eswatini alongside high-tax welfare states in Europe. The kingdom's tax revenue is equivalent to about 30% of its entire economy.
However, Finance Minister Neal Rijkenberg notes that a significant portion of this revenue comes from the Southern African Customs Union, which distorts the picture of the domestic tax burden. Rijkenberg stated that SACU accounts for at least 12 percentage points of the 30.7% tax-to-GDP ratio. This implies that the actual tax burden on Emaswati might be lower than the global ranking suggests.
A tax-to-GDP ratio compares government tax revenue with the total value of goods and services produced by an economy. In Eswatini's case, the headline ratio is complicated by SACU receipts, which are recorded as government tax revenue but are not the same as personal income tax or corporate income tax paid directly by Eswatini businesses.
The IMF's fiscal figures highlight the significant impact of SACU receipts on Eswatini's tax revenue. For 2024/25, the Fund estimated Eswatini's tax revenue at 30.3% of GDP, with SACU receipts accounting for 14.2% of GDP. For 2025/26, the IMF projected tax revenue at 27.2% of GDP, including SACU receipts equivalent to 10.7% of GDP.
Minister Rijkenberg rejects the suggestion that Eswatini's high ranking means households and companies face a comparable direct tax burden to those in traditionally high-tax economies. He points to personal income tax and VAT as more relevant taxes for households. Rijkenberg noted that government had not increased personal income tax brackets, protecting lower-income households.
The minister also highlighted the design of VAT, which zero-rates essential goods consumed by lower-income households, such as brown bread and maize meal. This aims to reduce the effect of consumption taxes on households least able to absorb them. Businesses pay corporate income tax on profits rather than turnover, ensuring that companies facing financial difficulties are not taxed on profits they have not made.
Rijkenberg emphasized that government's focus is on ensuring tax compliance from those who should already be paying, rather than increasing tax rates. He pointed to tax measures moving through Parliament to close loopholes and improve compliance, aiming to make sure "everybody pays". This approach is crucial as government navigates pressure on its finances and volatile SACU receipts.
Key points
- Eswatini's tax-to-GDP ratio is 30.7%, ranking it eighth globally.
- SACU receipts account for a significant portion of Eswatini's tax revenue, distorting the domestic tax burden picture.
- Minister Rijkenberg emphasizes the need for tax compliance from all taxpayers, rather than increasing tax rates.
