Tax Guide for US Expats Living and Working in Swaziland
Who Is Liable For Income Taxes in Swaziland
Individuals are taxed on employment and self-employment income from sources in or deemed to be in Swaziland except to the extent that the income is of a capital nature. An amount is deemed from a source in Swaziland if it is paid for services rendered or work or labor performed by a person in Swaziland regardless of whether the payment is made by a resident or nonresident of Swaziland.
Income subject to tax. The various types of income subject to tax are described below.
Employment income. Employees are subject to tax on their remuneration, which consists of salary, wages, leave pay, allowances, overtime pay, bonuses, gratuities, commissions, fees, emoluments, pensions, superannuation allowances, retirement allowances, stipends, honoraria and lump-sum payments. These items are included in remuneration regardless of whether they are paid in cash or whether they relate to services rendered. Employment income also includes the annual value of benefits with respect to any quarters, board or residence, loans granted to employees, payments for restraint of trade (lump-sum payments to employees with unique or specialized expertise in exchange for the agreement of the employees not to provide services to entities or persons in direct competition with the payer), share options and employers’ contributions to approved bursary schemes for the benefit or educational assistance of the children of employees or dependents of employees.
Investment income. Dividends paid to resident individuals are subject to 10% withholding tax that is a final tax.
Interest or dividends of up to E 20,000 accruing from the following is exempt from tax:
- Subscription shares in building societies registered under the Building Societies Act 1962
- Permanent or fixed-period shares in building societies registered under the Building Societies Act 1962
- Society shares from savings at mutual loan associations or cooperative societies
- Deposits in financial institutions, building societies or the Swaziland Development Savings
Bank established under the Swaziland Development and Savings Bank Order 1973
- Deposits in unit trust companies
Self-employment and business income. Persons receiving income other than remuneration, such as self-employment income, must submit an income tax return when the Commissioner of Taxes issues a notice for the submission of returns.
Directors’ fees. A director is an employee as defined in the Income Tax Order. Directors’ fees are considered to be remuneration and are subject to the Final Deduction System (FDS; see Section D) at a marginal rate of 33% (the highest applicable tax rate).
Taxation of employer-provided stock options. An employee is liable to tax on 50% of the difference between the value of the shares and the amount paid by the employee for shares issued to an employee under an employee share acquisition scheme. Employees are taxed on the same basis for both share acquisition and share option schemes. Employees are also taxable on gains derived from the disposal of a right or option to acquire shares under an employee share acquisition scheme.
Capital gains and losses. Swaziland does not impose capital gains tax. However, during the 2010 budget speech, it was proposed that Swaziland introduce a capital gains tax. The proposed rate of the tax and the implementation date have not yet been announced.
Deductions
Deductible expenses. Expenses are deductible to the extent that they are incurred both in and outside Swaziland in the production of taxable income. However, they are not deductible if they are of a capital nature.
Personal deductions and allowances. Contributions to approved pension funds are deductible to the extent that the total amount does not exceed 10% of an individual’s pensionable salary. Contributions to a retirement annuity fund are deductible to the extent that they do not exceed 15% of the taxable income accruing to that person from a trade carried out by that person. If an individual contributes to both pension and retirement annuities, the total deductible amount is restricted to 15% of taxable income.
Credits. Individuals below the age of 60 as of the last day of the year of assessment (1 July through 30 June) are entitled to an annual rebate of E 7,200. Individuals above the age of 60 as of the last day of the year of assessment are entitled to an annual primary rebate of E 7,200 and a secondary rebate of E 2,000, resulting in a total rebate of E 9,200. The rebate is apportioned if the period of assessment is less than one year.
Relief for losses. Losses may be carried forward indefinitely and deducted from taxable income. Losses incurred by individuals from one business cannot be offset against income from another business.
B. Other taxes
Wealth tax and net worth tax. Swaziland does not impose a wealth tax or net worth tax.
Property tax. Transfer duty is levied on the transfer of immovable property. The duty is based on the purchase price or value of the property. The following are the rates:
- 2% on first E 40,000
- 4% on the next E 20,000
- 6% on the amount exceeding E 60,000
Local authorities tax. Local authorities impose tax based on the value of the immovable properties located in their jurisdictions.
Graded tax. Graded tax of E 1.50 per month is levied on each Swazi adult.
C. Social security contributions
Employers and employees must each make monthly contributions of E 57.50 to the Swaziland National Provident Fund (SNPF).
E. Double tax relief and tax treaties
Swaziland has entered into double tax treaties with Mauritius, South Africa and the United Kingdom.
To learn more about the history, culture, economy and other information about Swaziland
We have been preparing US income tax returns for US Citizens and permanent residents living in Swaziland for over 15 years. As a US Citizen or permanent resident (green card holder) you are required to file a US return each year regardless of the fact that you file and pay taxes in your residence country. The expatriate earned income exemption ($100,800 for 2015) can only be claimed if you file a timely tax return. It is not automatic if you fail to file.
We have scores of clients located in Swaziland and know how to integrate your US taxes into the local income taxes you pay. Any income tax you pay there can be claimed as a dollar for dollar credit against the tax on your US return on the same income.
As an expat living abroad you get an automatic extension to file until June 15th following the calendar year end. (You cannot file using the tax fiscal year for US tax purposes). You must pay any tax that may be due by April 15th in order to avoid penalties and interest. You can get an extension to file (if you request it) until October 15th.
There are other forms which must be filed if you have foreign bank or financial accounts; foreign investment company; or own 10% or more of a foreign corporation or foreign partnership. If you do not file these forms or file them late, the IRS can impose penalties of $10,000 or more per form. These penalties are due regardless of whether you owe income taxes or not.
There are certain times you may wish to make elections with respect to your Corporation or Investment Company which will give you US tax benefits. There are other situations where forming a US corporation to receive your business income may be more advantageous than using a corporation in your resident country. We can help you with these decisions.
If you are self-employed, you will have to pay US self-employment taxes (social security). If you are a bona-fide employee you do not have to worry about paying US social security on your wages earned in Swaziland.
We have helped hundreds of expats around the world catch up because they have failed to file US returns for many years. Unfortunately, unlike India, Canada, UK, etc. you must also file so long as you are a US citizen or resident. You can if you follow proper IRS and State Department procedures surrender your US Citizenship and therefore cut off your obligation to pay US taxes in the future. You must surrender that Citizenship for non-tax avoidance reasons and then can usually not return to the US for more than 30 days per year for the subsequent ten years.
Let us help you with your US tax returns, US tax planning and other US tax and legal concerns. Download our expat tax questionnaire or request a consultation by phone, skype or email