MANZINI – About 22 ministries and government departments owe pensions and taxes of about E150 million for the past financial year.
The ministries and departments are said to owe the aforesaid amount due to failing to remit Eswatini National Provident Fund (ENPF) deductions, pension fund and value added tax (VAT) to the Eswatini Revenue Service (ERS). The Auditor General (AG), Timothy Matsebula, in his Consolidated Government Financial Statements (Annual Accounts) of the Kingdom of Eswatini for the financial year ended March 31, 2022, listed the various ministries and departments as having failed to remit the said money.
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The actual figure for all the ministries and departments is E149 576 246.19. The highest outstanding amount was recorded with the Ministry of Information, Communications and Technology (ICT). The AG said the Princess Sikhanyiso-led ministry had an outstanding VAT valued at E111 137 101. Matsebula reported that he notified the controlling officer (principal secretary in the ministry) that according to information sourced from the ERS, the ministry had a significantly huge outstanding VAT balance. He said the debt period spanned from 2015 to 2022, which was over eight years. The AG said, however, he was unable to confirm disclosure of this amount in the financial statements and an explanation on how the debt was created, why it was not settled and reasons for its accumulation were not provided during the audit.
The AG said entities were required by law (Income Tax Order of 1975 as amended) to remit taxes in accordance with the tax law. “I raised my concern that reported liabilities balances could be misstated and therefore misleading to users of the financial statements. Further, the ministry could be subjected to late payment interest, penalties and/or lawsuits hence resulting in financial losses,” reads the report. Matsebula said he then advised the controlling officer to request for a budget to settle the VAT debt and effectively manage its debts in order to avoid their accumulation and to appropriately disclose the debt in the financial statements. Matsebula said he further requested the controlling officer to provide an explanation, which should be supported with documentary evidence, on how the debt was created, why it was not settled and the reasons for its accumulation. “In response, the controlling officer stated that the VAT was accrued by different departments and parastatals, and the ministry had embarked on a tracing exercise to ascertain the implicated departments or parastatals,” reads the report in part.
Response
Furthermore, he said the controlling officer’s response was noted, however, at the time of compiling the report, the matter had not been resolved. The AG further said there were unremitted deductions of the national provident fund and taxes. He said: “I reported that unremitted deductions in respect of the ENPF increased from E3 507.85 in the 2020/2021 financial year to E9 367.85 in 2021/2022 and unremitted taxes remained unchanged at E2 791 105.36 as at March 31, 2022. This shows that the matter as reported in my previous financial year’s audit report was not addressed.” Also, he reported that the Umbutfo Eswatini Defence Force (UEDF) had an outstanding VAT debt amounting to E10 850 476 as at March 31, 2022. The AG said VAT debts related to tax periods dating from 2016 to 2019, which were now a period over six years.
He said the effect of the outstanding VAT was that the country was deprived of receiving revenue in the form of taxes by the ministry. Matsebula said the controlling officer was advised to remit the VAT debts to the ERS and provide proof of settlement and report monthly on the status of this tax debt to the Ministry of Finance and AG. “However, during an exit meeting with the controlling officer, he explained that the tax was charged on donated items and as a ministry they were making consultations with the Ministry of Finance and Eswatini Revenue Services to establish whether the Ministry of Defence could be exempted from paying tax on donated items,” reads the report in part. Also, the Ministry of Tinkhundla Administration and Development had outstanding taxes amounting to E9 188 180.80 and unremitted deductions in respect of the national provident fund amounting to E26 428.61 as at March 31, 2022. The AG reported that the PS under the ministry reported that the ministry was working tirelessly in cleaning the accounts.
Deductions
Matsebula further said the Ministry of Housing and Urban Development had unremitted deductions amounting to E6 308 009.43, which consist of ENPF amounting to E219 906.97, S.G. civil servants and teachers pension of E14 612.36, car advance interest subsidy – banks of E7 201.34 and taxes amounting to E6 066 288.76. On the other hand, he reported that the Ministry of Economic Planning and Development had VAT debts worth E4 267 852 and pay-as-you-earn (PAYE) tax debt worth E1 853, as at March 31, 2022. He said the VAT debt related to tax periods dating from 2015, 2017 to 2019 and PAYE tax debt relates to tax periods dating from 2013 to 2014, which is a period of over 10 years. The AG also reported that there were unremitted deductions of the ENPF amounting to E58 788.16, unremitted taxes amounting to E1 749 354.95 and tax refund worth E389 226.14.
Furthermore, he reported that the Ministry of Natural Resources and Energy had E713 874.17 while the Ministry of Agriculture had E745 517.18 outstanding taxes. The Ministry of Agriculture also has an outstanding VAT debt of E94 126. Matsebula reported that through a report referenced; Ref: A15 Vol. XIV/12 dated February 3, 2023, he notified the controlling officer that records from ERS revealed that the Ministry of Agriculture had a VAT debt. The AG said the VAT debt related to tax periods dating from 2017 to 2022, which was now a period of over five years. Also, he reported that the Royal Eswatini Police Service (REPS) had unremitted deductions of national provident fund and taxes amounting to E4 420 and unremitted taxes worth E51 216.
Response
Furthermore, he reported that Parliament had an unremitted debt to the ENPF of E56 220.10. Matsebula reported that in response, the controlling officer submitted that the deductions worth E56 220.10 due to the ENPF had not been paid, since the transaction of transferring such funds was managed by the Treasury Department, and Parliament was only tasked with making the follow-up to ensure that the deducted funds do reach the ENPF. He said the controlling officer did not provide any evidence of prior follow up on this matter. Also, the AG reported that at the time of compiling this report, the matter had not been solved. Also, the Private and Cabinet Offices had unremitted deductions of the ENPF amounting to E9 790 under Centre 1101. The AG reported that he further advised the controlling officer that the deductions of the ENPF and taxes should be remitted to ENPF and ERS.
Matsebula reported that the controlling officer responded by stating that the Standing Cash Advance of E1 646.90 was a matter dating back to 2001, hence the office was still trying to gather information on this matter and would keep the esteemed office of the AG posted. He further stated that the reconciliation of the credit balance of E9 790 due to the ENPF was on-going because it dates back to 1999. Matsebula said when the exercise was complete; a report would be submitted to the esteemed office of the AG.
Deductions
The AG further reported that the Ministry of Tourism had unremitted ENPF deductions, civil servants, teachers’ and also pension and taxes. Matsebula reported that there were unremitted deductions in respect of national provident fund amounting to E2 353.66, SG Civil Servants Pension of E12 705.60 and unremitted taxes amounting to E26 315.06. Matsebula said in response, the PS stated that the ministry made an effort to reconcile the provident and the pension fund, however, the process was put on hold and deadlines for submissions were missed. He said the controlling officer further stated that the ministry eventually solved the anomaly in the account, and that the ministry balanced the account for ERS item. The AG said the non-remittance of deductions deprived the beneficiaries of the ENPF and the pension fund from benefitting from their rightful contributions. Also, the Deputy Prime Minister’s Office reported that there were unremitted deductions in respect of the ENPF amounting to E5 365 and civil servants and teachers pension deductions amounting to E16 438.66. Also, he said the taxes; amounting to E3 192.75, were not remitted to the ERS.