Eswatini: Proposed VAT registration and compliance regime for nonresident electronic services providers

The Government of Eswatini on March 31, 2026, published the Value Added Tax (Amendment) Bill, 2026 (Bill No. 10 of 2026) in the Government Gazette Extraordinary. The bill proposes targeted amendments to the Value Added Tax Act, 2011 (the “Principal Act”) that would require nonresident suppliers of electronic services to register for and account for VAT, introduce an electronic invoicing (e-invoicing) system, and impose new administrative and criminal penalties.

The bill has been debated by both houses of Parliament and is presently awaiting assent. It is scheduled to come into effect on the date of publication in the gazette.

Background

The Principal Act currently contains no dedicated rules for nonresident suppliers of electronic services. In principle, a nonresident making taxable supplies to non-VAT-registered customers in Eswatini may already be liable to register and charge VAT. In practice, however, compliance has not been feasible: the Eswatini Revenue Service (ERS) registration framework is designed for local businesses and requires a fixed place of business in Eswatini, together with the submission of certified documents at an ERS office. A nonresident without a local presence therefore has no practicable means of registering, charging, reporting, or remitting VAT.

The bill addresses this gap by establishing a dedicated online registration and compliance route for non-resident suppliers of electronic services.

Key features of the proposed amendments

Scope of “electronic services”

The bill inserts a definition of “electronic services” into section 2 of the Principal Act. The term means services dispatched from a location outside Eswatini through the internet or another electronic network, which cannot be obtained without the use of information technology, and which are supplied to a recipient in Eswatini. The definition expressly includes:

• Websites, web hosting, and remote maintenance of programs, systems, and equipment
• Software and software updates
• Images, text, and information
• Access to databases
• Music, films, and games, including games of chance
• Political, cultural, artistic, sporting, scientific, and other broadcasts and events, including television
• Advertising platforms
• Streaming platforms and subscription-based services
• Cab-hailing services
• Cloud storage
• Data warehousing
• Artificial intelligence

Business-to-business (B2B) versus business-to-consumer (B2C)

The registration obligation applies to a nonresident supplier of electronic services that supplies to a person not registered for VAT in Eswatini. The proposed regime is therefore B2C in scope.

For B2B supplies, the Eswatini business customer would remain liable to self-assess VAT under the reverse charge mechanism.

Customer location

The bill contains two location tests:

• Proposed section 16bis: A supply of electronic services by a nonresident supplier is deemed to be made in Eswatini if it is supplied to a person not registered for VAT and at an address in Eswatini.
• Proposed section 32bis: A supply of electronic services is treated as delivered in Eswatini if the payment details are located in Eswatini, or when the billing or access proxy indicates residence in Eswatini.

The bill does not clarify how these two tests interact.

Marketplace and platform rules

The bill does not include platform or marketplace rules that would shift the VAT collection obligation onto platforms facilitating the sale of digital services. The obligations therefore apply to the nonresident supplier of the electronic services, including digital platforms in respect of their own services.

Registration

A nonresident supplier of electronic services that supplies to a person not registered for VAT in Eswatini must apply for registration as a taxable person. The application must be made online in the form prescribed by the Commissioner General and must contain:

• Business name and trading name
• Taxpayer identification number
• Certificate of incorporation
• Contact details of the business and of the contact person for tax matters
• Registered address
• Website or uniform resource locator
• Certificate of incorporation or registration in the country of origin
• Any other information required by the Commissioner General

When the Commissioner General is satisfied that the requirements have been met, a VAT registration number will be issued to the applicant. A nonresident supplier that ceases to supply electronic services must apply for deregistration. The Commissioner General may also deregister a nonresident supplier when the supplier has ceased to supply electronic services, no longer meets the registration requirements, or if deregistration is otherwise appropriate under the Act.

The bill does not set a registration threshold for nonresident suppliers.

Compliance and returns

Registered nonresident suppliers must file returns online, accompanied by the tax due, by the seventh day of the month following the return period. The bill also amends section 80(2) of the Principal Act so that currency conversion is based on the prevailing exchange rate provided by the Central Bank of Eswatini, replacing the average daily selling exchange rates of the previous month.

VAT invoicing

Nonresident providers would be required to comply with standard invoicing obligations.

Penalties

The bill introduces a range of administrative and criminal penalties:

• Failure to register: On conviction, a fine not exceeding E100,000, imprisonment for a term not exceeding 10 years, or both.
• Failure to issue electronic tax invoices: On conviction, a penalty not exceeding E500,000, payable within seven days of imposition. A person aggrieved by the imposition of a penalty may file an objection or appeal under the Act.
•  Misuse or tampering with the electronic invoicing system: On conviction, a penalty not exceeding E500,000, payable within seven days of imposition.
• Offences relating to the electronic invoicing system: Including failure to acquire or use the system, failure to issue electronic tax invoices, issuing false or incorrect invoices, misuse of the system, or tampering with the system. On conviction, a fine of not less than E50,000 and not more than E500,000, imprisonment for a term not exceeding three years, or both.
• Nonresident tax evasion: On conviction, payment of the tax evaded plus a penalty equal to twice the amount of tax evaded, in addition to any other fine or term of imprisonment that may be imposed under the Act.
• Failure to demand or report the non-issuance of an electronic tax invoice: On conviction, for a natural person, a fine of not less than E1,000 and not more than E3,000, imprisonment for a term not exceeding three months, or both; for a legal person, a fine of not less than E10,000 and not more than E30,000, imprisonment for a term not exceeding ten months, or both.

Additional amendments

The bill also introduces:

• Registration of prospective traders (proposed section 6bis): The Commissioner General may register a person as a prospective trader when the person provides sufficient evidence of an intention to commence an economic activity in Eswatini, makes or may make taxable supplies where registered, agrees to claim input tax credits after suppliers have accounted for output tax, and specifies the period within which taxable supplies may commence. Registration under this section must not prejudice the fiscus or be detrimental to revenue collection.
• Input tax and subsequent supplies (proposed section 28(15)): When an input tax deduction on the acquisition of goods is prohibited under the Act, the subsequent supply of those goods is not subject to output tax.
• Display of registration certificate (proposed section 55bis): A registered taxpayer who fails to display the registration certificate at the principal place of business commits an offence, punishable on conviction by a fine of not less than E2,000 and not more than E6,000, imprisonment for a term not exceeding three years, or both.
• Repeal of section 70: Section 70 of the Principal Act is deleted in its entirety.

Implementation timeline

The bill provides that the Principal Act would come into effect on the date of publication in the gazette. As noted, the bill has been debated by both houses of Parliament and is awaiting assent.
 

For more information, contact a KPMG tax professional:

Philippe Stephanny | philippestephanny@kpmg.com