Simple Guide to Exchange Controls in Eswatini

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Simple Guide to
Exchange Controls in Eswatini
Umntsholi Wemaswati
OF ESWATINI

Contents
Residential status for exchange control purposes Dealings in foreign currency Authorised Dealer (AD) and Authorised Dealer in Foreign Exchange with Limited Authority (ADLA) Types of accounts offered by Authorized Dealers Facilities available for individuals Business entities Exports Merchanting transactions Income transfers to non-residents Royalty and fees payments Capital issues Omnibus travel facility Miscellaneous importations from outside the Common Monetary Area The cross-border foreign exchange transaction reporting system 3 4 4 6 8 9 10 11

1. RESIDENTIAL STATUS FOR EXCHANGE CONTROL PURPOSES
   Eswatini classifies residents into those who are Common Monetary Area (CMA-Eswatini, Lesotho, Namibia and South Africa) residents and those of the rest of the world non-residents. Residents are further classified as temporary or permanent residents.
   1.1. Permanent Resident - A permanent resident is a person (i.e. a natural person, body corporate,
   foundation, trust or partnership) whether of Swazi or any other nationality, who has taken up residence, is domiciled or registered in Eswatini.
   1.2. Temporary Residents - Temporary residents are for exchange control purposes, natural persons
   of countries outside the CMAwho have taken up temporary residence in Eswatini excluding those who are purely on temporary visits.
   1.3. Non-Resident - A non-resident is a person (i.e. natural person or legal entity) whose normal
   place of residence, domicile or registration is outside the CMA.

2. DEALINGS IN FOREIGN CURRENCY
   No person is permitted to hold or deal in foreign currency other than an AD or ADLA.

3. AUTHORISED DEALER (AD) AND AUTHORISED DEALER IN FOREIGN EXCHANGE WITH LIMITED AUTHORITY (ADLA)
   Simple Guide to
   Exchange Controls in Eswatini
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   AD ADLA

4. TYPES OF ACCOUNTS OFFERED BY AUTHORIZED DEALERS

5. FACILITIES AVAILABLE FOR INDIVIDUALS
   5.1 Individual Foreign Capital Allowance
   A foreign capital allowance may be availed of through an AD for the transfer of up a total of E4 million per private individual (natural person) resident per calendar year in Eswatini.
   5.1. Single Discretionary Allowance
   In addition, residents (natural persons) who are over the age of eighteen (18) years may be permitted to avail of a single discretionary allowance (SDA) within an overall limit of E 1 million per individual per calendar year, without the requirement to obtain a Tax Clearance Certificate to cover one or all of the following discretionary payments:
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   Simple Guide to
   Exchange Controls in Eswatini

• Donations to Missionaries
• Maintenance Transfers
• Monetary Gifts and Loans
• Gift Parcels
• C o m m e m o r a t i v e Emalangeni Coins
  5.2. Travel Allowances
• There is no limit on the amount of Emalangeni that may be spent on travelling within the CMA.
• Up to E15 000 in cash per person may be taken when proceeding on vi s it s outside the CMA to meet travellers' immediate n e e d s o n r e t u r n t o Eswatini.
• Foreign exchange in respect o f a tr a v e l a l l o w a n c e m a y b e p r o v i d e d i n a n y authorised form. The travel allowance may also be transferred abroad to the traveller's own bank account, but not to an account of a third party.
• Minors travelling with parents may have their travel allowances up to E200 000 transferred to t h e ir p a r e n t s ' bank account abroad.
  5.3. Study Allowances Abroad
  P e r m a n e n t r e s i d e n t s undergoing full time courses out s ide the CMA may be allowed foreign exchange to cover the cost of board and lodging, books and other expense for the academic year.
  5.4. Borrowing Abroad
  Residents are permitted to borrow funds from abroad. Registration of the funds with the Central Bank is necessary before being enjoyed by customer.
  5.5. Emigration
  Persons regarded as permanent residents of Eswatini for Exchange Control purposes will, at the time of emigration to countries outside the CMA, be accorded a settling-in-allowance of up to E 8 million per family unit and E 4 million for single persons at the prevailing rate of exchange.
  5.6. Import and Export of Local and Foreign Currency Bank Notes
• E s w a ti n i r e s i d e n t s travelling to countries out s ide the CMA are permitted to take out foreign bank notes upto the applicable travel entitlement.
• In addition, they may import or export up to E 15 000 in local bank notes at any one time which must be reduced by the value of any bank notes issued by other member countries of the CMA which are permitted to be exported or imported.
• The E 15 000 in local currency does not count against a resident’s travel allowance.
  5.7. Transactions in Securities Between Residents and Non-Residents
  Dealings in both resident and n o n - r e s i d e n t o w n e d or controlled securities by residents and by non-residents require prior approval.
  5.8. Personal Transfers by Foreign Nationals and immigrants
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  Personal Transfers by Foreign nationals (except those who are purely on a temporary visit) are required, on arrival, to declare in writing to an AD in foreign exchange whether they are in possession of foreign assets and if so, give an undertaking to the effect that they shall not place such assets at the disposal of a third party.
  5.9. Personal Transfers by Immigrants
  F o r e i g n N a ti o n a l s may retransfer abroad, through an AD, capital which has been introduced into Eswatini p r o v i d e d t h a t t h e y c a n substantiate the original introduction of such funds.
  5.10. Current Transfers by Temporary Residents
  Temporary res ident s may transfer to countries outside the CMA their locally earned monthly income.
  5.11. Importation of Motor Vehicles and/or Caravans by Eswatini Residents Returning from Visits Abroad
  Eswatini residents may be p r o v i d e d w i t h f o r e i g n exchange, through an AD, to cover the cost of motor vehicles and/or caravans purchased outside CMA for subsequent importation into Eswatini, as well as, freight, handling charges and other related costs subject to certain conditions imposed by the Central Bank of Eswatini.
  5.12. Import Payments
  Payments for imports require t h e p r e s e n t a ti o n o f documentary evidence and will not be deducted from the Single Discretionary Allowance of E 1 million per calendar year. The goods to be imported should be delivered in the country within 4 months of making the import payment and the delivery note submitted to the Authorised Dealer for acquittal of the transaction.
  5.13. Import payments via credit and/or debit cards
  Individuals with locally issued credit and/or debit cards are permitted to make foreign currency payments for small transactions (e.g. imports over the internet) by means of such credit and/or debit cards up to a limit of E 50 000.
  15.3. Import payments via an Authorised Dealer in foreign exchange.
  Individual s may purchase foreign currency for payment of imports via an AD.

6. BUSINESS ENTITIES
   T h e f o r e i g n e x c h a n g e r e s tri c ti o n s o n E swa ti n i business entities have been liberalised with the intention of increasing the ease of doing bus ines s through foreign exchange transactions.
   6.1. Types of Accounts
   The following types of accounts maybe operated by business entities of Eswatini;

• C u s t o m e r F o r e i g n Currency Accounts (CFC Accounts) CFC Accounts may be opened by ADs in Eswatini for the Eswatini entities (legal persons).
• S p e c i a l C F C Accountholders - These a r e o p e n e d f o r t h e insurance industry, to cater for foreign currency wo r k i n g ba l a n c e s as permitted by the Central Bank of Eswatini.
• Foreign Bank Accounts - Eswatini business entities that have legal or bona fide sources of income abroad are permitted to open foreign bank accounts.
  6.2. Foreign Investments
• Eswatini Business Entities (Legal Persons) - Eswatini bus ines s entities are allowed to invest outside the CMA. Registration of t h e f u n d s t o be externalized with the Central Bank, is necessary.
• Eswatini Institutional Investors - Long-term insurers, pension funds a n d m a n a g e m e n t companies of collective investments scheme shall, on application, be allowed to transfer up to 25% of their total assets and in the case of collective Simple Guide to Exchange Controls in Eswatini 6 s c h e m e mana gement companies up to 35% of their total assets under management, to acquire f o r e i g n p o r t f o l i o investments. This however does not absolve such entities from complying w it h o t h e r r e l e v a n t legislations.
  6.3. Import Payments
• Payment for imports - The permitted methods of payment from Eswatini to countries outside the CMA are;in local currency to non-resident account in the CMA:
• In any specified foreign currency: and
• In local currency to a non-resident account from another non-res ident account in the CMA.
  6.4. Import Permits
  In view of the measures of control exerci sed by the Eswatini Revenue Services over the importation of certain types of goods, AD’s are required in their own interest, to ensure that a covering Import Permit issued by the Ministry of Finance is available in respect of the certain goods before establishing letters of credit, a rr a n g i n g t o guara ntee payments or making payments or entering into forward e x c h a n g e c o n t r a c ts i n c o n n e c ti o n w i t h t h e importation of goods into Eswatini.
  6.5. Requisite Documentation
  Foreign exchange in payment of imports from countries outside the CMA may be provided for the f.o.b. value of the goods (as defined in Section 72 of the Customs Excise and Sales Duty Act, No. 21 of 1971).
  6.6. Payment of Capital Goods
  Foreign exchange may be provided for advance payments up to 100 % of the ex-factory cost of capital goods to be imported not exceeding a total value of E10 million. Payment for the importation of capital goods in excess of E10 million may only be provided up to 50 % of the ex-factory cost of the goods to be imported.
  6.7. Advance Payment and/or Cash with Order Requests
  Bu s in e s s e n ti ti e s ma ybe provided with foreign exchange through an AD, in respect of advance payments and /or cash with order requests to cover the cost of permissible imports, other than capital goods, against the presentation of an invoice stating that payment shall be made in advance. The goods to be imported should be delivered in the country within 4 months of making the import payment and the delivery note submitted to the Authorised Dealer for acquittal of the transaction.
  6.8. “Cash on Delivery" Consignments
  Bu s in e s s e n ti ti e s ma ybe provided with foreign exchange through an AD to meet import payments relating to goods which have been consigned by air on a "cash on delivery" basis against submission of a copy of t h e r e l a ti v e tr a n s p o rt document bearing an original stamp - "For Foreign Exchange Purposes Only" and dated and signed by a lawfully registered freight forwarder.
  6.9. Extended Credit Terms
  The established documentary credits stand-by letters of credit, arranging to guarantee payments or open account payments in connection with the importation of goods into Eswatini, where the credit terms extended to the local importer exceed twelve (12) months, require the prior approval of the Central Bank of Eswatini. 6 . 1 0 . I m p o r t a ti o n o f Computer Software Bu s in e s s e n ti ti e s ma ybe provided with foreign currency through an AD for the payment for computer software against s u p p o r ti n g d o c u m e n t a r y evidence. Bu s in e s s e n ti ti e s ma ybe provided with foreign currency through an AD for the payment of maintenance payments a p p l i c a b l e t o c o m p u t e r software packages in advance and/or retrospectively against d o c u m e n t a r y e v i d e n c e c o n fi r mi n g t h e a m o u n t involved.
  6.11. Imports from Botswana
  Imports from Botswana maybe paid for against the commercial invoice issued by the supplier and the consignee's prescribed copy of the Form SAD 500, Simple Guide to Exchange Controls in Eswatini 7 which form shall bear an original stamp of the Botswana Customs Authorities.
  6.12. Forei g n Cur rency Payments for Import Transactions up to E 50 000 over the internet by means of Credit and/or Debit cards
  All credit and/or debit cards including co-branded cards, issued by AD may be utilised outside the CMA to make permissible foreign exchange payments for small transaction, e.g. imports over internet by means of such credit and/or debit card, up to an amount of E 50 000.00.

7. EXPORTS
   All exports to countries outside the CMA must be supported by the prescribed declaration on the Form F.178.
   Business entities exporting goods to countries outside the CMA must comply with the following conditions;

• Sell goods exported within a reasonable time, but no later than six months from date of shipment;
• Receive the full foreign exchange proceeds not later than six months from date of shipment;
• Re c e i v e p a y m e n t i n f o r e i g n c u rr e n c y or Emalangeni from a local non-resident account and offer the full foreign currency proceeds to an AD within 30 days after becoming entitled thereto or retain the export proceeds indefinitely in a CFC Account at an AD.
• exporters may not waive o r d e l a y r e c e i p t o f payment for more than six months after shipment or 30 days after accrual.
  7.1. Replacement Goods and Short Shipments and Goods under Guarantee
  ADs may attest Forms N.E.P. covering goods up to be shipped in replacement of rejected or defective goods previously shipped, or in completion of a previous short shipment.
  7.2. Export of Advertising Matter and Trade Samples
  AD may attest Form N.E.P c o v e ri n g t h e e x p o r t of advertising matter and trade samples on a "no charge" basis provided they are satisfied that the goods are being shipped purel y for adverti s ing / promotional purposes.
  7.3. Goods Exported for Repairs/Adjustments and return to Eswatini
  In the case of manufactured goods registered with the Eswatini Revenue Services for export to their country of origin for repairs or adjustments and not for replacements, free of payment or at a cost.
  ADs may attest the required Form N.E.P., where from their knowledge of their customers and the circumstances of the case, they are fully satisfied that the goods are being d i s p a t c h e d , s u b j e c t t o subsequent return to Eswatini.
  7.4. Return of Goods for which no payment has been made f rom the Common Monetary Area
  AD may attest Forms N.E.P. covering the return of goods to the original supplier free of counter-value or re-exports for the latter's account, provided they are fully satisfied that no payment has been or shall be made from the CMA for the goods in question.
  7.5. Export of Defective Goods for Replacement
  Eswatini business entities may re-export to the original supplier defective goods which have been paid for from the CMA, provided the AD has documentary evidence that the foreign supplier has agreed to:
  (I) replace the consignment on a no-charge basis with goods of an equivalent value; (in such cases the applicant shall be in possession of an import permit for the replacement goods); or (ii) refund the cost of the defective goods in full.
  7.6. Export of Postage Stamps for Philatelic Purposes
  The export of postage stamps for philatelic purposes shall be regarded as a normal export transaction subject to the Form F.178 procedure. Enquiries concerning the export of postage stamps which cannot be answered by the ADs will be referred to the Central Bank and not to the Eswatini Revenue Services (ERS). Simple Guide to Exchange Controls in Eswatini 8 s s
  7.7. Export of Currency Coins for Numismatic Purposes
  All matters relating to the export of gold coins and other currency coins for numismatic purposes will be referred to the Central Bank of Eswatini with full details.

8. MERCHANTING TRANSACTIONS
   Business entities are permitted to enter into Merchanting transactions through an AD, against supporting letters of c r e d i t a n d t h e r e l e v a n t a g r e e m e n ts amongs t the p a r ti e s , p r o v i d e d fi rm arrangements are made to ensure that no payment is made to the foreign supplier until payment has been received from the foreign importer (buyer) in an approved manner, fully covering such payment and the Eswatini merchant’s profit levied.
9. INCOME TRANSFERS TO NON-RESIDENTS
   9.1. Dividends/Profits/Income Distributions
   As part of government policy in attracting foreign investment, dividends derived from current trading profits are freely transferable on submission of documentation (including l a t e s t a n n u a l fi n a n c i a l statements of the company concerned). Non-res ident shareholders are required to settle tax obligations before transfer of profits.
   9.2. Payment of Interest on Loans
   ADs may allow the transfer to non-res ident s of interes t income (less withholding tax) on loans granted to Eswatini resident parties, provided they a r e s a ti s fi e d t h a t t h e acceptance of the loan as well as the interest rate payable was registered with the Central Bank of Eswatini.
   9.3. Directors Fees
   ADs may approve the transfer to non-residents of directors' fees provided the application is accompanied by a copy of the resolution of the Board of Directors of the remitting company confirming the fees to be paid to the beneficiary;
   9.4. Rentals
   ADs may permit the transfer to non-res ident s of income accruing in the form of rentals on fixed property owned by them against the production of a copy of the rental agreement and provided the AD concerned is satisfied that the amount involved is reasonable in relation to the property in question.
   9.5. Income Earned Outside Eswatini
   AD may not allow the transfer from Eswatini of any income earned outside the country unless such funds represent the p r o fi t o f w h o l l y o w n e d subsidiaries or of branches and d i v i s i o n s o f r e g i s t e r e d c o m p a n i e s p r e v i o u s l y transferred to Eswatini.
10. ROYALTY AND FEES PAYMENTS
    10.1 Royalties and Fees / C h a r g e s (Consultancy, Management, Professional, Service, and Similar Payments) Arising from the Use or Importation of Trade Marks, Patents, Designs, etc.
    Bu s in e s s e n ti ti e s ma ybe provided with foreign currency through ADs, to make payments to persons resident outside the CMA in respect of royalties and fees/charges, provided that the r e l e v a n t a g r e e m e n t / amendment / alterations / renewal thereto have/had been approved/cleared by the Financial Surveillance Division.
    10.2. Royalties and Rentals on Cinematograph Films/Videos and Royalties and Fees on Records, Musical Works and Books
    Eswatini residents may be provided with foreign currency through ADs, to make payments to persons outside the CMA in respect of royalties and fees per titl e o n c i n e m a t o g r a p h fi l m s / v i d e o s , records, reproduced, musical works and books sold under licence in Eswatini, subject to the agreement / amendment / alterations / renewal thereto having been approved by the Financial Surveillance Division.
    10.3. Payment for Licence Fees on Films and Videos
    Simple Guide to Exchange Controls in Eswatini 9 s E s w a ti n i r e s i d e n t s a r e permitted to transfer foreign currency, through an AD, in payment of licence fees on fi l m s / v i d e o s i m p o r t e d , provided that – a) ADs view the relevant a g r e e m e n t b e twe e n t h e licensee and licensor; and b) payments are made in terms of the relevant agreement and supported by relevant invoices;
11. CAPITAL ISSUES
    The following transactions may b e m a d e bu t r e q u i r e registration with the Central Bank of Eswatini,

• an issue or issues of capital which amount in aggregate to more than E 100 000, or
• renew or postpone the date of maturity of securities maturing for repayment in Eswatini which amount in aggregate to more than E100 000.
  For the time being and until further notice, the Central Bank has no objection of all classes of capital issues for any amount.
  11.1 Equity for Companies Listed on the Eswatini Stock Exchange
  Non-residents may invest in Equity Investment of Eswatini companies through the Eswatini Stock Exchange without the prior approval of the Central Bank of Eswatini.
  11.2. Local Credit Facilities for Non-resident Firms
  Business entities with 25% or more of their net worth, (including paid-up share-capital, shareholders loans and accumulated earnings), held or c o n tr o l l e d , d ir e c tl y o r indirectly, by non-residents, may be granted local credit facilities. Specific approval of the Central Bank of Eswatini will however be required. 1 1 . 3 . Tr a n s a c ti o n s i n Securities between Residents and Non-Residents Dealings in both resident and n o n - r e s i d e n t o w n e d or controlled securities require registration with the Central Bank of Eswatini. “Security” means any share, stock, bond, d e b e n t u r e s t o c k , u n i t certificate and includes any letter or other document conferring or containing any evidence of right in respect of any security.

12. OMNIBUS TRAVEL FACILITY
    Business entities may make an application to ADs or an ADLA for Omnibus Travel facilities of up to E 2 million per calendar year, for allocation at the discretion of the business entity.
    12.1. Payment for Insurance / Reinsurance Premiums by Registered Eswatini Insurance Companies/Brokers
    Registered Eswatini Insurance C o m p a n i e s / B r o k e r s ma y transfer foreign currency through an AD, in respect of i n s u r a n c e / r e i n s u r a n c e p r e m i u m s (e x c l u d i n g i n s u r a n c e / r e i n s u r a n c e p r e m i u m s i n r e s p e c t o f currency risks) provided that the request is supported by documentary evidence.
    12.2. Payment of Premiums on Foreign Currency Life Policies and Pension Fund Contributions
    Permanent and temporal residents may transfer through ADs, the payment of foreign currency life insurance policies and pension fund contribution