ERS Targets Construction Sector with Tax Audits
MBABANE- ERS has identified a significant tax compliance gap within the construction sector, which it believes is contributing to the country’s growing value-added tax(VAT) shortfall.
In response, the Eswatini Revenue Services (ERS) has issued a request for proposal (RFP) inviting consultancy firms to undertake forensic tax audits and to establish a dedicated tax intelligence network aimed at curbing tax evasion and improving enforcement.
This bold move signals ERS’s strategic shift towards intelligence-driven tax administration as it seeks to crack down on systemic non-compliance in one of Eswatini’s most economically active sectors.
The construction sector in Eswatini has seen steady growth, fuelled by both public infrastructure projects and private sector investments. However, the ERS has identified as disturbing trend: Widespread underreporting, fraudulent refund claims and ultimately undermine tax collection efforts.
LEAKAGE
According to the RFP document published on the Eswatini Public Procurement Regulatory Agency (ESPPRA) website, internal tax audits have revealed several weaknesses in VAT value chain- from the importation of construction materials to local purchases and eventual outputs.
The discrepancies have prompted the need for a targeted forensic audit to reveal the true extent of revenue leakage. The tax authority acknowledges that while its internal audit teams have made efforts to track compliance, the magnitude of the challenge requires external expertise with advanced digital forensic capabilities and experience in uncovering hidden tax fraud schemes.
The consultancy assignment is anchored on two main pillars: Conducting in-depth forensic VAT audits of the construction sector and establishing a sustainable tax intelligence network.
Among its key objectives, the ERS aims to:
- Uncover underreporting, fraudulent activity and other non-compliance within the construction sector.
- Assess weaknesses along the VAT value chain.
- Recommend targeted interventions to plug the revenue leakage.
- Develop a structured intelligence framework to proactively detect and report tax evasion schemes.
- Provide actionable policy and enforcement reform suggestions.
The scope of work outlined in the RFP is far-reaching and rigorous. Consultants are expected to use a risk-based approach to identify businesses within the sector most likely to be engaging in VAT fraud.
These include practices such as:
- Underreporting of imported goods at borders.
- Manipulated sales declarations.
- Cash transactions designed to escape formal accounting systems.
- Fraudulent VAT refund claims involving fictitious suppliers or shell companies.
- Unrecorded sales to related parties.
The consultants will be required to employ electronic forensic techniques, including the analysis of digital accounting system, point of-sale data and covert transaction monitoring (e.g. mystery shopping) to compare actual versus reported sales.
Each audited entity will be issued a detailed audit report, complete with
