Important reminder for the December pay run
The Eswatini Revenue Service (ERS) has introduced enhancements to the TaxEase system, which requires PAYE to be calculated using a calendar-day tax factor rather than the 1/12 averaging method. This change ensures that monthly payroll submissions align exactly with ERS assessments and reduces the need for manual reconciliation at tax year end.
This guide serves as a reminder of the updated rules and the actions employers must take in December to remain compliant.
Background on ERS changes
The enhanced ERS PAYE Reconciliation System provides real-time visibility of PAYE variances through TaxEase. The main changes are:
- From annual to monthly, monthly PAYE submissions (July to June) now build the employer’s annual PAYE position.
- Monthly data now replaces the former annual reconciliation spreadsheet.
- ERS calculations are now based on actual calendar days rather than the 1/12 averaging method.
While the twelve-month averaging method is still recognised, ERS uses calendar day logic as the basis for automated calculations. Any minor differences between the two methods are resolved through the statutory tax year end reconciliation.
PAYE reconciliation requirements
Employers must ensure ongoing reconciliation throughout the year. Variances commonly occur due to:
- Incorrect start and end dates, as employees who worked the full year should reflect 365 days worked.
- Using the incorrect tax table, such as applying the standard table to a board member.
- Incorrect classification of remuneration.
- Incorrect or missing employee PINs.
- Missing or outstanding monthly schedules.
Note:
- Where variances occur, the employer must amend the affected monthly schedule.
- If an employee is terminated during the year, the employer is responsible for ensuring that the PAYE calculated matches the PAYE deducted in their final month of employment.
- When correcting differences, employers must always consider the Year-To-Date (YTD) variance rather than the monthly variance.
System enhancements to support ERS alignment
Calendar day tax factor
To meet ERS requirements, the system now applies a calendar day tax factor. The following components have been added to support the calculation:
- Days Worked, which reflects the calendar days worked in the period.
- Absent Days, which reflect unpaid leave days that reduce the days worked for PAYE purposes.
- Tax Factor, which is automatically calculated based on cumulative days and tax periods.
PAYE is calculated using the tax factor, the ERS tax tables and the annual rebate, and is then prorated back to the period based on days. This method improves accuracy for new joiners, leavers, employees with unpaid leave and irregular or one-off earnings.
This enhancement took effect in October 2025, and all open runs were recalculated.
Allow negative PAYE in December and June
Under the Final Deduction System (FDS), the ERS requires that over-deductions are offset against PAYE due for that specific month, while under-deductions must be paid to ERS and recovered from the employee.
To align with this, the system allows for negative PAYE adjustments in December and June. The following rules apply:
- Employers may only process negative PAYE adjustments in December and June.
- Negative adjustments cannot exceed the YTD PAYE.
- If the refund is larger than the tax due, employers must correct the original month where the error occurred.
Action required
To ensure compliance, please complete the following steps:
- Ensure Days Worked, Absent Days, and Tax Factor are active on your payroll.
- Capture Absent Days for all unpaid leave.
- Enable the setting ‘Allow negative PAYE in December and June’ if recalculations are required.
If a correction is required on a previously terminated employee who was part of a closed run and was not recalculated, please follow these steps:
- Create an Interim Run linked to your December 2025 pay run.
- Enter a value of 0.01 on any taxable component for that employee. This small value triggers the system to recalculate the tax based on the new logic and legislation.
- Process the result.
Support and guidance
For system specific information, please refer to the Release Notes:
- 903621 / 90362: Tax factor enhancement details.
- 87599: 'Allow negative PAYE' functionality.
ERS has published the following resources:
- Step-by-step guide on accessing and submitting monthly PAYE schedules
- New Monthly PAYE Tax Computation Tool
- Additional support via the ERS website and social media platforms
*Please note: The ERS is finalising a PAYE Reconciliation Guide and FAQ. We will share the documents with you as soon as they are published.