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The Corporate Social Responsibility Tax (CSR) - A Newly Introduced Tax

The Minister of Finance, Trade and Investment announced in the 2013 Budget Speech that new taxes will be introduced as of 1st January 2013. Seychelles Revenue Commission (SRC) has been mandated to facilitate the implementation and collection of revenue for the new taxes. One of those new taxes is the Corporate Social Responsibility (CSR) Tax. The CSR is widely understood to entail compliance with ethical and regulatory standards, promoting accountability for businesses’ actions that can lead to a positive impact on the communities and markets in which it operates. As per SI 16 of 2013, the CSR is payable at 0.5% of monthly turnover.

Notice
Notice for Corporate Social Responsibility and Tourism and Marketing taxes

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Who should pay the CSR?
In order for an entity to be able to pay this tax, there are a few criteria that it needs to meet:
  • It needs to have a turnover of SR 1 million or more;
  • It must not be listed in the Second Schedule of the Business Tax Act of 2009, and
  • It must not fall in following listed in the Seventh Schedule of the Business Tax Act of 2009 (categories 2, 3, 4, 5 and 6) listed in the Seventh Schedule of the Business Tax of 2009 (SI 66 of 2012)
How is CSR calculated?
The entities that are eligible to pay the CSR Tax will have to do so monthly, based on their current turnover.

What is the rate of the (CSR) Tax?
The CSR tax is charged at 0.5 % for non-VAT registered eligible entities. If an entity is VAT registered, the 0.5% will be applicable on its turnover exclusive of the VAT it has charged on its invoices.

For example:
(a) A non-VAT registered entity:
If a company had a turnover of SR 1.2 million in 2012 and is not VAT registered, and its turnover is SR100,000 in May 2013, its CSR liability will be o.5% of SR 100,000 which is SR 500.

(b)A VAT registered entity:
If a company with a turnover of SR 2 million in 2012 is VAT registered and its turnover is SR 100,000 in May 2013, then approximately SR 13,043 of the SR 100,000 will be VAT. Its CSR liability will therefore be calculated as 0.5% of the Vat exclusive turnover that is 0.5% of SR 86,957 and will amount to SR 435.

There are certain companies that are classified as intermediaries for VAT purposes, and for them, the CSR will be applicable on their commission.

Does paying CSR tax prevent a company from making donations to charities?
Entities that were spending on projects and making sponsorships or donations in the spirit of corporate social responsibility can continue to do so. However, their spending does not substitute for their CSR obligations. If their monthly turnover is SR 100,000, their CSR liability is SR 500.00 regardless of whether or not they make any donations or sponsorship.

However, their spending on these donations/gifts may be deductible on their business tax liability, provided it is in line with the Fifth Schedule of the Business Tax Act, 2009. The Fifth Schedule of the Business Tax Act governs the impact of these spending/sponsorships/donations on their business tax liability. This means that all benefits which companies were able to make use in the past still exist.

For more information
Please do not hesitate to contact our Advisory Centre on 4293741/4293742, Manager Provision of Advice on 4294937, Manager Registry on 4293726, Manager Returns and Payment Processing on 4294972 or Mrs Woodcock on 4293724.


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