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Reduction in Trades Tax on Food items, effective September 1, 2012

In its continued efforts to mitigate recent increases in the cost of living, the Ministry for Finance, Trade and Investment (MFTI) will be reviewing trades tax rates on certain commodities. Effective September 1st 2012, trades tax on the following commodities will be reduced as follows:

Commodity Old tax rate Tax rate from Sept 1st , 2012
1. Tea 50% 25%
2. Coffee 50% 25%
3. Pre-cooked bread 200% 100%
4. Sweet potatoes 50% 25%
5. Manioc 50% 25%
6. Fish (fresh & chilled)
Including: (Trout, Pacific Salmon, Flat fish, Plaice, Sole, Blue fin tuna, Herrings, Cod, Haddock, Coal fish, Eel
200% 25%
Southern Blue fin Tuna 200% 100%
7. Vegetable juice R10.00 per litre R0.00 per litre (no trades tax)
8. Fruit Juice ( sweetened) R10.00 per litre R5.00 per litre
9. Fruit Juices (unsweetened) R10.00 per litre R0.00 per litre (no trades tax)

At present, the majority of food items carry a 0% trades tax rate, whilst GST is applicable across the board. Nevertheless GST is also exempted on a group of basic food items, namely milk power, infant formula, sugar, rice, high protein flour, sunflower oil, salt, margarine, oranges, apples, vegetables, lentils and a number of other food items especially for infants. The reductions in tax on certain types of imported fish will benefit more directly the tourism sector.

As was announced in June this year, the MFTI is conducting further analysis to determine whether or not Seychelles should adopt the VAT. Should VAT be introduced, Regulations governing this tax (published but yet in force), provides for further exemptions on specific categories of food items, as these new category of items are included on the VAT exempted list. Examples of those items are specific types of meat, specific types of fish and bread. Therefore, the combined results of trades tax reductions being implemented in September 2012, plus scheduled exemptions under VAT, if and when implemented, should create a positive effect on the retail prices of these food items, hence benefitting consumers.

Additionally, this reduction is part of a commitment under COMESA Free Trade Agreement, where some trades tax rates have been earmarked for reduction in 2013. The Government, through this tariff revision has effectively brought forward some of these reductions much earlier than already programmed.

This exercise to reduce the trades tax on other items, including non-food will continue in 2013, pending further analysis and in line with our international trade negotiations and commitments.

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