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Can a VAT registered business deregister for VAT?

Value Added Tax will be implemented on July 1 2012. In order to charge VAT on the sales of goods and services, businesses will have to be registered for VAT. The Value Added Tax Act 2010 establishes a VAT threshold of SR 5 million, which determines the level at which businesses will be registered for VAT on a compulsory basis. Businesses making an annual sales turnover which is equal to or exceeds the VAT threshold are required under the Act to register for VAT. Businesses that make an annual sales turnover which is less than the VAT threshold can choose to register for VAT on a voluntary basis.

Can a VAT Registered business cancel its VAT registration?
Yes, but only if:
  1. the business no longer makes taxable supplies
  2. the business is being sold as a going a concern
  3. the legal status of the business is being changed (e.g. from an individual to a corporate entity)
  4. the business’ annual sales turnover no longer exceeds or is not expected to exceed the VAT threshold of SR 5 million, IF the business is registered on a compulsory basis
  5. it is no longer the wish of the business to be VAT registered IF the business has been VAT registered on a voluntary basis after a period of at least 12 months
When can a business apply for VAT cancellation?
  • Businesses registered for VAT but ceases to make taxable supplies need to apply for deregistration within 7 days of no longer making taxable supplies.
  • Businesses being sold as an ongoing concern or whose legal state is being changed need to apply for deregistration within 21 days of the event taking place.
  • Business registered on a compulsory basis will NOT be able to deregister for VAT if their annual sales turnover remains within the VAT threshold unless they meet conditions 1 to 3 above.
  • Business registered on a voluntary basis can deregister after 12 months of being VAT registered. However, if they want to be deregistered before that 12 months period, they need to formally inform SRC and provide justifiable reason(s) as to why they should be deregistered. It is important to note however, that the Revenue Commissioner reserves the right to approve or disapprove any VAT cancellation.
N.B: Registration for VAT starts this month (February 2012). All businesses will receive a letter from SRC with regards to this. However all VAT registration will only take effect as of 1 July 2012. If a business comes to register prior to the VAT implementation date (before July 2012) and is voluntarily registered, it can always inform SRC if it no longer wishes to be VAT registration, at any time before July 1, 2012. Businesses which come to register on a compulsory basis prior to July 2012 but realize by June that their annual sales turnover for 2012 will not exceed the VAT threshold, can notify SRC in writing with justifiable reasons as to why they should not be registered for VAT.

Can the Revenue Commission deregister a business without the business having made the request?
Yes, but only if the annual sales turnover of that business does not exceed the VAT threshold. The Revenue Commissioner can deregister a business if it fails to comply with the VAT obligations and if the business failed to notify Seychelles Revenue Commission that its annual sales turnover no longer exceeds the threshold.

What happens if the Revenue Commissioner refuses to deregister a business that has applied for VAT deregistration?
The business can make an objection to the Revenue Commissioner providing justifiable reasons why they believe they should be deregistered. If they do not agree to the objection decision taken by the Revenue Commissioner, the business can make an appeal to the Revenue Tribunal. If the business does not agree to the decision taken by the Revenue Tribunal, the business can make an appeal to the Supreme Court. If the business still does not agree with the decision taken by the Supreme, the business can appeal to the Court of Appeal.

N.B: A business must not cease itself to be deregistered until the Revenue Commissioner has officially deregistered that person.

How do I deregister for VAT?
Businesses have to complete the VAT cessation form which will be available at the Client Advisory Centre at Oceangate House and at any other SRC offices on Mahé, Praslin and La Digue.

What happens after the VAT deregistration has taken effect?
Once deregistered, a business should:
  • No longer hold itself to be a VAT registered business
  • Return the VAT certificate and any other certified copies to SRC
  • Immediately stop charging VAT on its sales to customers
  • Submit a final VAT return (including final adjustments) and pay the VAT payable within 15 days of the date of cancellation.
The business will still remain liable to any acts done or omitted to be done when the business was registered for VAT.

For more information
You can contact Seychelles Revenue Commission on 4293737 or email us at advisory.center@src.gov.sc.
The Value Added Tax Act, 2010 is available here.


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