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VAT on Importation - The Deferred Payment Facility

Value Added Tax (VAT) will come into effect as of 1 July 2012 replacing the GST. One of the benefits of the VAT is the deferred payment facility which VAT registered businesses will be able to enjoy on the importation of large capital items.

How does the deferred payment facility works?
The deferred payment facility will allow a VAT registered business to defer the payment of VAT on large capital items imported. This means that the VAT payable on these capital goods will not be paid at the point of entry (at Customs) but deferred until the submission of the next VAT return.

The VAT payable is reported as an output tax and an input tax on the same VAT return. Input tax is immediately offset against output tax, giving a neutral effect. This creates a cash flow benefit for businesses, and for SRC it removes the administrative burden associated with of having to refund the VAT paid in the following month.

What are the conditions that have to be met for a business to qualifying for the deferred payment facility?
In order to qualify for the deferred payment facility, the following conditions have to be met:

(a) the business must be VAT-registered (compulsorily or voluntarily),

(b) the business must be active;

(c) the business must file VAT returns on a monthly basis;

(d) the goods must be a capital item of a value not less than SR 100 000;

(e) the business must have a good compliance record (exempt of any violation or offences of tax and customs laws and/or regulations for the past 3 years).

(f) the business must receive a formal authorization for the facility from the Revenue Commissioner..

In addition, a bank guarantee may be required before the deferred payment is allowed, as deemed necessary by SRC. Taxpayers will be notified in writing when a bank guarantee is required.

Application for the deferred payment facility
A VAT-registered taxpayer who wishes to obtain a deferred payment authorization must apply to the Revenue Commissioner for approval. The request for deferred payment must be submitted for each capital item at least 2 weeks before the item arrives in Seychelles.

Once the authorization is granted the taxpayer must present the following documents to Customs:
  • Bill of entry
  • Copies of document showing the date/quantity/description of goods received
  • Copies of import permits, transshipment permits etc
  • Copies of shipping documents such as air waybill or bill of lading
  • Copies of commercial invoices accompanying the goods, if available
  • Copies of insurance documents accompanying the goods, if available
  • Copies of correspondences from your overseas principals.
The identity of the overseas supplier as well as the value and description of the goods must be readily identifiable/verifiable.

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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