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Value Added Tax: Have You Registered Your Business yet?

Value Added Tax (VAT) will be implemented as of 1st January 2013, replacing the Goods and Services Tax (GST) which has been in place since 2001. The VAT registration process started earlier this year and all businesses registered with SRC were sent a VAT Registration Form for them to complete in order to confirm their VAT registration status.

SRC has noticed that a number of businesses have not yet returned their forms possibly because VAT was postponed. However, now that it has been confirmed that VAT will be implemented on 1 January 2013, SRC is calling on all the businesses which have not registered to do so as soon as possible so as to avoid any last minute confusion.

To recall, there are two types of VAT registration - compulsory and voluntary.

If a business makes an annual sales turnover, which is equal to or exceeds the VAT threshold of SR 5 million it is mandatory for the business to register for VAT (Compulsory Registration).

If a business makes an annual sales turnover, which is less than the VAT threshold of SR 5 million, the business is not required to register for VAT. However, it can choose to register on a voluntary basis (Voluntary Registration) provided the business satisfies the following basic requirements:
  • has kept and will keep proper records;
  • is compliant with all other revenue laws; and
  • has a fixed place of doing business.

How do businesses confirm their VAT registration status?
As a business, you will confirm your VAT registration status by completing the VAT registration form. On the form, you should tick YES or NO when asked if:
  • you make taxable supplies;
  • your annual sales turnover for 2011 has exceeded the VAT threshold(5 Million or more);
  • your annual sales turnover for 2012 is expected to exceed the VAT threshold; or
  • you wish to be registered on a voluntary basis - if their annual sales turnover has not exceeded and is not expected to exceed the VAT threshold.
You will then have to sign the VAT registration form and send it to SRC.

It is important to note that businesses falling within the VAT threshold will have to register by 31 December 2012, as their VAT obligations will start as of 1 January 2013 regardless. SRC is encouraging those businesses to register early so that they can be identified and targeted for specific VAT workshops that will be organized during the next few months of 2012.

What is the requirement for VAT registration?
Regardless of the VAT threshold only a business making taxable supplies will be able to register for VAT. A business makes taxable supplies when it sells goods or provides service which is taxable under the VAT Act 2010. To determine if your supply is taxable, you can refer to the exemption list in Schedule 1 (of the VAT Act 2010 or contact SRC).

So if your business makes purely exempt supplies (your goods or services are specifically listed as exempted under the Vat Act) you will not be able to register for VAT. E.g. meat and vegetables is VAT exempted. So a business selling only meat and vegetables is not required to register for VAT even if the business falls within the VAT threshold as meat and vegetables are not taxable supply.

How does a business know when it is registered?
Once you have submitted your VAT Registration Form to SRC, we will verify that you meet the requirements for VAT registration. If you successfully meet all the requirements, you will be officially registered for VAT and will be sent a letter of registration from SRC. If you do not meet the requirements for VAT registration, we will send you a notification letter to confirm that you are not registered for VAT.

Later this year, after having registered you will receive a VAT Registration Certificate from SRC, which you will have to display in a prominent area in your place of doing business. If you have multiple places of doing business you will have to request for certified copies with SRC in order for you to display your certificates in all of your other locations. You will not be able to display a photo copy of your VAT certificate.

For more information
You can contact Seychelles Revenue Commission on 4293745 or email us at for more information about VAT registration.
The Value Added Tax Act, 2010 is available here.

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