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Value Added Tax - How and When a Business can Claim for a Refund?

The Value Added Tax (VAT) Act 2010 has introduced a deduction mechanism to ensure that VAT is neutral for VAT registered businesses. This deduction mechanism—which is the main feature of VAT—allows VAT registered businesses to offset the VAT paid on imported goods and/or local supplies (input tax) against the VAT collected from their customers (output tax) to determine their tax liability. When the input tax exceeds the output tax for a taxable period, a VAT credit occurs. This credit is normally carried forward to the next period but subject to certain conditions, it can also be refunded.

When can businesses get a refund?
For all businesses (except exporters, suppliers of zero-rated goods or services and for businesses in a construction phase) VAT credits have to be carried forward for a period of 3 consecutive months before being refunded.

Exporters, suppliers of zero-rated goods or services and businesses during the construction phase can claim a VAT refund on a monthly basis.

Businesses considered as exporters, with a minimum of 85 percent of their total turnover attributed to export sales.

Businesses considered as suppliers of zero-rated goods/services (other than exporters) with a minimum of 85 percent attributed to zero-rated supplies.

Businesses making important financial investments during the commencement phase while their commercial activity has not yet started. This is typically the case of hotels during their construction phase.

What are the conditions for claiming a VAT refund?
  • The credit reported on a (monthly or quarterly) VAT return must be at least equal to SR 10 000 or more; Credits lower than SR 10 000 are not refundable;
  • Credits must be supported by sufficient evidence including proper VAT invoices, bills of entry and other records;
  • These documents must be presented upon request made by SRC.
How does a business claim for a VAT refund?
To claim for a refund the taxpayer/business must fill in the designated box at the bottom of the VAT return and must indicate the amount to be refunded. This amount cannot exceed the credit calculated (line 11B of the VAT return).
VAT refunds will be processed within a reasonable period of 45 days from the date the claim for a refund is made.

What are the special circumstances that the deadline can be extended?
However, the given deadline may be extended in special circumstances, where:
  • a filed VAT return is incomplete;
  • the taxpayer has failed to respond within a reasonable period for verification enquiries; or
  • SRC suspects, on reasonable grounds that the VAT return is inaccurate and/or the taxpayer is engaged in fraudulent activity, in which case the taxpayer will be subjected to an audit and/or investigation.
Excess VAT credits should be primarily offset against VAT and other tax arrears, except where an outstanding amount is subject to a genuine dispute. This should be supported either by the taxpayer’s accounting documents and the debt management system.

VAT refunds can be made:
  • By cheque or;
  • Bank to bank transfer
For more information
You can contact Seychelles Revenue Commission on 4293745 or email us at vat@src.gov.sc. The Value Added Tax Act, 2010 is available here.

Website Published Date: 10th April 2013

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