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Simplified Tax for Small Businesses - The Presumptive Tax

Improving voluntary compliance through simplification of the tax regime is a major objective of the Seychelles Revenue Commission. We want to make it easier and cheaper for businesses to comply with their obligations as taxpayers with a system that reduces compliance burden in terms of time, money and effort required. With this in mind, effective January 1 2013, a Presumptive Tax Regime was introduced for small businesses with an annual turnover below SR 1 million. This includes sole traders, partnerships and companies as long as they were not registered for VAT.

While the presumptive tax removes all obligations related to Business Tax and VAT, those related to employment (employers’ obligations under the Income and Non-Monetary Benefits Tax) still remain.

What are the benefits of the Presumptive Tax?
The benefits of presumptive tax is that it reduces the taxpayer compliance burden.
  1. Easy to fill return - The presumptive tax return is a simplified one-page return compared to the four- page Business Tax Return that other businesses have to submit along with their Profit & Loss Account and certified accounts if a company;
  2. Only one return required - Small businesses are only required to file one single return per year by the 31st March;
  3. Only one payment required - Small businesses are only required to make one payment per year, when they file their presumptive tax return.
  4. Cheaper - No certification of account is required
  5. Simpler - the record keeping requirements are less burdensome for small businesses. Presumptive tax regime is based on cash accounting rules.
Is it compulsory for all small businesses to pay the Presumptive Tax?
The presumptive tax is applicable for all businesses regardless of their activity and their status; provided their annual turnover is not above SR 1 million and that they are not registered for VAT.

However, upon prior authorisation from the Revenue Commissioner, small businesses can opt to remain in the normal business tax regime where they will:
  • be liable to the normal rate of tax of 15% on their taxable income of between Sr150,001 to SR 1 million;
  • need to pay PAYG (Instalment) on a monthly basis based on forecasted revenue each year; or
  • need to pay PAYG (DAS) as and when payments are being received for services rendered;
  • lodge a 5-page self assessed business tax return by 31st March of each year; and
  • need to attach any amount of business tax due together with the business tax return when being lodged.
According to the Revenue Administration Act, Section 32, all businesses must retain their accounting documents and records for a period of at least seven years. This also applies to businesses under the Presumptive Tax Regime, meaning that even if they are not required to submit any additional documents with their returns, it is a requirement under the law that such records are retained in case they are audited.

What are the procedures for opting out of the Presumptive Tax Regime?
Businesses that want to be in the normal Business Tax for the year 2014 should write a letter to the Revenue Commissioner requesting to opt out of the Presumptive Tax regime, and should provide valid reasons for wanting to opt out. It is important to note that the Revenue Commissioner reserves the right to deny any request depending on the reasons for wanting to opt out of the regime.

SRC has extended its deadline to request for opting out of Presumptive Tax for the year 2013 to the 15th April 2014. As soon as approval is given by the Revenue Commissioner, businesses will have until the 30th April 2014 to submit their normal Business Tax Return as well as make their payment due for the year 2013.

Businesses that would like to opt out of Presumptive Tax for the year 2014 have until the 30th April 2014 to do so.

For more information
Please do not hesitate to contact our Advisory Centre on 4293741/4293742, Manager Provision of Advice on 4294937, Manager Registry on 4293726, Manager Returns and Payment Processing on 4294972 or 4293724 or email us at advisory.center@src.gov.sc.


Website Published Date: 14th April 2014

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