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Activities which were not subjected to GST but is taxable under VAT Act 2010

In July 2012, GST will be replaced by the Value Added Tax. Goods and Services Tax (GST) is currently levied on imported goods, specified manufacturers of goods produced in Seychelles and on specified service providers.

Value Added Tax is a broad- based consumption tax applying to all commercial activities involving the production and sale of goods and supply of services. Value added Tax is levied on all goods and services unless they are exempted in the VAT Act 2010 or business which falls below the threshold of 5 million can choose not to voluntarily register for VAT so are outside the VAT chain.

What are the differences between GST and VAT?
GST works like a turnover tax, there is no deduction mechanisms preventing its cascading effect (tax on tax). VAT is only charged on the value added to goods and services. The VAT paid (input tax) by a taxable persons on his purchases (and/or imports) is offset against the VAT collected (output tax) from his customers on his sales. VAT in principle is neutral and not an expense for businesses. It is ultimately borne by the final consumers.

What are taxable supplies?
VAT is charged on any supply of goods or services made in Seychelles by a registered business in the course or furtherance of any business unless they are specifically exempted under the VAT Act 2010.

A transaction is therefore within the scope of VAT if the following conditions are met when:
  • It is made by a taxable person (if he/she is — or is required to be registered as a VAT taxpayer).
  • It is made for payment in the course or furtherance of any business activities by a registered business.
  • It takes place in Seychelles or a person is physical present in Seychelles when the business transaction occurs.
What are taxable businesses?
Under the VAT Act 2010, business means any independent and continuing activity which is mainly concerned with making supplies to another business for a consideration. The activity must have a degree of frequency and scale. It must also be continued over a period of time. Isolated transactions are not normally business for VAT purposes. Private or personal activities are also non-business activities, example an individual selling his /her car or house.

However all businesses are not automatically taxable businesses, the VAT Act 2010 has introduced a registration threshold of 5 million, while businesses whose turnover is below the threshold can voluntarily register if they feel comfortable to be able to fulfill all the obligations of a VAT registered business.

What activities that were not subject to GST and that are subject to VAT?
The list of activities that was previously not subject to GST but are now taxable supplies under VAT Act 2010.
  • Renting or leasing of office , shop accommodation, factory , plant, vessel, and aircraft
  • Building Contractor and all other form of contracting activities, such as painting, electrical wiring, Air-conditioning work, etc
  • Garages, such as mechanical or body repair work on any vehicle
  • Ship repair facilities
  • Sporting and other Club facilities which are Not for the purpose of charitable or religious functions
  • Quarrying and other type of mining related activities
  • Long-term lease of land
  • Sale or long term lease of immovable property constructed for purposes of re-sale and Integrated Resorts Schemes
  • Retail and wholesale business
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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