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VAT: When Seychelles is the Country of Consumption

Value Added tax is a consumption tax which is borne ultimately by the consumer. As a result, VAT is not a charge on businesses. It is levied on the sale of a good or a service which is consumed by an individual.

VAT is borne by the final consumer in a distribution chain. An example of a distribution chain is as follows:
VAT becomes a cost to a business when the business is not registered for VAT, thus is considered as the final consumer. For example, from the above distribution chain if the importer and the wholesaler are VAT registered but the retailer is not, then the retailer (which cannot, directly, charge the VAT to other customers) will bear the tax as a final consumer.

Rules to Ensure that VAT is taxed in the Country of Consumption
In principle, a good is consumed in Seychelles, if the good is delivered or is made available in Seychelles to the consumer. For example: an imported good is taxed at the point of entry because it is supposed to be consumed in Seychelles.

As a general principle, the place of supply of a service is where the supplier has established his/her business, or where the supplier has a permanent address.

However, different rules apply depending on the service being provided to a taxable business (Business to Business – B2B) or to a non-taxable person (Business to Consumer - B2C).

The supply of services between businesses (B2B services) is in principle taxed at the place of establishment of the recipient of the supply.

The supply of services to private individuals (B2C services) is taxed at the supplier's place of establishment.

However there are general exceptions to the second rule. In order to ensure that VAT is remitted to the country of consumption, the place of supply depends on the nature of the service. If a supplier’s business is not in Seychelles, VAT is taxed in Seychelles if:
  • The service consists of works being done on moveable tangible property which are delivered in Seychelles.
  • The service is provided by an intermediary who carries out his/her main transactions in Seychelles.
  • The service is connected to immoveable property in Seychelles.
  • The service is cultural, artistic, sporting, scientific, educational, entertainment and similar events which take place in Seychelles.
  • The service is restaurant and catering, when they are physically carried out in Seychelles.
  • The service is a short term hiring of means of transport when the means are actually put at the disposal of the customer in Seychelles.
  • The service is of a radio, television broadcasting end telecommunication which is received and enjoyed by customers in Seychelles.
  • The service is roaming whereby it is not possible to ascertain who initiated the supply, and where the billing address of the roaming customer residing in Seychelles is known.
It is important to know where goods and services are to be consumed, as this determines whether or not VAT will apply. Although exports are consumed outside of Seychelles, the place of supply is considered to be Seychelles and therefore VAT in Seychelles applies. However, VAT on exports in Seychelles is levied at a zero rate (0%).

For more information
Please 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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