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Taxable and Non-Taxable persons in the VAT system

There are traditionally two types of actors in a VAT chain: the taxable persons and ”others”.

The taxable persons generally act as VAT collectors on the behalf of the tax authority. They charge VAT on their sales (output tax) and get a credit for the tax incurred in their businesses expenses (input tax). It is only the net between the output tax and the input tax that the taxable persons have to remit to the tax authority. In other words this net corresponds to their value added.

The“others”, businesses or households will be treated as final consumers. They ultimately bear the tax burden.

Below is a typical example of a VAT chain:


What is a taxable person?
A taxable person under the VAT Act 2010 means a person who is registered for VAT.

Mandatory registration — A person is registered for VAT if he/she conducts taxable operations as part of his/her business and if his/her annual sales turnover reaches, or is expected to reach, the threshold of SR5 Millions.

Voluntary registration — In some cases a person whose sales turnover is below the VAT threshold may decide to register on a voluntary basis if he/she thinks that he/she will draw some benefits from being registered; for example, the right to claim a VAT credit on business expenses is one of them.

What is the role of a taxable person?
As mentioned above, VAT registered persons collect the VAT from their customers when supplying taxable goods or services, and are responsible to remit it to the tax authority — the Seychelles Revenue Commission.

To do so, they have to report for each taxable period — let us say every month — the amount of VAT collected (output tax), and they will off-set it against the VAT paid on their business expenses (input tax), so that only the excess of output tax will be remitted to the SRC. If the input tax exceeds the output tax they will carry this credit forward on their next return or claim a VAT refund.

For example, if SR100 is incurred on input tax and SR200 is collected on output tax, then the SR100 input tax is offset against the SR200 output tax. The difference between the two (SR200 – 100 = SR100) is to be remitted to the Seychelles Revenue Commission.

To summarize

Registered taxpayer

Not registered taxpayer

Receive a VAT certificate from the SRC and will have to display it

Will not receive any VAT certificate

Charge VAT on its sales (if supplies are taxable goods and services)

Does not charge VAT on its sales(even if supplies are of taxable goods and services)

Will maintain proper VAT records including VAT invoices

Will have to comply with accounting rules but will not issue VAT invoices

Can deduct input tax from its output tax (unless not deductible)

Cannot deduct any input tax

Gets a VAT credit and refund

Cannot get any credit or refund



Is a person, whose business is making zero-rated supplies, taxable or non-taxable?
It can happen that a VAT registered taxpayer’s main business consists of making zero-rated supplies, and a typical example is an exporter. Exports are zero-rated, but not exempted. While they will never collect VAT, they will get a credit for the input tax attributable to their exports.

A person whose main business is to make non-taxable supplies should not be registered, because his/her activity is out of the scope of the VAT.

For more information
You can contact Seychelles Revenue Commission on 4293737 or email us at advisory.center@src.gov.sc.


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