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What is Value Added Tax(VAT)?

Overview
More than 140 countries in the world have already implemented a Value Added Tax “VAT”. Seychelles will introduce its own VAT on 1st July 2012 to replace the current GST, aiming at correcting its cascading effects. The VAT Act was passed in December of last year.

VAT in Seychelles will not differ from other VAT worldwide. Value Added Tax is a broad-based tax of 15% (as officially announced by the Vice President last week) on most goods and services imported, sold and consumed in Seychelles. VAT is a consumption tax which is paid ultimately by final consumers.

VAT is collected at all stages of the supply chain, from imports to retail sales, as long as retailers are VAT registered and provided supplies are not exempted.
  • Regarding imports - Customs will collect VAT (on taxable goods) at the point of entry from the first rupee.
  • Regarding domestic supplies - VAT registered taxpayers (taxable businesses) will be the sole party to be allowed to collect VAT on their sales and to remit it to the Seychelles Revenue Commission. Most of them will be large businesses with a turnover exceeding SR 5 millions (as officially announced by the Vice President), but smaller business may voluntarily register for VAT if they meet certain specific criteria.
Value Added Tax means tax on the margin - Taxable businesses are entitled to deduct the VAT charged on their purchases (“input VAT”) against the VAT collected on their sales (“output VAT”). The right amount of VAT to be remitted to SRC by each taxable business is the net (difference) between input tax and output tax. Excess credits may be refunded to the taxable business.


VAT is neutral and fair
Neutrality - Taxable businesses will not bear the burden of the VAT except where explicitly provided for in the VAT Act 2010. The full right to deduct input tax, except for the final consumers, ensures the neutrality of the tax whatever the nature of product, the structure of the distribution chain and the technical means used for its delivery.

The application of VAT to international trade is based on the destination principle. Exports are free of VAT (with refund of input taxes) and imports are taxed on the same basis and at the same rate as local productions.

Fairness - Taxable businesses in similar situations carrying out similar transactions are subject to similar levels of taxation.


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Self-Assessment for Business Tax
The Self-Assessment System – Assessing your own tax liabilities
Value Added Tax
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