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Frequently Asked Questions - The Presumptive Tax

What is a Presumptive Tax?
A Presumptive tax is a simplified tax regime aimed at reducing the compliance burden for small businesses. It was introduced in January 2013 under the Tenth Schedule of the Business Tax Act, 2009 as amended.

What is a small business?
For tax purposes, a small business in Seychelles is one that makes an annual turnover of less than SR1 million.

Are all small businesses liable to the presumptive tax?
All small businesses (including sole traders, partnerships and companies), other than those registered for VAT on a voluntary basis, are liable to the presumptive tax unless they received permission to opt out of the presumptive tax regime.

What is the applicable rate of the presumptive tax?
The presumptive tax is applicable at a flat rate of 1.5%.

How does the Presumptive Tax system work?
The presumptive tax is applied on the annual business turnover of the current year (i.e. the year in which the revenue is earned). For example, the Presumptive Tax due (payable) in 2014 depends on the annual business turnover for 2013.

Example
In 2013 a business makes an annual turnover of SR 550 000.
  • The presumptive tax payable is SR 8, 250 (550 000 x 1.5% = 8,250).
  • The payment of the SR8, 250 is due in 2014 by 31st March.
How to determine the annual turnover of the business?
Annual business turnover means the total revenues earned by a business on a yearly basis from its operations, whether from the sales of goods or services. Turnover is another term used for what is commonly known as gross income or total income received.

To calculate your business annual turnover, add up all your income (revenue generated from selling your product) for the year.

What are the obligations of a small business under the Presumptive Tax regime?
Small businesses using the presumptive tax regime are required to:
  1. Lodge a simplified one-page return to SRC by the due date.
  2. Make one payment of the tax by the due date.
  3. Report their income and expenses on cash basis.
  4. Keep their records of income and expenditure for a minimum of 7 years.
When is the Presumptive tax payable and the Presumptive Tax Return due?
The presumptive tax is payable by 31st March in the following year in which the revenue was generated. The presumptive Tax Return is due by the same date.

The first presumptive tax is payable on or before the 31st March 2014. This is also the date on which the presumptive tax return has to be filed.

Are small businesses under presumptive tax liable to any other taxes?
Whilst the presumptive tax removes all obligations related to the normal business tax and VAT on small businesses, the employers’ obligations under the Income and Non-Monetary Benefits Tax, 2010 still remain. This means that the small business employing staff should withhold the income tax from the employees’ salary and remit it to SRC on a monthly basis as well as pay non-monetary benefits tax for their employees if such benefits are provided to them.

Are small businesses under the presumptive tax regime required to use the DAS book?
Prior to 1 January 2013 (before the introduction of the Presumptive Tax) most of the small businesses (other than the ones listed below) were liable to the Pay As You Go (PAYG) - Deduction At Source system, where they had to use the DAS book each time they received a payment for their service. The recipient of these services had to deduct 5% from the payment of the service.

Under the presumptive tax regime this is no longer necessary, except for the following categories of small businesses:
  1. Building contractor.
  2. Maintenance Contractors.
  3. Mechanics (motor vehicle, marine or refrigeration).
  4. Hirers or operators of plant and equipment including sea vessels, Motor vehicle for transportation of goods or for towing.
  5. Hirers of Public Omnibus.


Know more about
Exchange Of Information
Self-Assessment for Business Tax
The Self-Assessment System – Assessing your own tax liabilities
Value Added Tax
The Tax and Customs Agent Board (TACAB)
Lodgment of Partnership Business Tax Return
Read More>>
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