Taxable and non-taxable persons in the Vat system


26-August-2011

The taxable persons generally act as Vat collectors on behalf of the tax authority.  They charge Vat on their sales (output tax) and get a credit for the tax incurred in their business 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:

              IMPORTER      WHOLESALER      RETAILOR       CONSUMER

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 R5 million.

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 (SRC).

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 R100 is incurred on input tax and R200 is collected on output tax, then the R100 input tax is offset against the R200 output tax. The difference between the two (R200 – 100 = R100) is to be remitted to the SRC.

To summarise

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 This email address is being protected from spambots. You need JavaScript enabled to view it. .

Submitted by the Seychelles Revenue Commission

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