Registration for Value Added Tax |07 October 2011

As a general principle, persons engaged in a business are registered by the Seychelles Revenue Commission (SRC), meaning that they are allocated with a Taxpayer Identification Number (TIN) by SRC. While, the TIN provided by SRC is valid for all tax purposes including Vat (Value Added Tax) itself, all taxpayers are not automatically Vat registered taxpayers.
 
The Vat Act, 2010 introduces specific conditions to be a Vat registered taxpayer. A business becomes liable for registration when the business is making taxable supplies (standard and zero rated supplies) and the sales turnover exceeds the Vat threshold.

A Vat threshold relates to the minimum turnover that has to be performed by the business during a certain period of time. Annual turnover means the total receipts received for consideration of sales of goods and/or services in the course of the business during the fiscal year (or during the last 12 months if different). When considering the threshold the sale of capital assets and the sale of a whole or part of a person’s business are not included as the business turnover.

Vat threshold is mainly designed to relieve small business from the burdens of complying with Vat administrative requirements. The Vat threshold has been set at R5 million. As such:

• Businesses whose annual turnover is above or equal the Vat threshold must register for Vat (compulsory registration).

• Businesses whose annual turnover is below the Vat threshold may voluntarily register for Vat (voluntary registration).

Voluntary registration will be upon application and approved by the Revenue Commissioner, provided that the business meets all the criteria required to be voluntarily registered for Vat, which includes the taxpayer’s good compliance history and the keeping of proper records.
 
It is important to note that a voluntary registered business has the same obligation under the Vat Act, 2010 as a compulsory registered business.

For those businesses which do not have a place of business in Seychelles but must or would like to register for Vat will have to appoint a Vat Agent to register on their behalf.

What are the benefits for a business to voluntary register for Vat?

Even those that do not have a legal requirement to register for Vat because their turnover does not meet the threshold, voluntary registration may help improve their business’ image with clients. Most importantly, being Vat registered, will enable them to charge Vat on supplies and offset input tax against the Vat collected. There are thus potential cash flow advantages of being able to charge Vat on sales and claim back Vat on purchases.

What are the different situations that have to be considered in respect with Vat registration?

1. Initial identification of Vat taxpayers. Before Vat is introduced for the first time in July 2012, an initial step has to be carried out by SRC to identify:  a) who will be mandatorily Vat registered, and b) who will be voluntarily registered.

To do so, in January 2012, SRC will send out a form to existing businesses (taxpayers with a TIN) in which they will be asked to confirm whether their 2011 turnover is estimated to be above or below the Vat threshold of R5 million. Taxpayers, whose turnover is below the Vat threshold, will be asked whether they wish to voluntarily register for Vat.

2. Identification of new Vat taxpayers. Once the Vat is introduced, only new taxpayers will be asked— when applying for a TIN—whether they anticipate to be Vat registered or not. To do so, they must have reasonable grounds that their turnover will sustainably exceed the threshold and that they will be able to comply with the Vat requirements.

Will a business be able to de-register once it has registered for Vat?

A Vat registered taxpayer may decide to de-register (and may be allowed to) when if it ceases to make taxable supplies or its turnover has fallen and remained under the threshold for a consecutive period of 12 months. The Revenue Commissioner may also cancel the registration of a Vat registered business if it does not keep proper records; if it does not furnish regular and reliable Vat returns to SRC; or if it does not comply with its obligations under the other revenue laws.

For more information

You can contact Seychelles Revenue Commission on 4293737 or email us at advisory.center@src.gov.sc for more information abount Vat. All our weekly articles about Vat can be found on our website (www.src.gov.sc).

Submitted by the Seychelles Revenue Commission