Deduction of GST on Vat


19-October-2012

The last return will be due by January 21, 2013. If you have issued an invoice in November 2012 and the payment will be made either in February 2013 or March 2013 you will still have to remit the GST liable to the Seychelles Revenue Commission (SRC) the following month.

Under the Vat Act 2012 all Vat registered businesses will have to charge Vat on the sale of their goods and the services they provide. There is a concern that come January 2013, tax will be paid twice on the same goods in view that GST would have been paid on the goods purchased prior to December 31, 2012 and Vat will apply on the sale of the same goods if still in stock when Vat is introduced.

The SRC would like to reassure businesses that this will not be the case as the Vat Act, 2010 has made provisions for the deduction of GST already paid for businesses not to incur Vat on the same goods. The transitional rule is there to ensure that the same good is not liable to both GST and Vat which will increase the price of the good.

How will the transitional rules apply?
All Vat-registered businesses will be able to claim an input tax credit for the GST paid on the goods still in stock after December 31, 2012 when they submit their first Vat return which will be due by February 21, 2013. However, Vat-registered businesses can only claim an input tax credit if the following conditions are met:
• The goods are used for business purposes;
• The goods are used for making taxable supplies;
• The same goods are not exempted under the Vat Act 2010;
• There are satisfactory documents to prove that GST has been paid on those imported goods.
If the Revenue Commissioner is satisfied that those conditions have been met, the GST paid on these goods will be offset against the Vat collected. When GST is not been fully offset against output tax, the credit can be carried forward for at least a period of three months after which SRC can refund the taxpayer the amount due.  

What must Vat-registered businesses do that want to claim an input tax credit for the GST already paid?
Businesses will need to ensure that:
• They carry out an inventory of goods in stock by the end of December 2012 so as to claim input tax credits in the following month which will be February 21, 2013.
• They must keep relevant records / documents which correlate with the stock on the Bills of Entry.
• All the relevant records / documents are made available if and when requested by SRC.
N.B: Businesses will not be able to claim input tax credits on goods in stock for 2011 as they have already claimed the credits in their tax returns for prior year.

For more information
You can contact Seychelles Revenue Commission on hotline number 4293745 or email us at This email address is being protected from spambots. You need JavaScript enabled to view it. . The Value Added Tax Act, 2010 is available on the Seychelles Revenue Commission website (www.src.gov.sc).

Contributed by the Seychelles Revenue Commission

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