New laws seek to strengthen tax collection |19 December 2013

The Tourism Marketing Tax Bill and the Corporate Social Responsibility Tax Bill were presented by the Finance, Trade and Investment Minister Pierre Laporte for the Assembly’s consideration and approval on Tuesday.

This followed the Assembly’s approval of the budget for 2014.

The two Bills are among 16 expected to be tabled, debated and approved by the Assembly which has been convening every day until tomorrow for this purpose.

Presenting the Tourism Marketing Tax Bill 2013, Minister Laporte explained that the Tourism Marketing Tax and the Corporate Responsibility Tax were introduced a year ago during the 2013 budget address and the two taxes were functioning under the Business Tax at that time.  With regard to the two taxes he said the business community raised various concerns during the course of the year and these included the fact that it was not clear to them how the taxes were being applied under the Business Tax Act.

Therefore to bring more clarity the government, through a Bill, proposed that the taxes function under a separate Act which as a result it will from now on make them no longer applicable under the Business Tax Act.

But Minister Laporte stressed that nothing else changes and the thresholds with regard to eligibility for the tourism marketing tax remains at above R1 million turnover and at a rate of 0.5 %.

Members who intervened welcomed the proposed Bill. Majority party member Maria Payette-Marie said removing the functions of the two taxes from under the Business Tax Act will no doubt clear all confusion and make things more understandable for the business community.

“From now on businesses who are eligible to pay this tax will better understand all the procedures for payment of this tax,” said Ms Payette-Marie.

She noted the government has indicated that from 2009 to 2013 there has been a substantial decrease in terms of taxes that businesses pay in Seychelles and therefore the new pieces of legislation will hopefully close loopholes and address these shortcomings.

For her part the leader of government business Marie-Antoinette Rose pointed out that the new Tourism Marketing Tax legislation will ensure that all players in the tourism industry take their responsibility seriously and contribute their share in helping to continue marketing Seychelles as the industry continues to boom.
 
She noted that for many years the government has been the biggest contributor to pump money in tourism marketing from which large hotel establishments have benefitted the most while smaller establishments struggle to create a name for themselves even though often they are the ones who offer better service and the Creole warmth that visitors are looking for.

She said under the new legislation there is a need for the tourism marketing budget to be reevaluated to ensure small establishments and the country in general benefit from the boom in the tourism industry.

The leader of the opposition in the Assembly, David Pierre, echoed the same view. “If tourism is the pillar of the country’s economy, it is important that the government always finds the money to market Seychelles so it remains the destination that people around the world know and want to visit.  Therefore it is important that the money is used efficiently and small hotel establishments should get all the support possible as they are very much appreciated by visitors,” said Mr Pierre.

As for the Corporate Social Responsibility Tax Bill, Minister Laporte said it is based on the same principle as the Tourism Marketing Tax Bill with the only difference being in regard to exemption as it will cover many more activities for instance those which fall under the offshore business sector.

It also aims to remove ambiguity in its applications and clearly defines its threshold level of payment.

Minister Laporte said work will be ongoing throughout next year to ensure a review of the basis of the tax.
 
Members who intervened agreed that it was high time businesses honour their responsibilities and give back something to the communities they operate in.

Elected member for Bel Ombre Galen Bresson gave several examples of projects in the district he served where businesses could have helped. He pointed out that the tax is really justifiable.

For her part the leader of government business stressed that there is a need for government to set up dedicated funds in regard to the CSR so that districts where there are no large businesses, as well as sports champions could also tap into it.

She pointed out that districts with no such businesses should not be disadvantaged and left out.

On Tuesday the Assembly also debated and approved two other Bills – the Financial Services Authority Bill which seeks to establish the Financial Services Authority and to repeal and replace the law relating to the Seychelles International Business Authority (Siba) as the financial services regulator, and the Legal Practitioners Amendment Bill which seeks to amend several sections of the Legal Practitioners Act 1990.

The Assembly continued its debates yesterday during which five other Bills were tabled. It continues its session today.