Value Added Tax (Vat): The transitional period |03 November 2012

To replace the GST there will be the Value Added Tax (Vat) which will come into operation on January 1, 2013. Under Vat all Vat-registered businesses will have to charge Vat on the sale of their goods and services.

There is a concern that tax will be paid twice on the same goods in view that GST would have been paid on the goods imported/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 Seychelles Revenue Commission (SRC) would like to reassure businesses that this will not be the case as the Vat Act, 2010 has allowed for transitional provisions to deal with this particular issue. The transitional provision is there to ensure that the same good is not liable to both GST and Vat.

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;
• There are satisfactory documents to prove that GST has been paid on those goods.
If these conditions have been met, the GST paid on these goods will be offset against the Vat collected. When GST has not been fully offset against output tax, the credit can be carried forward on the next Vat returns. Subject to certain conditions the input tax credit can be refunded to the taxpayer by SRC.  

Important Note
Businesses will need to ensure that:

• The inventory of goods in stock by the end of December 2012 is exhaustive, accurate and supported by proper documents and evidences.
• Relevant records/documents and Bills of Entry correlating the payment of GST are properly kept
• While these documents do not need to be attached to the Vat return they will be made available upon request from SRC.
• The GST (credit) is fully reported on the first Vat return due on February 21, 2013.
N.B: Businesses will not be able to claim input tax credits on goods in stock for 2010 and 2011 as this GST is already a cost of sales for the determination of the Business Tax due from these fiscal years.

For more information
You can contact Seychelles Revenue Commission on hotline number 4293745 or email us at vat@src.gov.sc. The Value Added Tax Act, 2010 is available on the Seychelles Revenue Commission website (www.src.gov.sc).

Submitted by the Seychelles Revenue Commission