Vat-taxable supplies not allowed as input tax credit


28-May-2012

A taxable supply is a supply of taxable goods or services (other than exempt), made for payment by a taxable person for business purposes in Seychelles.

What is an input tax credit?
When a Vat-registered business purchases goods or services, the Vat incurred on imports and the purchase of taxable supplies is called input tax. A Vat-registered business can offset this input tax against the output tax (Vat collected on its sale). The input tax allowed as credit is the tax paid on imports and purchases and attributable to taxable supplies.

When will taxable supplies not be allowed as input tax credit?
There are a number of specific categories of expenditure upon which the Vat incurred by a taxable person meets the definitions and requirements of input tax but MAY NOT be deductible. Vat incurred does not automatically become input tax simply because it has been incurred by a Vat registered taxpayer.

Input tax credit will not be allowed for the following taxable supplies, unless they are used for the making of taxable supplies specific to the activity of the business:
• domestic accommodation;

• pursuit of personal interests e.g. sporting and leisure activities;

• expenditure for the personal benefit of company directors, proprietors etc; and expenditure in connection with non-business activities;

• passenger vehicle, spare parts or repairs and maintenance for such vehicle unless the   person’s business activities involves the dealing in or hiring of passenger vehicles;

• entertainment including food, beverage, amusement or hospitality of any kind that is provided for employers, associates for private and public purposes, membership or free entrance in any club, and

• accommodation for family or associates.
Vat incurred in respect of non-business activities is generally not eligible for deduction as input tax credit.

What evidences must a taxpayer keep if he/she wants to claim input tax credits?
Input tax credits are allowed for a taxable import at the time of importation and for a taxable supply at the time of the supply. However, input tax credit is allowable only in the Vat period that the person holds the required documentation. Therefore, if the person does not have the required documents, an input tax credit will not be allowed for that Vat period regardless of the time of supply.

The required documentations for claiming input tax credit are:
• Vat invoices/credit notes/debit notes issued by a Vat-registered person
• A certified copy of customs import document (i.e. Bills of Entry) showing the amount of Vat paid at importation.

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. . The Value Added Tax Act, 2010 is available on the Seychelles Revenue Commission website (www.src.gov.sc).

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