Value Added Tax (Vat)-How to compute input tax and output tax


25-March-2013

What is input tax?
Input tax is the Vat that a business pays for the goods when imported or for the goods and services locally purchased from another Vat-registered business. This Vat is claimable as input tax credit by any Vat-registered business.

When can businesses claim input tax?
Businesses can claim input tax if they meet these requirements:

• The input tax is claimable as a credit when paid
• When applied to taxable goods or services
• When the expenses are made for the purpose of the business and for the making of taxable supplies. Expenses incurred for private or personal use will not qualify as an input tax
• When the expenses are not specifically enumerated as non eligible (accommodation, entertainment, cars under certain conditions (unless the person business activities involves the dealing in or hiring of passenger vehicle).

What evidences are required for claiming input tax?
Businesses must keep the following valid evidences:

• Proper Vat Invoices/ credit note/ debit note issued by a Vat-registered business
• A Bill of Entry or other document prescribed under the Customs legislation for the import.

How to compute your input tax?
In February 2013 a business made the following operations:

1. It imported goods worth SR15,000 (CIF + customs duties) Vat at 15% (SR15,000 x 15% = SR2, 250) has been paid at Customs.
2. It purchased insurance amounting to SR7000/- from an insurance company for the company’s motor vehicle (SR7000×100÷115=6086.96×15%=SR913.04).
3. It hired a building contractor (Vat-registered) for renovating the shop for SR25,000. (SR25,000×100÷115=SR21,739.13×15%=SR3260.87)
The Vat return due on March 21 will look like this:

What is output tax?
The output tax is the Vat charged (and collected) by a Vat-registered business to its customers on the sale of taxable supplies.

When is the Vat due? 
General rule is “cash basis”: Vat is due when received, in other words the output tax must be displayed on the Vat return when the payment is received. Example: Vat received in February 2013 must be declared on the Vat return due on the March 21, 2013.
Exception: “Accrual basis”: upon agreement from the Commissioner certain businesses can report the Vat when invoiced. This Vat while not yet collected must be displayed on the Vat return corresponding to the Vat period. Example: invoice issued in February and payment received in April. The Vat is due on the Vat return due on March 21. 

How to compute your output tax
In February 2013, the business received payments for SR140,000 corresponding to its sales. The output tax is calculated as follows:  (SR140,000×100÷115=SR121 739.13×15%=SR18,260.87).
In February a transport service delivery fee (SR8000) was invoiced but the payment has not been received. This corresponding Vat (SR8000×100÷115=SR6956.5×15%=SR1043.48) will be reported when the payment is received. If it is received before March 21 it should be reported in the same month.
The Vat return due on March 21 will look like this:


Vat liability or credit
Where the output tax exceeds the input tax for the tax period the difference (the tax liability or Vat due) must be paid to the Seychelles Revenue Commission.
If the input tax exceeds the output tax, a Vat credit is declared.
In most of the cases, this credit must be carried forward three consecutive months in the next Vat returns before being refunded. Exporters can claim a refund on a monthly basis.

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

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