Preliminary IMF report concludes that the VAT tax regime works well in Seychelles

The preliminary report was presented to the Minister of Finance last Wednesday (Gérard Larose)

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(Seychelles News Agency) – A preliminary report by an IMF delegation on a review of Seychelles Value added tax (VAT) concluded that the VAT has worked as well as it could have, but is in danger of being eroded if the widening of exemptions beyond strict necessity continues.

According to a press release from the Ministry of Finance, the IMF delegation visited Seychelles from September 6 to 15 to carry out a comprehensive review of the current VAT regime at the request of the government.

The objective of the review was to determine whether the VAT regime is the most efficient tax regime in place for a small economy such as Seychelles, an archipelago in the western Indian Ocean.

The review was announced by Finance Minister Naadir Hassan last year in his 2022 budget speech.

“With the help of the IMF, we will carry out a review of the implementation of the VAT tax regime, in order to minimize abuses in the collection of this tax,” Hassan said.

The assessment considered whether to have a VAT regime in a country with a small population and small economy like Seychelles and whether a Goods and Services Tax (GST) is better suited.

The IMF report said a return to the GST was unlikely to resolve the current dissatisfaction with the VAT and that the Ministry of Finance should work on a strategy where the shortcomings of the current VAT regime could be reformed.

The Value added tax was introduced in Seychelles in July 2012 and replaced the GST. VAT is a broad base tax of 15% on most goods and services imported, sold and consumed in Seychelles. It is a consumption tax that is ultimately paid by final consumers.

During the presentation of the preliminary report last Wednesday, Hassan expressed his gratitude to the IMF delegation for “the excellent work done in such a short time, and that more follow-up work will have to be undertaken, once the final report is presented. “.

The final report is expected in less than two months.

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