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An IMF delegation preliminary report on a review of the Seychelles Value Added Tax Regime (VAT) concluded that VAT has performed well in the country. However, it warned that there are risks of it being eroded if the broadening of the exemptions beyond the strict necessity continues
An IMF delegation preliminary report on a review of the Seychelles Value Added Tax Regime (VAT) concluded that VAT has performed well in the country. However, it warned that there are risks of it being eroded if the broadening of the exemptions beyond the strict necessity continues.
The IMF delegation was in Seychelles from September 6-15 to conduct a comprehensive review of the current VAT regime at the government’s request.
The review was to find whether the VAT regime is the most efficient tax regime in place for a small economy like Seychelles as a follow up of the announcement by finance minister Naadir Hassan last year in his 2022 budget address. The assessment looked at the suitability of having a VAT regime in a country with a small population. It also tried to see the suitability of the Good and Services Tax (GST) as a better option for a small country like Seychelles. The IMF report ruled that a return to the GST is unlikely to solve the current discontent with VAT. It also suggested that the finance ministry would need to work on a strategy where the shortfalls in the current VAT regime could be reformed.
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It may be noted that the Value Added Tax was introduced in Seychelles in July 2012. Later, it was replaced by the GST. VAT is a broad-based tax of 15 percent on most goods and services imported, sold, and consumed in Seychelles, based on consumption paid ultimately by the final consumer.
