Seychelles Introduces Progressive PIT Regime

Posted in Business and Economy at 5:09 pm by Robert Klien

A new progressive income tax system for individuals was introduced in the Seychelles on June 1, 2018.

For citizens only, the first SCR8,555.50 (USD629) of taxable income is exempt from income tax. A 15% rate applies on income up to SCR10,000, starting from the first rupee earned for non-citizens. Income up to SCR83,333 is subject to a 20% rate and a 30% applies on income above that threshold.

In order to support taxpayers and employers when calculating income tax liability, a calculator has been released by the Seychelles Revenue Commission (SRC).

Subject to conditions set out in the second schedule of the Income and Non-Monetary Benefit Tax Act, the following payments are not taxable income under the new regime:

  • an emolument derived by a person entitled to privileges under the Privileges and Immunities Act;
  • an emolument being a reimbursement for the use of a motor vehicle;
  • an emolument being a reimbursement by an employer of an employed person for the cost of using the employee’s own motor vehicle for the benefit of the employer;
  • day-to-day living expenses for traveling workers (per diem);
  • a retirement pension;
  • payments for overtime; end of contract payments;
  • a uniform/shoe allowance;
  • a bonus;
  • compensation;
  • a service charge;
  • a gratuity payment;
  • and a 13th-month payment.

Compliance obligations have changed since the introduction of the regime. A new payroll form has been designed and the monthly Business Activity Statement (BAS) has been updated.

According to the SRC, the two forms must be lodged within 21 days following the end of the applicable month. The payroll form has been developed to assist employers with the calculation of their monthly income tax withholding obligations.

For employers with fewer than 10 employees, the payroll statement can be lodged either manually or electronically using the SRC’s E-Service facility. For employers with 10 or more employees – only electronically.

Firms must also lodge an employee status report. The first deadline is July 21, along with the payroll statement. After this first deadline, the employee status report should be updated and submitted on January 21 every year.