Seychelles giving 6 months amnesty to clear back taxes in bid to boost revenue

Hassan said that the initiative intends to help the government collect quick revenue in this time of economic crisis caused by the COVID-19 pandemic. (401 K/Flickr) Photo License: CC-BY SA 2.0

(Seychelles News Agency) - Individuals and businesses will be given six months starting in July to clear tax arrears in order to receive an exemption on accumulated interest and penalty fees, under the condition that the main tax liability is settled, said a top official.

The new tax amnesty programme is one of two policies approved by the Cabinet of Ministers.

The Minister of Finance, Naadir Hassan, told reporters on Tuesday that the amnesty programme being put forth by the Seychelles Revenue Commission (SRC) is an incentive for those who are having difficulties settling their tax payments due to penalties.

Hassan said that the initiative intends to help the government collect quick revenue in this time of economic crisis caused by the COVID-19 pandemic.

The Minister also announced that the Revenue Administration Act will be reviewed to include a provision for a write-off of tax debt.

“The provision will be more of an exception rather than a norm. The provision will state clearly under which special condition that a tax debt could be waived off. There would be a process established to ensure that there is no abuse. Also to ensure transparency, when a decision is taken to write off, a notice will be published so that if there is an objection anyone can do so,” said Hassan.

According to SRC, there is a record of SCR1.034 billion ($63 million) in terms of tax debt as at March 31 this year and approximately SCR30 to SCR35 million from primary taxes are expected to be collected through the amnesty programme. Forty-two per cent of the which amounts to SR432 million are penalties and additional taxes. SRC is hoping to have at least 50 percent of those penalties waived under the amnesty.

Seylina Verghese, director general in the Tax and Financial Sector Policy division of the Ministry, said that the condition attached to waive off interest will also depend on the date of payment.

From July to August, SRC would waiver 75 percent of interest. If it is being paid from September to November, we would waive off 50 percent and if it is from November, we would only take out 25 percent. Whereas for penalties, we would remove 100 percent regardless the date of payment within the 6 months given,” said Verguese.

Three categories of tax payers are being targeted under this programme and this includes those who have lodged their returns but have never paid, those who have under-declared their income on lodged returns, and those who have never lodged, added Verghese.

She said that “once the Programme is completed, SRC would have more time to focus on those that are still not paying.”  

On her side, the Commissioner General of the Seychelles Revenue Commission, Veronique Herminie, said that taxpayers will not be able to negotiate to pay by instalment if they want to waive off the penalties and interest, however, if they still do not pay, SRC will proceed with relevant actions as per the tax laws including prosecution.

Seychelles, a group of 115 islands, once established an amnesty programme in 2015 whereby the country was able to collect SCR21 million ($1.28million). 

The other policy announced by the Minister is to add provisions within the Revenue Administration Act to give the Commissioner General the power to write off a tax debt.

“The provision will be more of an exception rather than a norm. The provision will state clearly under which special conditions that a tax debt could be waived off. There would be a process established to ensure that there is no abuse. Also to ensure transparency, when a decision is taken to write off, a notice will be published so that if there is an objection anyone can do so,” said Hassan.

He highlighted that there are huge payments still in the tax book that have not been settled yet at SRC for various reasons.  

“Some look impossible to collect and the debt is always remaining in the tax book as there is no current law to allow a write-off. Henceforth, the provision in the law will help to settle this once and for all,” said Hassan. 

Herminie said the write-off procedure will be applicable under special circumstances such as if a person is terminally ill, a business facing bankruptcy and undergoing liquidation, and people who have passed away.

Further details given by the officials highlighted the specific conditions which would allow for the debt to be written off and these are serious hardship, uneconomical debt and elapse of statutory limitation period. A new  Tax Debt write off Committee will be established to review the cases and submit proposals for the consideration of the Commisisoner General and forwarded to the finance Minister. As per the Public Finance Management Act 2012, only the Minister of Finance can authorise this write off.