INCOME AND NON-MONETARY BENEFITS TAX ACT, 2010

INCOME AND NON-MONETARY BENEFITS TAX ACT, 2010

Arrangement of Sections

PART I

PRELIMINARY PROVISIONS

1. Short title and commencement.

2. Interpretation.

3. Source of emoluments and non-monetary benefits.

PART II

TAX ON INCOME AND NON-MONETARY BENEFITS

4. Imposition of tax on income and on non-monetary benefits.

PART III

COLLECTION OF TAX

5. Withholding of tax from payment of emolument.

6. Payment of tax withheld.

7. Failure to pay tax withheld.

8. Employer's limited right to recover.

9. Recovery of tax from employed person.

10. Tax withholding statement.

11. Priority of withheld tax.

12. Indemnity.

13. Withheld tax a final tax.

14. Computation of tax and liability to pay tax on non-monetary benefits.

PART IV

GENERAL PROVISIONS

15. Power to prevent tax debtors from leaving Seychelles.

16. Objections and appeals.

17. Ministerial discretion.

18. Records.

19. Regulations.

FIRST SCHEDULE

SECOND SCHEDULE

THIRD SCHEDULE

FOURTH SCHEDULE

10 of 2010.

SI 68 of 2010,

95 of 2010,

10 of 2011,

11 of 2011,

21 of 2011,

35 of 2011,

42 of 2012,

67 of 2013,

21 of 2016,

41 of 2016.

AN ACT to provide for taxation of income and non-monetary benefits and for connected matters

[Date of commencement: 1st July 2010]

PART I

PRELIMINARY PROVISIONS

1. Short title and commencement.

(1) This Act may be cited as the Income and Non-Monetary Benefits Tax Act, 2010.

(2) This Act shall come into operation on 1st July 2010 and apply to—

(a) emoluments paid on or after that date; and

(b) non-monetary benefits provided on or after that date.

2. Interpretation.

In this Act, unless the context requires otherwise—

"associate" has the same meaning as in the Business Tax Act;

"Business Tax Act" means the Business Tax Act, 2009;

"commencement date" means 1st July, 2010;

"day care worker" means an employed person whose duties primarily involve supervision of preschool children attending a registered day care centre;

"domestic worker" means an employed person who is solely engaged in the performance of domestic work at a person's residence, including cooking, security, gardening, laundering, child minding, caring for an elderly or invalid person, or cleaning of the residence;

"emoluments" means any cash remuneration received by an employed person and includes—

(a) any salary, wage, allowance, gratuity, bonus, commission, leave pay, payment in lieu of leave, overtime pay, fee, pension, director's fee, management fee and work condition supplement;

(b) any amount as consideration for the agreement by an employed person to—

(i) enter into employment;

(ii) accept any conditions of employment or any changes to the employed person's conditions of employment; or

(iii) a restrictive covenant in respect of any past, present or prospective employment;

(c) an amount received on termination of employment, whether paid voluntarily or under an agreement, including any compensation for redundancy or loss of employment;

"employed person" means a person gainfully employed in Seychelles whether under a contract of service, as a director or a member of the board of a body corporate, or as the holder of an office and includes—

(a) a person, though not bound by a formal contract of service, who is subject to the control of another person as to the manner and method in which the first mentioned person carries out that person's duties; or

(b) a person working on an approved Government employment project or scheme under the Unemployment Relief Scheme Act, 1995;

"employer" means a person who engages or remunerates an employed person and, in the absence of other evidence of employment, the person by whom or on whose behalf the payment for services rendered is made;

"exempt emolument" means an emolument specified in the Second Schedule;

"fair market value" has the same meaning as in section 4 of the Business Tax Act;

"income tax" means the tax imposed under section 4 of this Act;

"individual" means a natural person;

"non-monetary benefits" means any benefit provided to an employed person in respect of the person's employment or to an associate of the employed person, including any right, privilege, service or facility and includes a right, benefit, privilege, service or facility that is or is to be provided under an arrangement for or in relation to the performance of work and benefits listed in the Fourth Schedule to this Act;

"person" includes—

(a) an individual, partnership, entity or trust; or

(b) a government body;

"prescribed" means prescribed by regulations made under this Act or another revenue law;

"provides", in relation to a benefit, means the provision of a benefit in respect of the employment of an employed person whether or not—

(a) the benefit is also provided by reason of, or in relation directly or indirectly to, any other matter or thing;

(b) the employment will occur, is occurring, or has occurred;

(c) the benefit is surplus to the needs or wants of the recipient (i.e., the employed person or an associate of the employed person);

(d) the benefit is also provided to another person;

(e) the benefit is, or is required to be, provided or used in connection with that employment; and

(f) the benefit is provided as a reward for services rendered, or to be rendered, by the employed person;

"received" includes—

(a) applied or provided on behalf of the employed person either at the instruction of the employed person or under any law;

(b) credited to an account for the benefit of the employed person or an associate of the employed person;

(c) made available to the employed person; or

(d) an amount not actually received by or paid over, but reinvested, accumulated, carried to or paid into an insurance or pension fund or any other fund, however designated or otherwise dealt with on behalf of the employed person or as the employed person directs;

"records" means the records that must be kept by an employer pursuant to the record keeping obligations of revenue laws including this Act;

"Revenue Administration Act" means the Revenue Administration Act, 2009;

"Revenue Commissioner" means the Revenue Commissioner appointed under section 4 of the Seychelles Revenue Commission Act, 2009;

"tax on non-monetary benefits" means the tax payable by an employer under this Act where the employer provides whether directly or indirectly a non-monetary benefit to an employed person or to an associate of an employed person;

"tax year" means the period of twelve months beginning on the 1st January in any year and ending on the 31st December in that year.

3. Source of emoluments and non-monetary benefits.

(1) For the purposes of this Act, a person shall be deemed to be employed in Seychelles where he or she is paid an emolument or provided with a non-monetary benefit—

(a) by a person who is a resident or carrying on business or has the place of effective management or control of his or her business in Seychelles;

(b) by any person on behalf of a person referred to in paragraph (a); or

(c) from a source in Seychelles,

and, the person who pays the emolument or provides the non-monetary benefit or on whose behalf the emolument is paid or non-monetary benefit is provided shall be deemed to be the employer of the person receiving the emolument or the benefit, and the emolument or the non-monetary benefit shall be liable to tax under this Act.

(2) An amount is an emolument of an employed person notwithstanding that it has been paid—

(a) to the employed person by an associate of the employer or by a third party under an arrangement with the employer or an associate of the employer;

(b) to an associate of the employed person; or

(c) by a past employer or a prospective employer of the employed person.

(3) For the purposes of subsection (1), a person who performs any service or carries out any functions in Seychelles on behalf of or at the request of another person not resident in Seychelles shall be deemed to be employed in Seychelles, the person who benefits in Seychelles from those services or functions shall be deemed to be the employer of the first mentioned person and the emolument paid or received in respect of those services or functions shall be deemed to have been paid by the person who benefits in Seychelles from the services or functions and shall be liable to withhold and remit tax at the rate specified in the First Schedule.

(4) An employed person shall be deemed to have received an emolument or a non-monetary benefit although the emolument or the non-monetary benefit or any part thereof is not actually received by or paid over to that person but is reinvested, accumulated, carried to or paid into an insurance or pension fund or any other fund, however designated or otherwise dealt with on behalf of the person or as the person directs.

PART II

TAX ON INCOME AND NON-MONETARY BENEFITS

4. Imposition of tax on income and on non-monetary benefits.

(1) Subject to subsection (3), income tax at the rate specified in the First Schedule is levied upon emoluments received by an employed person in Seychelles and is payable to the Revenue Commissioner in accordance with this Act.

(2) Tax on non-monetary benefits at the rate specified in the Third Schedule is levied upon non-monetary benefits received by an employed person in Seychelles and is payable to the Revenue Commissioner in accordance with this Act.

(3) No tax is imposed under this Act on emoluments or at non-monetary benefits that are exempt emoluments specified in the Second Schedule or exempt non-monetary benefits specified in the Fourth Schedule.

(4) The tax imposed under subsection (1) is imposed on the gross amount of emoluments received and no deduction is allowed for any loss or outgoing incurred by the employed person in deriving emoluments.

(5) The tax imposed under subsection (2) is imposed on the fair market value of the non-monetary benefits.

PART III

COLLECTION OF TAX

5. Withholding of tax from payment of emolument.

(1) Subject to subsection (3), an employer shall withhold tax at the rate specified in the First Schedule from the gross amount of emoluments as prescribed.

(2) An employer required to withhold tax under this section shall do so at—

(a) the time the amount is paid to the employed person; or

(b) the time the amount is credited to the account of the employed person; or

(c) the time the amount is dealt with on the employed person's behalf or otherwise made available to the employed person.

(3) The obligation of an employer to withhold tax under subsection (1)—

(a) is not reduced or extinguished because the employer has a right, or is otherwise obliged, to deduct any other amount from a payment of emoluments; and

(b) applies notwithstanding any law that provides that any amount of emoluments is not to be reduced or subject to attachment.

(4) In the event that an employer fails to satisfy the provisions of this section, the Revenue Commissioner may invoke the powers under Part V of the Revenue Administration Act to ensure compliance.

(5) This section does not apply to emoluments that are exempted by the Second Schedule 2 of this Act.

6. Payment of tax withheld.

(1) Tax required to be withheld by an employer shall be paid to the Revenue Commissioner within 21 days after the end of the month in which the employer was required to withhold the tax.

(2) In the event that an employer fails to satisfy the provisions of this section, the Revenue Commissioner may invoke the powers under Part V of the Revenue Administration Act, to ensure compliance.

7. Failure to pay tax withheld.

(1) If an employer—

(a) fails to withhold tax as required by section 5; or

(b) having withheld tax fails to pay the tax to the Revenue Commissioner as required by section 6,

the employer is personally liable to pay to the Revenue Commissioner the amount of tax and any penalty and additional tax due in respect of the failure.

(2) The Revenue Commissioner may invoke the powers under Part V of the Revenue Administration Act and any other provision of that Act to ensure compliance with the obligations imposed by this section.

8. Employer's limited right to recover.

An employer liable for an amount of tax under section 7 as a result of failing to withhold tax is entitled to recover the tax (but not any penalty or additional tax due in respect of the failure) from the employed person.

9. Recovery of tax from employed person.

(1) If an employer fails to withhold tax as required by section 5, the Revenue Commissioner may recover the tax from the employed person provided the total amount recovered does not exceed the tax that should have been withheld.

(2) Notwithstanding the recovery of any tax under subsection (1), the employer continues to be liable for—

(a) any other legal action in relation to the failure; and

(b) the imposition of any penalty or additional tax in respect of the failure.

(3) In the event that subsection (2) applies to an employer, the Revenue Commissioner may invoke the powers under Part V of the Revenue Administration Act and any other applicable provision of that Act to ensure compliance.

10. Tax withholding statement.

An employer withholding tax under section 5 shall furnish the employed person and the Revenue Commissioner with a withholding tax statement in accordance with the Regulations.

11. Priority of withheld tax.

(1) The tax withheld by an employer under section 5 from a payment of emoluments—

(a) is held by the employer on behalf of the Government; and

(b) is not subject to attachment in respect of any debt or liability of the employer.

(2) In the event of the death, liquidation or bankruptcy of an employer who has withheld tax from the payment of emoluments, the withheld tax does not form part of the employer's estate and the Revenue Commissioner has first claim for that amount before any distribution of property is made with the exception of any money claimed by the Seychelles Pension Fund.

(3) An amount of tax that an employer is required to withhold under section 5 is—

(a) a first charge on the emoluments to which the withholding relates; and

(b) deducted prior to any other amount that the employer may be required to deduct from the payment by virtue of an order of any Court or under any other law.

12. Indemnity.

An employer who has withheld tax under section 5 and remitted the tax to the Revenue Commissioner in compliance with section 6 is indemnified against any claim by the employed person for payment of the deducted amount.

13. Withheld tax a final tax.

The tax withheld under section 5 is a final tax on the emoluments of the employed person.

14. Computation of tax and liability to pay tax on non-monetary benefits.

(1) Tax shall be computed on the total non-monetary benefits received in respect of a month or where the employment is for a period less than a month on the total non-monetary benefits provided in respect of that period.

(2) An employer that provides non-monetary benefits to an employed person is liable to pay tax in respect of that non-monetary benefit at the time of the provision of the non-monetary benefit and the tax shall be paid to the Revenue Commissioner by the 21st day of the month following the month in which the liability arose.

(3) Tax payable by an employer in respect of non-monetary benefits shall be calculated in accordance with the rates set out in the Third Schedule to the nearest Seychelles Rupee and any amount of cents shall be disregarded.

PART IV

GENERAL PROVISIONS

15. Power to prevent tax debtors from leaving Seychelles.

(1) Where the Revenue Commissioner has reason to believe that a person liable to remit income tax withheld from an employed person or to remit tax or pay a penalty in respect of providing non-monetary benefits may leave Seychelles before the date on which the tax or penalty is due and payable, the tax or penalty shall be due and payable on such date as the Revenue Commissioner notifies to that person.

(2) Where the Revenue Commissioner is of the opinion that any person is about to or likely to leave Seychelles without paying income tax due or tax on non-monetary benefits or penalty, the Revenue Commissioner may invoke the provisions of the Revenue Administration Act to prevent that person from leaving Seychelles until the person has paid the tax due or penalty or has made alternative arrangements acceptable to the Revenue Commissioner.

16. Objections and appeals.

(1) An employer or an employed person dissatisfied with a revenue decision concerning the application of this Act to that person may object to that decision in accordance with Part IV of the Revenue Administration Act.

(2) An employer or an employed person dissatisfied with an objection decision concerning the application of this Act to that person may appeal from that decision in accordance with Part IV of the Revenue Administration Act.

17. Ministerial discretion.

The Minister may, for the socioeconomic benefit of Seychelles, by Order published in the Gazette, treat the emoluments and non-monetary benefits derived by any class or category of employed persons—

(a) as exempt emoluments and non-monetary benefits; or

(b) as subject to a reduced rate of tax,

if the Minister is of the opinion that the employment carried on by the class or category of persons has assisted or will assist in the socioeconomic development of Seychelles.

18. Records.

An employer shall maintain such records as are prescribed under the Revenue Administration Act or any other revenue law including this Act.

19. Regulations.

(1) The Minister may make regulations for the proper and efficient administration of this Act including—

(a) matters required to be prescribed under this Act;

(b) amending the Schedules;

(c) making saving or transitional provisions consequent on the enactment of this Act; and

(d) prescribing penalties for the contravention of regulations.

(2) If regulations made under this section are of a transitional nature and are made within six months after the commencement of this Act, the regulations may provide that they take effect from the commencement date.

FIRST SCHEDULE

[Section 4(1)]

Rate of income tax

1. The rates of income tax payable by an employed person who is a citizen of Seychelles, in respect of gross emoluments received in a month from all sources of employment shall be as follows—

(i) for the gross emoluments up to SCR8555.50, 0% of the amount;

(ii) for the gross emoluments above SCR8555.50 and up to 10,065.29, the amount calculated according to the following formula—

0.15 -

[8,555.50

(A

x

0.85)]

 

A

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