In the National Assembly New Excise Tax Act proposed |17 June 2022
The government is proposing a more modern, comprehensive and relevant Excise Tax Act to replace the one in place since 2009.
Vice-President Ahmed Afif presented the Excise Tax Bill to allow for the replacement of the said Act to the National Assembly on Tuesday, while standing in for the minister responsible for finance, Naadir Hassan, who is on a mission overseas.
VP Afif reminded Assembly members that it was in his budget address for the year 2021 that Minister Hassan announced that the government was going to bring a new excise tax law.
VP Afif said a lot of work has been put to realise the new law which is replacing the Excise Tax Act 2009.
“It is one which is more relevant to the modern business environment and in line with international standards. Additionally it will provide for a simpler, more practical and effective mechanism for the application of the excise tax,” VP Afif explained.
He noted that after several weaknesses /loopholes were identified with the excise tax system, the government sought assistance under the SADC Trade Related Facility (TRF) to review and improve the system in place.
VP Afif cited some of the weaknesses as follows:
- Lack of sufficient control with regard to registration, importation of raw material, production and storage and sale of excise goods in particular alcohol and cigarettes. Currently the SRC lacks sufficient information to reconcile the amount of raw material /input to the amount of finished products. The lack of information has resulted in control focusing only on finished products.
The new law provides for control to be applied to the whole process i.e. from importation to the finished products.
- The existing law is not providing the necessary powers to officers to ensure that control is being applied and conditions are being followed at all times.
“Officers of the SRC will have powers under the new law to access production centres without any prior notice, inspect and retain documents, collect samples, analyse data/statistics in any form including electronic format.”
- Necessary control is also lacking when it comes to transactions of excise goods through Duty Free shops and this poses a great risk to public revenue through leakages in the system.
“With the new law, a complete system with emphasis on control through appropriate record, documentation and supervision will be put in place. Alongside the new law, general regulations to support the new law have also been drafted. The regulations will guide the commissioner and customs officers in better administering the excise tax laws.”
But what is really different between the previous act and the new one?
VP Afif explained that compared to its predecessor, the new Act establishes several new provisions for;
- registration of production sites for cigarettes and alcohol, registration and rules that guide operations of duty free shops, parametres to set up bonded warehouses for customs. Presently the facility does not exist under the old law and operators turn to provisions under the Customs Management Act 2011 if they want to set up one of these facilities with Customs.
- rebate, refund , remission, collection and recovery
- procedures to seize/confiscate products not in conformity with the law
- a mechanism to address disagreements between Customs and its clients
- the commissioner of Customs to be able to make rules to guide the operations of businesses that produce or import commodities on which excise tax are imposed.
- more clarity for customs officers when applying their powers in their role to apply procedures and regulations under the excise tax law.
“The new law will help Customs to better manage revenue collection and to bring more transparency for businesses in their obligations and procedures they need to follow. It will ensure that all actors and operators in the different sectors are functioning on the same regulation level. The new law is another phase in our effort to bring a more modern and efficient tax system for Seychelles,” VP Afif said.
Members on both sides of the House welcomed the different provisions of the new Act but during further discussions in committee stage, they started to make amendments to some of the provisions and this will continue during Assembly sittings next week.