Electronic Cash Register mandatory for grocery retail outlets by end of March 2023   |20 October 2022

Mr Lebon flanked by Mrs Herminie and Ms Larue during the press conference

• Eventual link up to SRC system for better tax revenue management

The electronic cash register and/or Point of Sale system (POS) will be mandatory for all grocery retail outlets by the end of March next year, instead of January as previously announced by the cabinet of ministers.

The principal secretary for Trade, Francis Lebon, made the statement yesterday morning at a press conference at Liberty House, to outline the new measure announced by government at the end of September, aimed at better managing tax revenue in the country.

Also present were the commissioner general of the Seychelles Revenue Commission (SRC), Veronique Herminie, and the deputy chief executive of the Seychelles Licensing Authority, Jessica Larue.

Mr Lebon explained that plans to introduce the new measure came after the government had noticed a substantial leakage and revenue loss over the years in the retail sector especially in the grocery segment.

He said the introduction of the electronic cash register and/or POS is expected to rectify this issue.

According to Mr Lebon, the equipment is not new to Seychelles as already 75 percent of grocery outlets are using the equipment. However, those who are yet to install the system have until March 31, 2023 to do so as it will be mandatory by April 1.

“This will be done by introducing a new condition in their license making it binding and this is applicable to retail businesses under categories 1, 1A, 1b, 1C, 1d. So, at the end of March 31, we will not accept any excuse,” explained Mr Lebon.

Retail businesses in these categories are those selling food items, non-alcoholic beverages, fresh or frozen meat or fish, edible fruits, either frozen or fresh vegetables, and alcohol. The new measure will not apply to kiosks, market or street vendors, tuck shops, food vans and snack shops.

SLA’s deputy CEO, Ms Larue, has advised retailers to respect the new license condition once it comes into force as any breach will result in penalties under the SLA Act.

“We have fines and procedures to revoke or suspend a license and we are also formulating a legal mechanism to add other penalties such as spot fines under the contraventions, and these will be published soon,” she said.

In the second phase of the project, the electronic cash register and the POS will be linked up to the SRC system, which according to Mr Lebon is a crucial component as it will address the management of the tax revenue in Seychelles. “The online link to SRC will allow the organisation to have access and analyse real time information to make its enforcement more targeted and its policy intervention more targeted and in a timely manner”.

According to SRC’s commissioner general, Mrs Herminie, the organisation has noticed several discrepancies in what retailers, importers and wholesalers are declaring in the ASYCUDA system at the Customs division when importing their goods and what they declare as taxes.

“We are unable to reconcile the two and we have noticed huge discrepancies for example a retailer may declare R6.5 billion worth of goods at customs but R2.5 million as taxes at SRC,” she explained.

Mrs Herminie further added that some businesses operate backwards by setting a standard Gross Profit margin for several years and work backwards to reach their cost of goods sold and sales. She said this was visible in a project carried out by SRC in 2021 to assess the gravity of the situation where it targeted seven high risk retailers.

“Our audit in 2021 showed R76.85 million in revenue loss and for 2022 as at August, the retailers audit stood at R7.9 million so there is a loophole in our system and we hope to strengthen it once their system is linked up to ours,” said Mrs Herminie.

Other than strengthening the business tax and Value Added Tax framework, allowing SRC to tackle underreporting of taxes as well as maximise revenue collection, PS Lebon said it will also enhance consumer protection, as consumers will be able to use their receipts for any claims at the Fair Trading Commission.

He added that regional countries that have used the system have positive documented results of its benefit.

“Some countries have seen an average of 30 to 50 percent increase in tax collection in a particular sector after introducing this system, as it is a measure that tackles underreporting of taxes.”

It should be noted that the policy is also in line with government strategy towards a digital economy.

Patsy Canaya