Seychelles Revenue Commission33,346 parcels through postal mail were cleared; 290,563 arriving passengers were processed coming from 2086 schedules flights and 510 unscheduled flights

Seychelles RevenueCommissionAnnual Report 2013

2

ContentsTable of Tables ...................................................................................................................... 3

Table of Figures ..................................................................................................................... 4

1 Foreword........................................................................................................................ 5

2 The year at a glance........................................................................................................ 8

3 About the Seychelles Revenue Commission .................................................................. 10

3.1 An overview .......................................................................................................... 10

3.2 Mission, Vision, Core Values and strategic objectives ............................................. 11

3.2.1 Our Mission .................................................................................................... 11

3.2.2 Our Vision....................................................................................................... 11

3.2.3 Our Core values .............................................................................................. 11

3.2.4 Our Strategic objectives .................................................................................. 12

3.2.5 SRC Organizational Structure........................................................................... 12

4 SRC resources ............................................................................................................... 13

4.1 Human resources................................................................................................... 13

4.2 Budget execution and budgetary performance....................................................... 14

5 Performances ............................................................................................................... 17

5.1 Revenue collection................................................................................................. 17

5.1.1 Actual revenue collected ................................................................................. 17

5.1.2 Actual revenue collected against forecast........................................................ 18

5.1.3 Overall assessment ......................................................................................... 19

5.2 Non revenue performance ..................................................................................... 31

5.2.1 Improve voluntary compliance and facilitate trade.......................................... 31

5.2.2 Improve detection and sanction of all forms of tax evasion and smuggling. ..... 37

5.2.3 Enhance our business capacity ........................................................................ 49

5.2.4 Develop a dynamic and professional workforce............................................... 52

5.2.5 Promote good corporate governance .............................................................. 57

ANNEXES............................................................................................................................. 61

3

Table of Tables

Table 1: Increase in number of staff per division .................................................................. 13

Table 2: 2013 Staff Turnover compared to 2012 ................................................................... 13

Table 3: Administered Budget –Expenditure for the year 2013 ............................................. 15

Table 4: Training Expenses Incurred In 2013......................................................................... 16

Table 5: Overall revenue collection 2013 against target....................................................... 19

Table 6: Total Business Tax revenue for the year 2010-2013................................................. 21

Table 7: GST collection for the year 2010-2013 *2013-GST Arrears..................................... 23

Table 8: Trades Tax Collection for the year 2010-2013.......................................................... 25

Table 9: SS and INMBT per category for the years 2010-2013 ............................................... 26

Table 10: Excise Tax collection on import and local production for 2010 – 2013.................... 28

Table 11: Value Added Tax collection on import and local productions for 2013 ................... 29

Table 12: Other Tax Revenue (license fees) collection for 2010 – 2013.................................. 30

Table 13: Other Non Tax Revenue collection for 2010 – 2013 ............................................... 31

Table 14: Actual Audit performance against planned for the year 2013 ................................ 38

Table 15: Audit performance for 2013 compared to 2012 by type of audit............................ 39

Table 16: Audit performance for 2013 by type of audit and tax line compared to 2012 ......... 39

Table 17: VAT Audit result as at 31 December 2013.............................................................. 40

Table 18: Number of cases received, closed and outstanding for the year 2013 .................... 43

Table 19: Revenue raised and collected from closed interpretation and appeal cases in 201343

Table 20: Collection Rate of debt (Gross/Net Arrears) for the year 2013 .............................. 44

Table 21: Monthly stock variation (gross/net arrears) .......................................................... 45

Table 22: Average age of debts (on gross arrears) ................................................................ 45

Table 23: Performance of Investigation Unit for 2013........................................................... 47

Table 24: Staff movement for the year 2013 ........................................................................ 53

Table 25: Training Participations per divisions for 2013 ........................................................ 54

Table 26: Total revenue raised and collected from audit reviews and follow- ups................. 59

4

Table of Figures

Figure 1: Seychelles Revenue Commissions’ Organigram ...................................................... 12

Figure 2: Expenditure budget consumption per cost centre for the year 2013....................... 15

Figure 3: Expenditure budget consumption per cost category for the year 2013 ................... 16

Figure 4: Contribution per tax type for the year 2013 ........................................................... 17

Figure 5: Contribution per tax type for the years 2012 and 2013........................................... 18

Figure 6: Actual 2013 revenue per tax type against budget estimates................................... 18

Figure 7: Business tax contribution per sector for the year 2013........................................... 20

Figure 8: Business Tax revenue for the year 2010 – 2013 ..................................................... 21

Figure 9: GST Arrears contribution per sector for the year 2013 ........................................... 22

Figure 10: Trades Tax contribution per sector for the year 2013 ........................................... 24

Figure 11: Trades Tax revenue for the year 2010 – 2013 ....................................................... 24

Figure 12: SS and INMBT contribution per sector for the year 2013 ...................................... 25

Figure 13: SS and INMBT revenue for the year 2010 – 2013 .................................................. 26

Figure 14: Excise Tax contribution per sector for the year 2013 ............................................ 27

Figure 15: Excise Tax revenue for the year 2010 – 2013 ........................................................ 28

Figure 16: Value Added Tax revenue for the year 2013......................................................... 29

Figure 17: Comparison of complaints for the year 2012 and 2013......................................... 50

5

1 Foreword

It gives me great pleasure to present the Seychelles Revenue Commission's Annual report for

the financial/fiscal year 2013. The Report provides a good understanding of how SRC is

organized, operates and performs vis-a-vis its functions and strategic direction/objectives.

Looking back over the year 2013, SRC was faced with numerous challenges but has that we

made good progress on different fronts, where our customers and our staff are concerned as

highlighted in this report. But despite these challenges, we were able to remain true to our

mission, which is to optimize revenue collection and facilitate trade to improve the socio-

economic well-being of Seychelles.

I am pleased to say that we have once again surpassed our revenue target. The revenue

collected in 2013 reached a new record of SR 4.6 billion since the creation of SRC in 2010 - an

increase of SR 213 million compared to 2012 and SR 5.9 million against what had been

forecasted for the year. The good performance was mainly from collection of Trades Tax, Excise

Tax and Other Revenue (license fees) whilst other tax lines namely Business Tax, Income Tax

and VAT under performed for various reasons.

While recognising that there is a fair bit that still needs to be done, I am satisfied with our

overall performance for the year, bearing in mind that in 2013 alone SRC implemented 4 new

taxes. The Value Added Tax which was part of the last tax reforms under the Macro Economic

Financial Programme was implemented on 1 January 2013, after much debate and controversy.

Additionally, there were the Social Corporate responsibility Tax [CSRT] and Tourism Marketing

Tax [TMT], where strong resistance was felt from the taxpayers, which required extra effort on

the part of SRC to ensure compliance. With the aim of assisting small businesses meet their tax

obligations, the Presumptive tax - a simplified tax regime - was introduced as an option to the

normal business tax regime for small businesses with an annual turnover of less than SR1

million. SRC also had the challenge of collecting more revenue with the lowering of the Business

Tax rates for some businesses from 33percent to 30 percent and in some cases to 25 percent.

All of this meant increased effort on the part of SRC to enforce the law and ensure that

6

taxpayers are meeting their obligations and being compliant so that we in turn can meet or

exceed the set revenue targets.

During 2013 we remain committed to improving our work efficiency and reducing taxpayers’

compliance costs by expanding our taxation electronic-service facilities for online filing. Since

February 2013 businesses can submit their BAS, VAT return and payroll online in one go. We

expect to see this translated into improved services to our customers with the increase in

uptake of this facility by more businesses as the electronic data so provided will be transmitted

to our client management system for direct processing removing the need for our staff to

manually enter data in the system (a time consuming exercise given the size of the taxpayer

population). The benefit is twofold as the facility brings convenience not only to the SRC but

also to the taxpayers as they can submit their return faster at their convenience and at a lower

cost.

On the technology front, we upgraded our Customs IT system (ASYCUDA++ to ASYCUDA World).

The switch was not an easy one given the specificity of the country but at its full capacity we

expect to achieve greater efficiency with the new system. We have also taken measures to put

ourselves more at par with international standards and this has included on-going reforms

within Customs. Furthermore, we migrated from HS 2002 to HS 2007 on 1 January 2013.

I am aware and appreciative of the fact that without the devotion, dedication, and

determination of our valued internal customers (our staff) all of these achievements would not

have been possible, given the significant reforms/happenings over the years including

2013.Therefore, in 2013 we introduced a scheme of service to encourage and motivate staff to

perform even better. My aim is to turn SRC into an outstanding organization, which is

performance oriented and as such we introduced in 2013 an employee’s Performance

Management System which is based on the setting of objectives and targets.

In 2013 we continued our fight against corruption. We drew up an integrity action plan with

defined tasks/activities and deliverables for the period up to December 2014. We also

7

developed and introduced our own Code of Conduct which provides visible guidelines for

behaviour and promotes our organization's mission, values and principles. The Code of Conduct

has been developed in line with the WCO Integrity Development Guide, Revised Arusha

Convention and PSO with the aim of promoting an integrity oriented environment within SRC.

I am very privileged to have served as the Revenue Commissioner for the past 3 years which

was my first term in office and I consider myself even more honoured to be able to work with

an outstanding team of professionals and a pool of committed and dedicated staff at the SRC. I

would therefore like to express my sincere thanks to the members of my Executive team, senior

and middle management and staff for their valuable support throughout 2013. Our

accomplishments in 2013 are attributed to their dedication, determination and positive

attitude when facing challenges. I would also like to express my appreciation to all our partners

both local and international, for their support and assistance.

To conclude, I am confident that united as one, despite the many challenges and tasks we daily

confront, we will continue to aim to deliver a high quality service to the public. It is therefore

with this in mind that I look forward to my second term as the Revenue Commissioner.

Jennifer Morel (Ms)Revenue Commissioner

8

2 The year at a glance

Revenue

SRC collected SR 4.6 billion in 2013, just above forecast by 5.9 million and above the 2012

figure by SR 213 million. VAT (including GST) was the biggest contributor (31percent) to the

total revenue collection for 2013 followed by Business Tax (19 percent), social security and

income and non-monetary benefits tax (16 percent), excise tax (14 percent), trades tax

(9percent), other revenues (licence fees) (6 percent), Goods and Services Tax (4percent)

and other non tax revenue (1 percent).

Trade and Travel

54,560 import transactions (Bills of Entry) were processed excluding temporary import, re-

importation, entry for warehousing and transhipment;

1,477 export transactions were processed mostly for the export of frozen fish, canned

tuna, crude oil, scrap metal and fish meal;

33,346 parcels through postal mail were cleared;

290,563 arriving passengers were processed coming from 2086 schedules flights and 510

unscheduled flights.

2 drug detections were done at the airport passenger terminal in the months of August

and October from 3 passengers coming from Kenya, South Africa and Zimbabwe.

New taxes implemented

SRC implemented 4 new taxes/regimes in 2013 namely:

Value Added Tax;

Corporate Social Responsibility Tax;

Tourism Marketing Tax;

Presumptive tax.

9

VAT performance

629businesses registered for VAT, 425 were registered on a compulsory basis and 204 on

voluntary basis;

Value Added Tax collected for the year 2013 amounted to SR 4.9 billion or 0.3 percent

below budget the forecast;

There were 107 claims for refund amounting to SR 50,938,971.23;

78 percent of refunds were made within the stipulated 45 days with an average number of

days being 20 days;

VAT Deferred Payment granted for 2013 was SR 26,532,072.63;

Compliance filing rate (filing on time) recorded was 80 percent.

New technology and standards introduced

The Customs IT system was upgraded from ASYCUDA++ to ASYCUDA World in June 2013;

Customs moved to HS Migration 2007 in January 2013.

Areas for improvement

Strengthening human resources weaknesses. Mitigating experience and knowledge

shortage due to the resignation of qualified staff and ensuring that new recruits and junior

staff have the minimum skills required to effectively perform within the workplace;

Improving the enforcement side of non-compliance, more specifically debt collection in

order to maximize revenue collection and recover outstanding tax obligations;

Developing new intelligence and risk management systems and processes in light of new

emerging risks facing revenue collection;

Increasing the rate of on time filing. With the implementation of the compliance strategy

and its close monitoring it is expected there will be a marked improvement in the

subsequent year.

Increasing the intake of electronic services. It is expected that with the introduction of the

e-payment facility in 2014 the number of users will considerably increase;

Enhancing communication with external stakeholders with active participation from them.

10

3 About the Seychelles Revenue Commission

3.1 An overview

The SRC, established in 2010, following the repeal of the SRC Act 2008, is an independent

government body, with the overall responsibility for the administration of the revenue laws as

follows:

• Business Tax Act 2009

• Business Tax 1987 (Cap 115)

• GST Act 2001 (Act 10 of 2001)

• Social Security Act (Cap 225)

• Seychelles Pension Act, 2005 (Act 8 of 2005)

• Licenses Act (Cap 113)

• Excise Tax Act, 2009

• Seychelles Business Number Act, 2009

• Value Added Tax Act 2010

• Customs Management Act 2010

The functions of SRC are:

• To assess, collect and account for all Government revenue authorized under the laws

listed in the Schedule;

• To administer efficiently and effectively all revenue laws in force;

• To advise the Government on matters of policy relating to revenue;

• To improve the standard and quality of services provided to payers of revenue;

• To counteract revenue evasion;

• To monitor and control the cost of revenue collection, and

• To undertake other work related to revenue administration as required by the

Government.

Today, SRC is made up of 328 staff and has a presence on the 3 main islands (Mahe, Praslin and

La Digue). SRC collects approximately 88 percent of the country’s revenue from seven tax lines

11

namely business tax, trades tax, excise tax, income and non-monetary tax, value added tax,

tourism marketing tax and social corporate responsibility tax.

To accomplish its mission SRC relies on the competence and expertise first and foremost of its

management team, staff and resident technical advisors. SRC also receives over whelming

support from its international partners such as WCO, SADC, IMF and the World Bank. SRC

became a member of the Commonwealth Association of Tax Administration (CATA) and the

African Tax Administration Forum (ATAF) in 2011 and since then 37 staff have benefited from

34 training and development opportunities. Very important also is the relationship that SRC

has built with other revenue administrations including the signing of a Memorandum of

Understanding with the South African Revenue Services where staff have had the chance to go

on attachments and share knowledge and expertise and in the process adopt good practices

within SRC.

3.2 Mission, Vision, Core Values and strategic objectives

3.2.1 Our Mission

“Optimize revenue collection and facilitate trade to improve the socio-economic well-being of

Seychelles”

3.2.2 Our Vision

“To be a modern, fair and effective customer-oriented revenue administration”

3.2.3 Our Core values

Whatever SRC aims to achieve is founded on its 5 core values - integrity, impartiality,

professionalism, transparency and accountability. All staff from the bottom upwards to the

executive are urged to continually demonstrate high moral and ethical behaviour while

upholding the rule of law; to apply the law equally and fairly to all without any favour; be

courteous, conscientious, business-like and knowledgeable; and be responsible for their

12

actions. SRC also values the sharing of relevant information with its external and internal

stakeholders whilst of course observing the confidentiality aspect of its taxpayers’ information.

3.2.4 Our Strategic objectives

• Improve voluntary compliance and facilitate trade;

• Improve detection and sanction of all forms of tax evasion and smuggling;

• Enhance our business capacity;

• Develop a dynamic and professional workforce; and

• Promote good corporate governance.

3.2.5 SRC Organizational Structure

Figure 1: Seychelles Revenue Commissions’ Organigram

Annex 1 provides the structure of each division within SRC with the latest changes made during2013.

13

4 SRC resources

4.1 Human resources

For 2013, the Human Resource section’s main activities referred mainly to staff welfare and

recruitment aspects. Improving Human Resources allocation through intensive recruitment

throughout the year saw SRC’s workforce once again grow by 11 percent to reach a total of 328

employees as per Table 1 below.

DIVISIONS 2012 2013 Increase In workforce

Commissioner’s Office 11 11 0Reform Project Office 13 16 3Support Services 36 44 8Customs 131 149 18Tax 105 108 3Total Amount 296 328 32

Table 1: Increase in number of staff per division

However as at the end of December 2013, out of a total of 362 positions, 34 remained vacant

as recruitment of high calibre candidates remain a challenge for SRC as the required pool of

candidates in the labour market is scarce and highly sought after.

This year again SRC recorded another increase in staff turnover, see table 2 below, from 7

percent in 2012 to 9.45percent in 2013 where by the most common reason for termination of

employment was due to employees getting better external offers as brought out in the exit

interviews that were conducted.

Termination of employment 2012 2013

Resignation 15 29Termination through dismissal 6 2Total Amount 7% 9.45%

Table 2: 2013 Staff Turnover compared to 2012

14

It was apparent that the salary package offered by SRC was no longer competitive and

therefore another major task for 2013 was the development and implementation of SRC’s

Scheme of Service which took effect on 1 July 2013. The introduction of the scheme of service

was in line with SRC’s strategic plan to promote career development and improve staff

retention within the organisation.

SRC was also transferred to the national wage grid and by working closely with the Department

of Public Administration, a job evaluation exercise was conducted to align SRC’s salary grade

level to the National wage grid grade level. This also led to the development of learning

pathways for staff’s future progression within the organisation.

4.2 Budget execution and budgetary performance

For 2013 SRC was allocated with an Initial Expenditure budget of SR 66.6 million and was

revised to represent a budget of 65.1 million(refer to Table 3).

However, SRC ended with a small deficit of R 76,210 on the allocated budget, mainly due to

minor excesses in spending over different expenditure lines. The Support Services Division

covers most of the expenses which makes up 48% of the total expenditure in view that they are

responsible in facilitating the daily functions of the offices (refer to Figure 2). As with prior

years, Wages & Salaries makes up the greatest percentage of the budget at 69% and Office

Running Cost at 14% (refer to Figure 3).

The table and charts below show the breakdown of expenditure across the three cost centres

of SRC.

15

Table 3: Administered Budget –Expenditure for the year 2013

Figure 2: Expenditure budget consumption per cost centre for the year 2013

23%

29%

Actual Budget

SCR (thousands)HRFM-

040D200TAX-

040D300CUSTOMS-040D400

Total Total Variance(Over)/Under

Wages & Salaries 11,015.12 14,780.34 19,026.70 44,822.16 44,987.70 -165.55

Office Expenses 9,084.34 - - 9,084.34 9,083.06 1.29

Maintenance &Repairs

1,104.78 - - 1,104.78 1,104.83 -0.05

Transportation &Travel Costs

1,910.26 - - 1,910.26 1,910.36 -0.10

ServiceAgreements

5,029.32 - - 5,029.32 4,979.53 49.78

Non-FinancialAssets

2,983.87 100 129.6 3,213.47 3,022.63 190.84

Total Expenditure 31,127.69 14,880.34 19,156.30 65,164.32 65,088.11 76.21

15



48% HRFM

TAX

CUSTOMS

Actual Budget


040D200TAX-



Wages & Salaries 11,015.12 14,780.34 19,026.70 44,822.16 44,987.70 -165.55

Office Expenses 9,084.34 - - 9,084.34 9,083.06 1.29


1,104.78 - - 1,104.78 1,104.83 -0.05


1,910.26 - - 1,910.26 1,910.36 -0.10

ServiceAgreements

5,029.32 - - 5,029.32 4,979.53 49.78

Non-FinancialAssets

2,983.87 100 129.6 3,213.47 3,022.63 190.84


15



Actual Budget


040D200TAX-



Wages & Salaries 11,015.12 14,780.34 19,026.70 44,822.16 44,987.70 -165.55

Office Expenses 9,084.34 - - 9,084.34 9,083.06 1.29


1,104.78 - - 1,104.78 1,104.83 -0.05


1,910.26 - - 1,910.26 1,910.36 -0.10

ServiceAgreements

5,029.32 - - 5,029.32 4,979.53 49.78

Non-FinancialAssets

2,983.87 100 129.6 3,213.47 3,022.63 190.84


16

Figure 3: Expenditure budget consumption per cost category for the year 2013

Actual BudgetSCR (thousands) HRFM - 040D200 Total Total

SRC Training 2,415.88 2,415.88 2,415.88Total Expenditure 2,415.88 2,415.88 2,415.88

Table 4: Training Expenses Incurred In 2013

As seen in Table 4, SRC was able to cover its trainings planned for the year and even had to

include other trainings not originally planned but which were found to be of great importance

and relevance. Although, again this year constraints were encountered when expected trainings

were cancelled or postponed by the organising institutions, it was found necessary, (in order to

meet the training plan) to request for in house trainings to be delivered by the different

institutions.

69%

14%

2%3%

8%5%

Wages & Salaries

Office Expenses

Maintenance & Repairs

Transportation & TravelCosts

Service Agreements

Non-Financial Assets

17

5 Performances

5.1 Revenue collection

5.1.1 Actual revenue collected

Figure 4: Contribution per tax type for the year 2013

SRC made a total collection of SR 4.6 billion for the year 2013, an increase of SR 213 million

compared to 2012.The greatest proportion of revenue is from the newly introduced value

added tax (VAT) which contributed to 31 percent of total revenue collected. The lowest

proportion of tax revenue was goods and services (GST) tax at 4 percent primarily due to this

tax being replaced by VAT.

Figure 4 shows the proportion of revenue collected for the main tax lines with Value Added Tax

at 31 percent , Business Tax 19 percent , Income Tax & Social Security 16 percent, Excise tax 14

percent, Trades Tax 9 percent GST 4 percent Other Revenue representing 6 percent. (Other

revenue comprises of license fees).

Excise Tax14%

Value Added Tax31%

Other Revenue(license fees)

6%

Other NonTax Revenue

1%

Proportion of Actual Revenue Collected for2013

17

5 Performances













Business Tax19%

Goods &Service Tax

4%

Trades Tax9%

Social Security &Income Tax

16%Excise Tax

14%

Proportion of Actual Revenue Collected for2013

Business Tax

Goods & Service Tax

Trades Tax

Social Security & Income Tax

Excise Tax

Value Added Tax

Other Revenue (license fees)

Other Non Tax Revenue

17

5 Performances













Business Tax

Goods & Service Tax

Trades Tax

Social Security & Income Tax

Excise Tax

Value Added Tax

Other Revenue (license fees)

Other Non Tax Revenue

18

Figure 5: Contribution per tax type for the years 2012 and 2013

There was a decrease in the proportion of revenue for excise tax, and other revenue compared

to 2012 whereas trades tax and social security and income tax maintained the same proportion

of taxes collected. This was mostly attributed to the adjustments made in rates of beer and

stout (locally and imported) at the beginning of the second quarter of 2013and additionally to a

decrease in importation of motor vehicles for 2013. Business tax saw an increase of 1 percent in

the proportion of revenue collection for 2013 compared to 2012 due to the following taxes

being transferred to the business tax line: CSRT, TMT and Residential Rent where the latter was

previously captured under GST.

5.1.2 Actual revenue collected against forecast

Figure 6: Actual 2013 revenue per tax type against budget estimates

BusinessTax18%

TradesTax9%

SocialSecurity &Income &

Tax16%

ExciseTax16%

Other7%

2012

0200400600800

1000120014001600

BusinessTax

Goods&

ServiceTax

TradesTax

18












BusinessTax18%

Goods &Service

Tax33%

BusinessTax19%

SocialSecurity &

IncomeTax16%

ExciseTax14%

ValueAdded

Tax31%

OtherRevenue

6%

2013

TradesTax

SocialSecurity

&Income

Tax

ExciseTax

ValueAdded

Tax

OtherRevenue

Budget Estimates

Net Collection

18












BusinessTax19% Goods &

ServiceTax4%

TradesTax9%

SocialSecurity &

IncomeTax16%

Budget Estimates

Net Collection

19

TargetsSR ‘000’

ActualSR ‘000’

PerformanceSR ‘000’

Difference

Business Tax 919,013 881,833 -37,180 -4.0%Goods & Service Tax 179,732 177,577 -2,154 -1.2%Trades Tax 415,684 430,744 15,060 3.6%Social Security & Income &NonMonetary benefits Tax

765,644 761,342 -4,302 -0.6%

Excise Tax 649,281 651,913 2,632 0.4%Value Added Tax 1,450,845 1,445,882 -4,963 -0.3%Other Revenue (license fees) 249,933 260,750 10,817 4.3%Other Non Tax Revenue 26,009Total 4,630,131 4,636,0511 5,920 0.1%

Table 5: Overall revenue collection 2013 against target

5.1.3 Overall assessment

The overall collection of Revenue for 2013 has resulted in an over performance of

approximately SR 5.9 million (just under 1 percent of target).The best performing taxes being

Trades Tax, Excise Tax and Other Revenue (license fees), whilst Business Tax, GST, Income Tax

and VAT have fared less favourably. The underperformance can be explained by a decline in

payment of Income Tax for certain months and a reduction in the performance of some large

businesses for the year 2012 and 2013 which resulted in a downward variation of the monthly

Provisional Tax instalment collected and claims of refunds for some of those businesses.

Table 5 above is a summary of the revenue collected for the year ended 31 December 2013

whilst figure 6 shows a graphical presentation of actual revenue collected against the forecast

for 2013.

1 The total actual collection certified by treasury was SR 4,642,351,901.51 which includes SR 5,117,822.06prepayment bill of entry, SR -144,941.82 court cost deposit and SR 1,328,135.61 taxation unidentified item. Theseamounts are not included in table 5 because the prepayment bill of entry is a credit account that clearing agentshave with SRC, the court cost deposit is an old account with the balance brought forward from previous years andthe unidentified item account is a suspense account with a balance brought forward from previous years.

20

5.1.3.1 Business Tax Revenue

Figure 7: Business tax contribution per sector for the year 2013

A total net revenue of SR 881.8 million was collected for business tax for the year 2013, with

companies accounting for 79.2percent of the amount collected, sole traders 2percent,

partnerships 0.5percent, trust Nil, withholding tax 7.8percent and other taxes making up the

difference. The corporate social responsibility tax (CSRT) and tourism marketing tax (TMT) were

introduced in 2013 under the Business Tax Act 2009 and accounted for 5percent and

2.5percent, respectively of business tax collected. Tax on Residential dwelling which was

previously administered under the GST Act was legally transferred to the Business Tax Act 2009

in 2013 and accounted for 3percentof the amount collected.

Sole traders2.0%

Partnerships0.5%

Trusts0.0%

Withholding tax7.8%

Others0.1%

CSR5.0%

20











Companies79.2%

CSR5.0%

TMT2.5% Residential Dwelling

3.0%Companies

Sole traders

Partnerships

Trusts

Withholding tax

Others

CSR

TMT

Residential Dwelling

20











Companies

Sole traders

Partnerships

Trusts

Withholding tax

Others

TMT

Residential Dwelling

21

Figure 8: Business Tax revenue for the year 2010 – 2013

2010SR ‘000’

2011SR ‘000’

2012SR ‘000’

2013SR ‘000’

Companies 702,957 806,828 712,272 698,747Sole traders 13,820 14,910 21,688 17,202Partnerships 8,989 5,250 4,512 4,338Trusts 39 58 93 63Withholding tax 58,105 73,358 76,919 68,350Total 784,063 900,774 815,778 881,833

Table 6: Total Business Tax revenue for the year 2010-2013

When compared to 2012, the Business Tax collection for 2013 shows an increase of 8.1 percent

which is attributed mainly to the introduction of Corporate Social Responsibility Tax (CSR) and

Tourism Marketing Tax (TMT) and the transfer of Residential Dwelling Tax from GST to Business

Tax early in 2013. Corporate Social Responsibility Tax (CSRT), Marketing Tourism Tax (TMT) and

Residential Dwelling Tax as shown in Figure 7 accounted for 10.5 percent of the total business

tax collected over the year.

0

100

200

300

400

500

600

700

800

900

Companies Sole traders

21


2010SR ‘000’

2011SR ‘000’

2012SR ‘000’

2013SR ‘000’









Sole traders Partnerships Trusts Withholdingtax

21


2010SR ‘000’

2011SR ‘000’

2012SR ‘000’

2013SR ‘000’









2010

2011

2012

2013

22

When compared to previous years there was a decline in the performance of Business Tax

collected from Companies, Sole Trader, Partnerships, Trust and Withholding. Business Tax

collected from Companies for 2013 was below the previous year collection by SR 13.5 million or

1.9 percent, due to some businesses making requests for a downward variation of assessment

for PAYG instalment because the businesses anticipated that they would not make that much

profit for the year. Certain large businesses that usually pay business tax have also reported a

reduction in their performance for the year 2012 and have declared losses or claimed for a

refund.

5.1.3.2 Goods and Services Tax

Figure 9:GST Arrears contribution per sector for the year 2013

Localmanufacture -

alcohol1.90%

Telecom 21.52%

Insurance1.50%

Imported goods12.60%

Rental income1.33%

Gaming Tax(Casino)0.97%

22








refund.



Localmanufacture -

alcohol1.90%

Local manufactureothers2.02% Petroleum

0.00%

Tobacco0.00%

Professionalservices3.62%

Tourism 54.53%

Local manufacture -alcohol

Local manufacture others

Petroleum

Tobacco

Professional services

Tourism

Telecom

Insurance

Imported goods

Rental income

Gaming Tax (Casino)

22








refund.



Professionalservices3.62%

Local manufacture -alcohol

Local manufacture others

Petroleum

Professional services

Imported goods

Rental income

Gaming Tax (Casino)

23

2010SR ‘000’

2011SR ‘000’

2012SR ‘000’

2013*

SR ‘000’

Local manufacture -alcohol 26,969 15,030 17,921 3,375Local manufacture others 42,468 42,403 33,655 3,595Petroleum 10,228 1,806 0 0Tobacco 12,107 0 0 0Professional services 27,312 32,107 27,809 6,420Tourism 411,323 562,555 753,249 96,835Telecom 97,458 95,507 118,020 38,218Insurance 22,411 29,260 37,119 2,659Imported goods 376,534 413,439 431,929 22,380Rental income 24,026 23,760 34,494 2,366

Gaming Tax (Casino) 6,340 5,864 9,273 1,729Total 1,057,178 1,221,732 1,463,469 177,577Importation 376,534 413,439 431,929 22,380Domestic 680,643 808,292 1,031,541 155,198

Table 7: GST collection for the year 2010-2013 *2013-GST Arrears

Goods and Services Tax was replaced by the Value Added Tax in January 2013. The GST

contribution collected for the year 2013 is in respect of arrears on payments for the year 2012.

As shown in Table 7 above, total arrears on GST collected amounted to SR 177.6 million or 1.2

percent below budget estimates, (refer to Table 5 above). The underperformance can be

explained as a result of the unexpected constant collection for GST throughout the year up to

the third quarter, which resulted in the assumption that the collection for GST would continue

to increase for the fourth quarter therefore forecast was adjusted to include additional funds

for GST for the fourth quarter. Contrary to the forecast there was a drop in collection for the

fourth quarter.

As depicted in Figure 9 above, 54.5 percent of arrears have been collected from the tourismsector.

24

5.1.3.3 Trades Tax Revenue

Figure 10: Trades Tax contribution per sector for the year 2013

A total amount of SR 430.7 million was collected for trade’s tax for the year 2013. The largest

proportion being petroleum products which represents 35.5 percent of trades tax collected and

the smallest proportion being tobacco at 0.65 percent.

Figure 11: Trades Tax revenue for the year 2010 – 2013

Textiles and textileartic

4.95%

Motor vehicleaircrafts11.24%

Tobacco0.65%

Prepared food4.58%

Others19.01%

Levy(additionallevies)7.64%

0

50

100

150

200

24







Alcohol - beveragesspirits

15.14%

Petroleum - mineralproduct35.45%

Documentarycharges1.34%

Alcohol - beverages spirits

Petroleum - mineral product

Textiles and textile artic

Motor vehicle aircrafts

Tobacco

Prepared food

Others

Levy(additional levies)

Documentary charges

24







Alcohol - beverages spirits

Petroleum - mineral product

Textiles and textile artic

Motor vehicle aircrafts

Prepared food

Levy(additional levies)

Documentary charges

2010

2011

2012

2013

25

2010SR ‘000’

2011SR ‘000’

2012SR ‘000’

2013SR ‘000’

Alcohol - beverages spirits 29,439 43,694 38,050 65,225Petroleum - mineral product 151,223 162,837 161,569 152,691Textiles and textile articles 11,333 13,889 13,560 21,326Motor vehicle aircrafts 63,446 68,668 63,815 48,405Tobacco 1,527 468 1,130 2,787Prepared food 19,388 38,748 31,839 19,742Others 34,068 37,128 47,280 81,891Levy(additional levies) 45,117 50,631 42,955 32,917Documentary charges 2,424 7,678 2,867 5,759Total 357,964 423,741 403,064 430,744

Table 8: Trades Tax Collection for the year 2010-2013

Trades tax collected for the year 2013 was above budget estimates by SR 15.1 million or 3.6

percent. The increase is due to a higher collection of Trades tax on both Petroleum Products

and Trades Tax Others which accounts for 35.5 percent and 19.0 percent respectively of the

total Trades tax collected as depicted in Figure 10. When compared to the previous year Trades

tax collected increased by SR 27.7 million, or 6.9 percent, attributed mainly to an increase in

collection of Trades Tax Others, Alcohol, Textiles Articles, Document charges, and Tobacco

amounting to SR 34.6 million, SR 27.2 million, SR 7.8 million, SR 2.9 million and SR 1.7 million,

respectively.

5.1.3.4 6.1.4 Social Security (SS) and Income & Non-Monetary Benefits Tax Revenue (INMBT)

Figure 12: SS and INMBT contribution per sector for the year 2013

SSF Private1%

Income Tax Private63%

25

2010SR ‘000’

2011SR ‘000’

2012SR ‘000’

2013SR ‘000’










respectively.



SSF Government0% Income Tax

Government25%

Income TaxParastatal

11%

Income Tax Private63%

SSF Private

SSF Government

Income Tax Government

Income Tax Parastatal

Income Tax Private

25

2010SR ‘000’

2011SR ‘000’

2012SR ‘000’

2013SR ‘000’










respectively.



SSF Private

SSF Government

Income Tax Government

Income Tax Parastatal

Income Tax Private

26

Income tax from the private sector was the largest contributor of the SR 761 million collected

under social security and income tax for the year 2013.

Figure 13: SS and INMBT revenue for the year 2010 – 2013

2010SR ‘000’

2011SR ‘000’

2012SR ‘000’

2013SR ‘000’

Social SecurityPrivate 232,543 10,968 910 7,393Government 54,111 301 0 0Income TaxGovernment 70,738 141,802 166,004 190,728Parastatal 29,682 67,353 77,935 84,978Private 153,475 408,182 457,718 478,242Total 540,548 628,608 702,567 761,342Private 386,018 419,152 458,628 485,635Parastatal 29,682 67,353 77,935 84,978Government 124,848 142,102 166,004 190,728

Table 9: SS and INMBT per category for the years 2010-2013

0

50

100

150

200

250

300

350

400

450

500

Private

26




2010SR ‘000’

2011SR ‘000’

2012SR ‘000’

2013SR ‘000’



Parastatal Government

26




2010SR ‘000’

2011SR ‘000’

2012SR ‘000’

2013SR ‘000’



2010

2011

2012

2013

27

Social Security contribution collected for the year 2013 is in respect of arrears on payments. As

shown in Table 9 above, total arrears on social security collected amounted to SR 7.4 million or

as depicted in Figure 12 represents 1 percent of total collection.

Actual Income Tax collected has increased every year since its implementation in 2010 for all 3

groups as per Table 9 above. In 2013 there was an increase of 8.4percent in revenue collected

on employees’ emoluments.

However, Income Tax collected for the year 2013 under performed against forecast by SR 4.3

million or 0.6 percent. The underperformance is due to a decline in the collection of Income Tax

payments for the months of August to November compared to other months. The reason for

the decline was due to some businesses not remitting the income tax to SRC although they

have withheld the money from their employees.

5.1.3.5 Excise Tax Revenue

Figure 14: Excise Tax contribution per sector for the year 2013

PETROLEUM44.4%

MOTOR VEHICLES6.5%

27














ALCOHOL - LMG21.4%

TOBACCO - LMG16.6%

ALCOHOL10.8%

TOBACCO0.3%

ALCOHOL - LMG

TOBACCO - LMG

ALCOHOL

PETROLEUM

MOTOR VEHICLES

TOBACCO

27














ALCOHOL - LMG

TOBACCO - LMG

PETROLEUM

MOTOR VEHICLES

28

Figure 15: Excise Tax revenue for the year 2010 – 2013

2010SR ‘000’

2011SR ‘000’

2012SR ‘000’

2013SR ‘000’

Alcohol - LMG 132,725 215,520 183,220 139,524Tobacco - LMG 99,558 108,123 131,990 108,431Alcohol 46,872 60,816 60,498 70,411Petroleum 241,548 283,336 288,472 289,171Motor vehicles 46,801 57,395 57,948 42,587Tobacco 2,356 2,149 3,582 1,790Total 569,861 727,340 725,711 651,913Excise Import 337,578 403,697 410,501 403,958Excise Local 232,283 323,643 315,210 247,955

Table 10: Excise Tax collection on import and local production for 2010 – 2013

Revenue collected for Excise tax for the fiscal year 2013 amounted to SR 2.6 million or 0.4

percent above budget estimate.

Figure 14 shows that Excise Petroleum accounted for 44.4 percent of the total excise tax

collected followed by Excise tax on Locally Manufactured Alcohol by 21.4 percent , Excise tax

0

50

100

150

200

250

300

28


2010SR ‘000’

2011SR ‘000’

2012SR ‘000’

2013SR ‘000’







2010

2011

2012

2013

28


2010SR ‘000’

2011SR ‘000’

2012SR ‘000’

2013SR ‘000’







2010

2011

2012

2013

29

on Locally Manufactured Tobacco by 16.6 percent , Excise tax on Imported Alcohol 10.8percent,

Excise tax on Motor Vehicles by 6.5 percent and Excise tax on Imported Tobacco by 0.3 percent.

When compared to the previous year, Excise Tax collected in 2013 decreased by SR 73.8 million

or 10.2 percent. Excise tax collected on imports has decreased slightly by 1.6 percent whilst on

local by 21.3percent. The decline was mostly attributed to the adjustments made in rates of

beer and stout (locally and imported) at the beginning of the second quarter of 2013. There

was also a decrease in importation of motor vehicles for 2013.

5.1.3.6 Value Added Tax

Figure 16: Value Added Tax revenue for the year 2013

TargetsSR ‘000’

ActualSR ‘000’


Difference

VAT Local 870,774 827,593 -43,181 -5.0%VAT Import 580,070 618,289 38,218 6.6%Total 1,450,845 1,445,882 -4,963 -0.3%

Table 11: Value Added Tax collection on import and local productions for 2013

Value Added Tax (VAT) was introduced in January 2013 replacing the Goods and Services Tax

(GST) which was in existence since 2001. Value Added Tax collected for the year 2013amounted

0

200

400

600

800

1000

VAT LOCAL

29










TargetsSR ‘000’

ActualSR ‘000’


Difference





VAT LOCAL VAT IMPORT

29










TargetsSR ‘000’

ActualSR ‘000’


Difference





Targets

Actual

30

to SR 4.9 million or 0.3 percent below budget the forecast. The underperformance was due to a

late policy decision to allow notional credits to VAT registered businesses but was not factored

in the budget and some businesses claiming a decline in the performance of their economic

activity for certain months in 2013. Table 11 shows that VAT on local supplies and services

under performed by 5 percent whereas VAT on imports over performed by 6.6 percent.

5.1.3.7 Other Tax Revenue

2010SR ‘000’

2011SR ‘000’

2012SR ‘000’

2013SR ‘000’

LICENSE FEESTrade/Ind Licences 8,256 8,127 9,369 6,981Licences and other licences 5,109 5,088 4,353 3,346Road tax & other licences 41,977 44,336 53,524 54,156Telecommunications licences 61,826 61,998 66,066 72,683Casino licences 2,433 3,100 3,767 4,377Hotel licences 877 825 742 111Liquor and toddy licences 206 219 266 287Radio Broadcasting licence 0 0 0 2,302EU fishing licence fees 81,580 57,372 25,315 14,266EU vessel fees 0 0 56,302 53,429Non-EU fishing licence fees 0 0 70,180 48,813Total 202,263 181,065 289,882 260,750

Table 12: Other Tax Revenue (license fees) collection for 2010 – 2013

A noticeable decrease in other taxes (license fees) collected compared to the previous year can

be seen in table 12 above with a major decrease in hotel licence fees of 85 percent compared

to the previous year. This was due to changes at Seychelles Licensing Authority, where hotels

are now required to renew and pay their license fee every five years instead of yearly.

31

5.1.3.8 Other Non Tax Revenue

2010SR ‘000’

2011SR ‘000’

2012SR ‘000’

2013SR ‘000’

Fishing licence fees 70 66 82 71Processing fees-SLA 1,765 508 4 1SLA .insurance fees -32 18 67 101Publication 44 674 694 700Trades tax div(customs fees 997 2,957 3,458 3,202Storage 153 281 498 258Original voucher importer 2,516 3,295 4,590 4,953Pet bottles levy 3,383 7,833 809 164Poultry levy 13,624 20,406 8,230 16,208Levy cans 2,842 2,401 396 351Total 25,362 38,438 18,830 26,009

Table 13: Other Non Tax Revenue collection for 2010 – 2013

Total revenue collected from Other Non tax revenue for the year 2013 was SR 26 million with

the greatest proportion of revenue emanating from poultry levy which amounted to SR 16

million.

5.2 Non-revenue performance

5.2.1 Improve voluntary compliance and facilitate trade

Improving voluntary compliance and facilitating trade involves long term efforts and therefore

during 2013 SRC continued to put in place the right framework, be it in terms of strategies,

policies, standard operating procedures, or systems. The communication strategy, with its

accompanied 2013 action plan was implemented; customer service standards were revised; the

customer service strategy, the complaint policy were developed ready for implementation in

2014, ASYCUDA ++ was replaced by ASYCUDA World.

32

5.2.1.1 Improving service delivery

Customer service strategy – The customer service strategy was developed and approved for

implementation as of 1 January 2014. This Strategy will provide SRC with a road map to

maintain a professional customer service that is responsive to the organisation’s experiences. It

is closely linked with the SRC’s Taxpayer’s Charter and Customer Service Standards and is based

on agreed principles and supported by deliverables in the form of action plans. By committing

to this strategy SRC is demonstrating its commitment to provide its customers with the most

effective and efficient Customer Service through the effort of all its employees.

Communication strategy – The communication strategic was developed and implemented in

the first quarter of 2013. The communication strategy is a part of SRC’s overall strategy and is

critical in helping SRC meet its goals. It is designed to support the structural changes and new

working practices arising from SRC’s reform/modernisation programmes and to contribute to

the successful implementation of such programmes with the right information delivered to the

right audience at the right time.

Complaint policy – A complaint policy with outlined procedures and mechanisms was drawn up

to provide a formal route through which taxpayers can bring their grievances to the attention of

SRC. As a modern organisation SRC needs to show that it is committed to provide quality

service and therefore needs to have a mechanism in place to ensure that taxpayers and the

general public are heard, and that they are given the opportunity to participate fully in the

development and improvement of the services. The complaint mechanism is a means for SRC to

show its willingness to take remedial actions and for taxpayers and the general public to take

full advantage of using this process to make their views known.

Revision of the service standards - During 2013 SRC organised various meetings with the

different sections/ units within SRC to sensitise the staff and get their input towards the

exercise of reviewing the service standards. SRC also measured as a pilot some of those service

standards. The following are some of the standards that were measured in 2013:

33

• New Registration – 90percentof the businesses received their registration letter and TIN

within one day of furnishing all required document for registrations. Delays are caused

by taxpayers whose documents are not completed.

• Responding to VAT enquiries by e-mails – 75percent of emails were generally answered

within 7 days. Complex issues took a little longer with the longest taking not more than

1 month.

• Acknowledging written mails – 90percent written mails were acknowledged within 1

day of receiving them. Two staff were identified to acknowledge all incoming mails.

• Responding to letters – 80percent of letters were responded to within 7days of

receiving it.

• Time taken to answer a call - An Interactive Voice Recording (IVR) system was

developed and built-in into SRC telephone system to reduce congestion on the

telephone lines and route calls faster. There is a significant reduction (60percent) of

time taken to answer and route phone calls. In consequence complaints have been

reduced from clients who call SRC offices for any queries.

• Time taken to license bonded warehouses – 4 days were taken to issue a bonded

warehouse agreement.

E-filing and E-payment – Extension of the e-filing facility was launched at the beginning of 2013

to coincide with the filing of the first VAT return due on 21 February 2013. Businesses could file

their BAS form, VAT return and payroll in one go using the taxation e-service. A guide on how to

use the facility was developed and distributed to taxpayers. It was also made available on the

SRC website for downloading. A short video was produced and aired on SBC TV to explain how

to lodge online. The same content was put on DVDs which were distributed to large businesses

and Vat registered businesses. An article was published in the daily newspaper (Nation and

Today) to sensitise the taxpayers and general public of this new facility. An online poster “File

Online at Your Convenience” was produced and placed at various SRC offices as well as some

key stakeholders premises to sensitise the businesses and the public about the availability of

the service. SRC set up a Public Computer at its Advisory Centre, Ocean Gate House to enable

businesses to submit their BAS, VAT return & payroll online. But despite all these efforts only 44

34

businesses were filing their BAS forms and VAT Returns online by the end of 2013 even if 1163

had registered for the facility. The main reason given for not filing online was that there was

still the need to come to the SRC’s office to make payment as there was no e-payment facility

available for tax purposes. Therefore work accelerated in the second half of 2013 to set up the

e-payment platform. The facility which is expected to be launched in the first half of 2014 is

expected to increase the intake of the e-filing facility. In addition with the introduction of the e-

payment facility it will be mandatory for compulsory VAT registered businesses to file their

return online. All this is aimed at promoting e-filing which will leave SRC more time to

concentrate on providing better services to taxpayers as opposed to merely capturing data.

Switch to ASYCUDA World - In June 2013 after much delay, due to both Customs and the

traders/clearing agents not being ready, SRC (Customs) switched to ASYCUDA World. The

ASYCUDA World system has indeed facilitated trade, despite its high technical implication

which initially caused some importers to feel that the procedures have become more

cumbersome for them. Once stabilised the system has various advantages that has facilitated

the whole process for clearance of cargo namely:

Removing the manual submission of commercial documents to customs;,

Allowing faster clearance and release of goods at Airport cargo;

Creating better controls through a Direct Delivery system;

Providing control on the manifest system which is now more reliable and steady;.

Direct transmission of manifest online by Airlines;

Online assessment of documents submitted to customs;

Effective and reliable reporting system;

Enforcement of pre-payment account for fast and automatic payment of bills.

5.2.1.2 Making it easier and cheaper

Compliance burden survey - SRC carried out a survey on taxpayers’ compliance burden for a

period of three months in the last quarter of 2013. Although the response rate was low SRC

managed to get some indications as to areas that needs improvement namely completing the

35

Business Activity Statement, filing and preparation of tax returns that according to the

respondents make the greatest contribution to the total tax compliance cost.

Launching of Presumptive tax– A simplified tax regime, the presumptive tax was introduced on

1 January 2013, for business with a turnover of less than SR1m, to make it easier for small

businesses to comply with their tax affairs. Businesses had a choice to be in the normal system

by applying for authorisation to opt out of the presumptive tax system.

A Simplified and standardised business tax return - In an effort to build the information system

for better risk identification, improve services by reducing processing time and introducing

online filling, a new business tax return was designed for the year 2013. The return is in a

standardize format and also caters for capturing of information being requested by some of the

organisation’s stakeholder such as the National Bureau of Statistics. With such a standardised

form SRC can now extend the online filing facility to business tax return.

Simplified BAS form for employers of domestic workers – In order to make it easier for

domestic workers liable to income tax of only SR50 per domestic worker per month to comply

with their tax obligations a simplified BAS incorporating a simplified payroll format was

designed. This is also aimed at reducing the administrative burden for SRC.

5.2.1.3 Design and implementation of educational and assistance programs

SRC prepared and rolled out 4 educational programs namely Value-Added Tax, Presumptive

Tax, Online filing and ASYCUDA World for Customs. The VAT program was for businesses falling

in the new threshold of 3 million whereas the Presumptive Tax targeted the small businesses

falling in the threshold of 1 million and below. SRC organised 5 presentations regarding

ASYCUDA World. A total of five videos and TV spots were produced for VAT and aired on SBC

TV.

At the beginning of the year SRC planned and conducted a number of presentations to

businesses in order to address some specific VAT issues such as the transitional period, notional

36

credit, apportionment rules, etc. Furthermore a total of 11 presentations took place between

October and November 2013 on Mahé, Praslin and La Digue for businesses that would fall in

the 3 million threshold category in 2014.

SRC prepared and executed an Educational Campaign for the newly introduced Presumptive

Tax for businesses falling under the SR 1 million threshold. A total of 4 presentations were done

on the 3 main islands. In spite of SRC”s effort to educate the taxpayers so that they adequately

fulfil their tax obligations, there was a very low turnout of participants. SRC also worked closely

with SeNPA staff so that they could assist SRC to educate and sensitize small businesses.

5.2.1.4 Consolidate partnership with Business community

SRC developed and implemented its Communication Strategy and accompanying action plan in

2013 to cater not only for its internal stakeholders but equally important for its external

stakeholders. One of the activities that was carried out to improve external communication was

the meetings with the Tax & Accountant Association and Clearing Agents. These meetings

provided a platform for the different stakeholders to air their concerns or make suggestions to

improve SRC services to them. As a result of the meetings SRC has identified two senior staff in

Provision of Advice Section to be responsible to attend to queries from Tax Agents as they are

the main intermediaries between SRC and the taxpayers. The meeting with the clearing agents

also gave the agents the opportunity to start the process to create an association for

themselves something which SRC is also supporting.

Work also started with the assistance and support of SADC for the setting up of a Business

Forum for Customs. The forum was supposed to be launched in the last quarter of 2013 but due

to reasons outside SRC’s control given the external involvement, the launching was postponed

for the first quarter of 2014.

37

5.2.2 Improve detection and sanction of all forms of tax evasion and smuggling

The Audit Strategy 2013 was implemented in January 2013. An audit selection committee was

set up soon after to monitor the progress and selection of cases for the first quarter of 2013.

The progress of the implementation of the audit strategy was monitored on a monthly basis.

The intelligence program which also formed part of the audit strategy was also monitored. The

program for cross matching third party data with tax information was not fully implemented in

2013 due to difficulties with obtaining information. That part of the program will continue in

2014. In line with the Audit Strategy for 2013, the intelligence team checked internal and

external data from various sources in order to identify the major risks for audit case selection

and provide cases to the audit team for in depth scrutiny. Profiles of large taxpayers were also

updated and with the assistance of the technical advisor, the Intelligence Unit also identified

other areas of risk.

5.2.2.1 Audit

In order to ensure that taxpayers comply with the provisions of the revenue laws and fulfil their

tax obligations, field and desk audits were conducted. During these audits taxpayers’ books,

records and accounts were examined. In cases where under reporting or non-reporting of

income was detected, assessments were raised inclusive of penalties and interest. The audits

conducted revealed that some taxpayers do not maintain proper records, under report their

income and submit unsubstantiated expenses on goods and services purchased by businesses.

There were also a large number of VAT registered businesses that were denied input tax credit

due to lack of valid VAT invoice or the input tax claimed did not qualify as an allowable credit.

For 2013, 299 audit cases were completed against a plan of 573 with a raised revenue yield of

SR 216.3 million against an estimated revenue yield of SR 115 million in respect of additionalassessments raised.

38

Actual Audits cases by segment against planned for 2013

Actual Planned Achievement %Small 85 160 53Medium 154 240 .64Large 60 173 35Total 299 573

Revenue raised against planned for the year 2013 by segment

Actual Planned AchievementSmall 4,133,518 10,000,000 41%Medium 57,319,423 48,765,000 118%Large 141,659,233 52,110,000 272%Total 203,112,174 110,875,000

Audit cases against planned for the year 2013

Actual Planned AchievementTotal 186 165 113%

Administrative assessment revenue raised against planned for 2013

Actual Planned AchievementTotal 13,181,425 4,125,000 320%

Table 14: Actual Audit performance against planned for the year 2013

Tax audits carried-out comprised of the following: 73 Value Added Tax audits, 70 income tax

audits, 58 social security audits, 51 business tax audits and the remaining 46 tax audits were

aimed on other types of taxes.

39

Type of Audit 2012All taxes 2013All taxes

Comprehensive auditsNumber of audits completed 92 73Additional Assessments Value 23,502,420 64,815,388Total Penalties & Interest 7,983,824 26,568,606Issue Oriented auditsNumber of audits completed 250 226Additional Assessments Value 21,068,726 89,448,575Total Penalties & Interest 28,600,897 22,279,617

Table 15:Audit performance for 2013 compared to 2012 by type of audit

2013 2013 2012

Type ofAudit

B Tax Withholding Tax

ValueAdded tax

GST SSC IncomeTax

Excise Tax All taxes All taxes

ComprehensiveauditsNumberof auditscompleted

18 2 0 9 21 22 1 73 92

AdditionalAssessment Value

31,485,963 379,996 21,208,757 5,525,506 4,954,089 1,261,077 64,815,38823,502,420

TotalPenalties& Interest

648,139 115,893 7,941,216 15,984,398

1,613,674 265,286 26,568,6067,983,824

IssueOrientedNumberof auditscompleted

330 73 35

37 480 226 250

AdditionalAssessment Value

9,256,5430

59,264,717 15,312,649 983,939 4,630,727 - 89,448,57521,068,726

TotalPenalties& Interest

8,217,523 6,968,185 2,606,256 2,533,127 1,954,526 22,279,61728,600,897

Table 16: Audit performance for 2013 by type of audit and tax line compared to 2012

Of the total number of tax audits completed and revenue raised, the greatest share was from

the Value Added Tax audits, representing 25 percent of the total number of tax audits and 33

percent of the total revenue raised. The focus for selection of audit cases were mainly on VAT

40

in view that it was the first year of implementation of VAT and credits being claimed were

extremely high.

Out of a total of 20 staff identified to conduct VAT audits starting the year 2013, SRC managed

to recruit 10 auditors. To compensate for the lack of qualified staff to spearhead the VAT

audits, most other existing audit staff, including the managers, director and technical advisors

were mobilized to assist with VAT audits. Table 17 shows the VAT audit results for the year

2013.

Large(000)

Medium(000)

Net all Audit(000)

VAT CREDITVAT Credit Initially Claimed 71,145,324.39 30,918,309.23 102,063,633.62Credit Denied as per Audit Conducted (40,171,934.14) (9,548,703.06) (49,720,637.20)Further Credit Allowed per AuditConducted

15,016.32 137,088.02 152,104.34

Credit Allowed (30,988,406.57) (21,506,694.19) (52,495,100.76)VAT DEBITVAT Payable As Initially Declared 47,763,385.58 1,524,972.36 49,288,357.94Further VAT Assessed per AuditConducted

7,593,538.64 1,950,541.47 9,544,080.11

Total VAT Payable 55,356,924.22 3,475,513.83 58,832,438.05VAT POSITION 24,368,517.65 (18,031,180.36) 6,337,337.29NET VAT POSITIONNet VAT Payable 55,356,924.22 3,475,513.83 58,832,438.05Penalties Imposed 6,791,129.79 177,054.97 6,968,184.76Balance Payable inclusive of Penalties 62,148,054.01 3,652,568.80 65,601,622.81

Table 17: VAT Audit result as at 31 December 2013

As illustrated above, a little over 49 percent or SR49.7 million of claims made for VAT Input Tax

were rejected. On the Debit side, 20 percent or SR 9.5 million of revenue was raised (net of

penalties imposed). Additional Revenue raised inclusive of penalties amounted to 33 percent

or SR 16.5 million of VAT declared.

When comparing the achievement of the Audit Section for the years 2013 against 2012, there

was an increase in revenue of SR 122 million in year 2013 but a reduction of 13 percent in the

number of completed cases. The underperformance in the number of completed cases were

mainly because the focus on audit in 2013 was on VAT and virtually all resources were

41

dedicated to VAT as it was the first year of implementation. In addition, there were capacity

constraints in terms of staffing. Extra effort will be initiated in 2014 to do more audits on other

tax types and to increase resources.

The Audit plan for 2013 also included VAT advisory visits and administrative assessments. Two

forms to raise VAT assessment and VAT amendment were designed for the Audit section and a

check list of questions was also developed for the VAT advisory visits.

5.2.2.2 Advisory Visits

As part of its educational campaign, during the month of January 2013, the auditors focused

mainly on VAT advisory visits and a total of 718 businesses were visited against a plan of 451

visits. This represents an over achievement of 160 percent. Visits were both to registered and

non-registered VAT businesses. They were provided with advice and verification was also done

at the VAT registered business premises to ensure that they were issuing out valid tax invoices

and complying with the VAT Act.

5.2.2.3 Administrative Assessments

In addition to tax audits, there were 186 administrative assessments of previous years which

were completed and total additional revenue raised amounted to SR 13.1 million. With the

introduction of the self- assessed return for the tax year 2010, the number of assessments for

prior years that have to be administratively assessed kept on decreasing. When comparing the

number of assessments completed in 2013 compared to 2012, there was a decrease of

71percent.

Nevertheless there were still a large number of taxpayers who had failed to lodge their business

tax returns and in late 2013, a project on the business tax non-filers commenced, whereby a

large number of businesses were identified and they were default assessed by the auditors in

the Large and Medium Audit Team. This project is still ongoing.

42

5.2.2.4 Other Audit Results

As of 31st December 2013, the audit raised additional revenue of SR203.1 million rupees. The

performance was 77percentabove the expected revenue for 2013. In comparison to year 2012,

this represented an increase of 121.9 million rupees or 150percent.

5.2.2.5 Disputes and Amendments

In the year 2013, 1 objection case and 71 amendment cases were completed. The grand total

of the disputes resulted in an increase in revenue of SR 3.5 million.

5.2.2.6 Interpretation and Appeal

At the commencement of 2013 there were a total of 18 interpretation and appeal cases on

hand. During the year an additional 18 cases were received bringing the total cases to 36 for

the year 2013. Of those cases a total of 27 were closed by the end of 2012.

No. of Cases

Opening stock as at 01/01/2013 18Business Tax objections 9Goods & Services Tax objections 5Revenue Tribunal 1Court cases 3

New cases received 18Business Tax objections 5Goods & Services Tax objections 7Value Added Tax objections 2Income & Non-Monetary Benefits Taxobjections

4

Total cases in the unit in 2013 36Objection cases closed as at31/12/2013

27

Cases Allowed in FullBusiness Tax 2Goods & Services Tax 4Income & Non-Monetary Benefits 2

43

Cases Allowed in PartBusiness Tax 3Goods & Services Tax 3Income & Non-Monetary Benefits 2

Cases DisallowedBusiness Tax 6Goods & Services Tax 4Income & Non-Monetary Benefits 1Value Added Tax objections 3

Court cases 1Closing stock (pending cases)21/12/13

9

Business Tax objections 3Goods & Services Tax objections 1Value Added Tax objections 2Revenue Tribunal 1Court cases 2

Table 18: Number of cases received, closed and outstanding for the year 2013

A total of 19 cases were disallowed in full or partially allowed resulting in an amount of SR

3,738,209.64 being additional revenue raised as a result of audits being upheld.

No. of Cases Closed Revenue Collectable

Cases Allowed in Full 8Business Tax 2 (83,192.30)Goods & Services Tax 4 (270,430.26)Income & Non-Monetary Benefits 2Cases Allowed in Part 8Business Tax 3 1,691,409.96Goods & Services Tax 3 814,057.08Income & Non-Monetary Benefits 2 257,445.51Cases Disallowed 11Business Tax 6 298,774.36Goods & Services Tax 4 675,022.73Income & Non-Monetary Benefits 1 1,500.00Total 27 3,384,587.08

Table 19: Revenue raised and collected from closed interpretation and appeal cases in 2013

44

5.2.2.7 Collection enforcement

A Collection Enforcement Strategy was also developed to maximize revenue collection and the

recovery of debts across all tax lines. The strategy was approved and was presented to the

Enforcement section to be implemented in 2014. The strategy is based on a risk based

approach to collection of debts with the objectives of increasing revenue collection, reduction

of outstanding recovery cases with more timely collections, reduction of cases sent for

prosecution and rejuvenation of the stock of arrears.

With the limited resource available for Enforcement, the focus for 2013 was mainly on

enforcing of debt arrears rather than on current monthly payment. The collection rate for 2013

was 32.5percentcompared to 18 in 2012. As can be seen in the table below the collection rate

has been fluctuating over the year but there is a significant decrease in the last quarter of the

year. At the start of the year the opening balance of uncollected debt stood at SR311.2 million

There was an additional amount of SR108 million during 2013 l to be collected bringing the

total to SR 419.2 million. SRC managed to collect 136.3 million during the year and at the end

of 2013 the closing debt balance stood at SR282.9 million.

Jan‘000

Feb‘000

Mar‘000

April‘000

May‘000

June‘000

July‘000

Aug‘000

Sept‘000

Oct‘000

Nov‘000

Dec‘000

Totalarrears 311,196 10,456 307,214 298,425 293,437 297,876 90,553 09,261 11,049 300,814 293,314 299,392

Amountcollected 21,055 8,110 11,491 6,386 11,049 7,588 9,907 6,362 8,148 5,965 4,242 5,145

Collection rate 6.77% 2.61% 3.74% 2.14% 3.77% 2.55% 3.41% 2.06% 2.62% 1.98% 1.45% 1.72%

Table 20: Collection Rate of debt (Gross/Net Arrears) for the year 2013

45

Stock Jan‘000

Feb‘000

Mar‘000

April‘000

May‘000

June‘000

July‘000

Aug‘000

Sept‘000

Oct‘000

Nov‘000

Dec‘000

Openingstock 311,196 310,456 307,214 298,426 293,437 297,876 290,553 309,261 311,049 300,814 293,314 299,392

Newdebt(raisedduringthemonth)

20,315 4,868 2,701 1,397 15,489 265,450 29,143 8,962 2,676 2,444 15,808 3,934

Collected duringthemonth

21,055 8,110 11,491 6,386 11,049 7,588 10,434 7,173 12,911 9,944 9,730 20,384

Endingstock 310,456 307,214 298,425 293,437 297,876 290,553 309,261 311,049 300,814 293,314 299,392 282,943

Table 21: Monthly stock variation (gross/net arrears)

As can be seen in the table 22, 77.0percentof the total outstanding debt is over 1 year old.

Debt/age 3m 3m-6m 6m-1y + 1y

Gross arrears282,942,772.42 282,942,772.42 282,942,772.42 282,942,772.42

Net arrears22,185,777.44 1,106,393.04 40,780,266.10 218,870,335.84

Percentage 8% 0% 14% 77%

Table 22: Average age of debts (on gross arrears)

By the end of 2013 there are 5 cases (1999 to 2007) still in court, whilst 5 cases were finalized.

Five cases (1999 – 2005) received judgment by consent. There were 15 additional cases being

brought to court.

5.2.2.8 Customs control strategy

The Customs control strategy was presented to Customs officers in March 2013. It was to be

implemented in 2013 but due to priority being given to the introduction of ASYCUDA World in

June 2013, and the risk Assessment Unit not being fully functional until late 2013 the Customs

control strategy will now be updated to include a chapter about passenger terminal and be

implemented in 2014.The Customs control strategy is designed to improve the economic

environment by reducing the amount of cargo subject to physical examinations and verification

46

as well as ensuring a credible and effective defence against smuggling. This is in line with SRC’s

overall strategic objectives, where Customs is required to provide an appropriate level of

facilitation to cross border trade and travel, and consequently to minimize disruption and cost

in a way that keeps the amount of intervention to the minimum necessary to deter, detect and

sanction those that choose not to comply with laws and regulations.

5.2.2.9 New units created for better control

A Manifest Unit was set up to prevent containers from leaving the port without the lodgement

of a BOE. It establishes proper control on collection of revenue in regards to Customs duties

and VAT.

The Risk Assessment Unit was formed in November 2012 and comprised of a manager and two

officers. However it was only in 2013 that one officer was able to start on specific issues relating

to risk. The other two officers were involved with the implementation of ASYCUDA World. The

unit’s manager only started work in July 2013. In that same month an expert from AFRITAC

South conducted a two day sessions to build capacity of the unit.

Despite being a new unit with limited expertise the following activities were carried out from

July 2013:

An incident report spreadsheet for record keeping was created;

The selectivity criteria’s created in the system since 2008 for over 6000 individual

inspections acts were reviewed;

Evaluating of import cases where penalties were imposed and cases referred to

investigation/audit/PCA were evaluated;

Profiling of 38 of the largest and most significant importers/traders was carried out with

a view to strengthening compliance and facilitating trade.

With the creation of the Risk Assessment Unit in the Customs Division, monthly meetings were

organized so as to introduce and get staff to start implementing the risk management strategy

in their areas of work. Officers in the Inland Revenue Section made it a must to detect all bond

keepers who were not complying with the procedures for private bonded warehouses.

47

Emphasis was on collecting outstanding revenue on goods that had been sold from private

bonded warehouses and on which taxes have not yet been collected. In line with this, Inland

Revenue was given a list of all bond keepers with outstanding revenue and this amounted to a

total of SR 15.8 million. As at 31 December 2013 a total of SR 1.3 million was still remaining to

be collected representing roughly 8percent of the initial balance.

During 2013, the Post Clearance Audit Unit was also set up and work immediately started

following a technical assistance mission from AFRITAC South on conducting Post Clearance

audit activities both internally and on importers for compliance to Customs laws and other laws

administered by Customs. The selection for conducting audits on companies has been based on

their past histories and the status of the goods they are importing. These were mainly bonded

companies importing high value taxable goods. Both desk and on-site audits were carried out.

For 2013, out of the 5 PCA planned the unit managed to complete 2 audit (both being

comprehensive covering a 5 year period) given that the concept of PCA was still new to the

officers.

The Investigation Unit reported 21 successful cases completed compared to 15 in 2012

amounting to a total revenue collection of RS 2.6 million as can be seen in the table below.

Table 26 reveals an increase in the number of cases of misclassification, undervalue of

goods(Re-assessment), restricted imports landed without import permits and fine collections.

Year Surplus goods Miss-classification Re-assessment Restricted import Fine collected Totalcollection

No. ofcases

ExtraTaxescollected

No. ofcases

Extra Taxescollected

No.ofcases

Amountcollected

No. ofcases

Penaltycollected

No.Ofcases

Amountcollected

2012 13 205,018.9 2 12,442.63 2 200280.2 NIL NIL 12 770799.74 1,188,541.4

2013 4 120,453.9 7 784,340.88 9 1,032,664.4 1 5306 15 934,533 2,552,228.7

Table 23: Performance of Investigation Unit for 2013

48

The Examination Unit reported a total number of 55 incidences for the year these involved

mainly undeclared commercial goods arriving through cargo, the figure reported for this year

was however lower than the figure reported in 2012 which was at 76. The decrease in 2013 was

partly due to the adjustment of the automatic selectivity system in the ASYCUDA world. As per

the Risk Unit the parameters was recently changed to be in line with best practice and these

were adjusted at 15percent- Red category, 35percent - Yellow, 15percent-Blue2 and 35percent-

Green as from June 2013 compared to the parameters set in ASYCUDA ++ which was 1percent-

Red, 24percent- Yellow and 75percent-Green. Therefore the number of verified cargoes in

2012 was higher at 3929 whereas in 2013 the amount dropped down to 3327. Before the

introduction of ASYCUDA World although some cargoes were routed to green, a large

percentage were still being verified by the unit. With the introduction of the new system, most

of the green cargoes are being released without verification as per the new guidelines and

SOPs. This in a way has facilitated and improved releases allowing for fast clearance of goods

from the warehouse.

There were two drug detections made at the airport passenger terminal during the year 2013,

where the drugs were in the form of chocolate powder concealed in a suitcase. The detection

was identified by an Officer from observing and by profiling the passenger. The second

detection involved a passenger displaying signs of a possible internal concealment and the

officer called for a body search. This was later confirmed when the passenger was admitted to

the hospital. In addition to drug detections, there have been a number of normal detections of

duty free goods concealed over and above what is allowed as duty free by passengers. The easy

detections have been attributed to the new X-ray machine recently installed in the arrival hall

where carry-on bags are scanned.

2 Blue pertains to PCA and PCA started operation in 2013, hence the parameter was set in 2013 as opposed to 2012where there was no PCA activity.

49

5.2.3 Enhance our business capacity

5.2.3.1 Strengthening our internal organization

An internal audit program for the year 2013 was developed with the aim of ensuring that

programmes and action plans are implemented in accordance with SRC’s strategic plan, to

identify the risks that may negatively impact SRC’s performance and prevent it from achieving

its objectives and to ensure that the Performance Management System which is critical for

decision making is effectively applied.

5.2.3.2 Implementing an Integrated IT system

Given the deficiencies of the Client Management System (CMS) which is hindering the efficiency

of managing revenue collection, SRC sought technical assistance from the Fiscal Affairs

Department of the International Monetary Fund to carry out an audit of the CMS. The audit

performed an independent evaluation of the suitability, scalability, and sustainability of the

CMS. From this audit, the technical assistance provided a description of functional deficiencies;

an examination of the health of the current system; immediate needs and longer-term options

for closing gaps in functionality and design features. The most viable recommendation from

that audit was that SRC considers replacing the CMS with an off the shelve system. Therefore a

business case was submitted to seek funding for this system which has a high initial investment

cost involved.

5.2.3.3 Improve the legal framework

SRC had recruited a second officer in order to assist with the general task of interpretation and

objection/appeal within the legal unit.

After the implementation of VAT, the legal unit focused on the drafting of new revenue laws

(CSRT Act and TMT Act) and reviewed a set of revenue laws already existing (IMNBTA, RAA,

BTA). The launching of petroleum exploration necessitated amending inconsistencies between

an outdated law (Petroleum taxation Act) and the current revenue laws.

50

SRC has been trying to take on board comments from taxpayers in addressing legal deficiencies

and this will guarantee improvement in the legal framework in the future.

However, delays were encountered due to the process undertaken before an amendment can

become law.

5.2.3.4 Design and implement a multi-year support service strategy, programs and annualplans

In 2013 the Administration Unit took on not less than 600 supportive tasks where

approximately 100 were training/workshop related services. The Unit also saw a significant

drop in monthly complaints compared to the previous year, figure 1 below refers.

Figure 17: Comparison of complaints for the year 2012 and 2013

The Unit also reviewed and updated the asset register by conducting a survey on every SRC

premise for easy monitoring and evaluation of assets. Guidelines and procedures for periodic

verification of assets on a half yearly basis were also developed and implemented, with the aim

of facilitating the monitoring of assets and the disbursement process.

0

10

20

30

40

50

60

70

80

20132012

51

The loss of two vehicles from the fleet in 2013 saw the Unit faced with many transportation

challenges and so as to maintain smooth vehicle operations, regular meetings were held with

drivers and other related staff. Both vehicles were involved in an accident and consequently

were sold off to the insurance company as the cost of the repairs would be greater than the

value of the car.

Due to the high rise of infrastructure related issues also saw the need to introduce a technical

unit which will ensure the proper maintenance of all SRC premises, equipment and facilities.

This is as per the proposed administrative procedures manual, which has been submitted for

approval and expected to be in full operation by the end of the first quarter 2014 with the aim

of segregating, simplifying and enhancing resource management.

In addition SRC developed a Health and Safety policy which approved in late 2013 with the aim

of facilitating the implementation of Health and Safety operations within SRC. In line with this,

the H&S unit has also tackled some major issues which had been identified since 2012 and

needed urgently to be resolved in 2013. Actions taken by SRC and related partners to resolved

major issues included:

• Semi renovation of the government warehouse by the Seychelles Port Authority;

• Report forwarded to the respective authority, Seychelles Port Authority, Ministry of

Finance Trade and Investment and Ministry of Health for the elimination of asbestos at

the seaport;

• Major extension and movement of ten SRC offices.

However again due to budget constraints certain issues raised in 2013 could not be addressed.

This included:-

• constructing roofing for filing shed at seaport which was leaking;

• implementing registry rack within the Tax Division;

• Filling shelves for the new air cargo terminal;

• Partitioning of examination office at the airport;

52

• Extension of government warehouse.

5.2.4 Develop a dynamic and professional workforce

5.2.4.1 Improve resource allocation

Throughout 2013, the HR section identified current and future needs of the different divisions

within SRC in terms of human resource allocation. However as result of an increase in workload

(due mainly to the implementation of ASYCUDA World or lowering of VAT threshold, which

resulted in changes in the duties and responsibilities of officers, and the increase in the number

of flights), HR had to carry out an extensive recruitment exercise to fill an outstanding 58 vacant

positions. The aim was to select and recruit on board as many potential and qualified

candidates in the organization. However, in 2014 a recruitment programme will be developed

alongside the HR Strategy to promote consistency and transparency.

Furthermore upon evaluating the duties and responsibilities of each post which helped in

identifying the qualification requirements of each position. As a result SRC has then been able

to identify areas of priority where staff is in need of training and development to increase their

capabilities and performance.

With the aim to further maximize Human Resources performance, SRC promoted a total of 55

employees’ based on their years of experiences and job knowledge as key factor to enhance

performance. Also as part of staff movement so as to make maximum use of current and

experienced employees a total of 23 internal transfers took place so as to enhance employee’s

knowledge in various functions of the different units of SRC. Table 24 below refers.

53

DIVISIONSNEW

APPOINTMENTS PROMOTIONSTRANSFERS TERMINATION OF EMPLOYMENT

(Through Resignation or dismissal)IN OUT

RC Office 1 1 0 0 0RPO 4 1 1 1 1SupportServices

5 0 0 0 2

Customs 32 50 16 0 14Domestic Tax 19 3 6 0 14Total Amount 61 55 23 1 31

Table 24: Staff movement for the year 2013

With an SRC 2013 Training plan and budget of approximately SR 2.1 million, the Training &

Development Section (T&D S) started the core operations early at the onset of the year with

two induction programmes in the first quarter as well as several processing for local and

overseas training applications spread out throughout the year. At the end of the year all new

recruits had followed their induction programme and above 80percent of the training plan was

completed with 57 staff participating in courses at local training institutions, 21 In-house

workshops (donor funded, facilitated by overseas consultants) and 68 on overseas short

training courses. In total there were 605 staff participations in 27 In-house training events

facilitated by SRC Trainers.

With the implementation of ASYCUDAWORLD (AW), the main focus was on delivery of AW

training for SRC AW Trainers, Shipping and Customs agents, brokers and all Customs Staff. A

training plan of identified AW training needs in other divisions will be implemented in 2014 as

well as necessary refresher training for trained stakeholders and mandatory sessions for new

applicants. T&D is keeping an up to date database for AW capacity building.

5.2.4.2 Increase employee’s competence skills and capability

The Training Needs Assessment [TNA] was one of T&D’s main activities for the year in the first

quarter of 2013 which covered above 95 percent of the workforce. The results of the TNA

allowed development of learning pathways for all posts within SRC. The Learning pathways

clearly mapped professional development needs and stages of each post and can be

customized for individual staff based on particular circumstances.

54

Several technical assisted trainings were also provided for the identified technical competencies

and structural gaps. A few of the technical assistance training followed from previous years

diagnosis missions by external bodies such as WCO or IMF consultants. There were ten such

technical missions by experts from WCO/IMF or IMF capacity building programmes of which

above 100 SRC staff were trained. The benefits of these capacity building supports prompted

requests for others in 2014 in several key technical deficiency areas. Some capacity building

needs questionnaires and requests forms have already been sent to the usual donors such as

IMF, WCO and SADC.

With important efforts made in 2013 to identify the training needs, this was further

complemented through trainings conducted as statistics per table 3below depicts.

Local Training (At Local TrainingInstitutions)

Overseas Training

Division Number ofParticipation

% of Total Participationin the division

Number ofParticipation

% of Total SRCParticipation

Secretariat 04 07 09 13

Reform ProjectOffice

01 02 20 29

Domestic Taxation 24 42 10 15

Customs 23 40 27 40

Support Services 05 09 02 03

Totals 57 100 68 100

Combined Total Participations: 125

Table 25: Training Participations per divisions for 2013

5.2.4.3 Enhance performance management

HR reinforced on the implementation its performance management system that was

introduced in late 2012. Meetings and trainings conducted on the PMS targeted mainly

55

supervisors, managers, directors to the executive management team, with the sole aim of

better equipping them with the tools that will facilitate the implementation and monitoring

process of the PMS. The steering committee of the PMS also met in late 2013, whereby they

drafted and documented certain standards criteria that if applied should be same across the

board for all individual staff.

The committee further drafted a rewards and sanctions policy to be applied in the PMS which

act as a guide when it comes to rewarding staff at the end of the appraisal period. This applied

to both new and current staff as this depicted a concrete and formal step as to what staff are

entitled to at the end of their appraisal period in terms of rewards based on their performance

throughout a standard annual appraisal period.

Furthermore, the steering committee will be developing a procedure for employees with poor

performance to be placed on a performance improvement programme. Each programme will

be specific to the post which will enable the employee to meet their targets.

5.2.4.4 Promote career development

The new Scheme of Service implemented in July 2013, is now more competitive and attractive

enough to motivate and retain long standing officers. The scheme is also geared at

remunerating staff for having marketable skills as well as an inducement allowance. This aims

to be a motivator for staff to obtain academic qualifications which will enhance their prospects

for continued career progression.

The HR Section will be developing and implementing a succession and retention policy to be

implemented in 2014 with the help of technical assistant from WCO, where contact has already

been established with the first session being held in February 2014. This is to build capacity

within the HR Section and assist in developing a HR Strategy which will include a Succession and

Retention policy.

56

5.2.4.5 Manage change and adapt to change

The introduction of change management as a topic in the induction program was a turning

point as it was conducted internally by SRC personnel. Other workshop on the same topic was

conducted for current staff. Change management is expected to become a tradition in SRC so as

to equip staff with the right skills and attitude when it comes to changes at organisational,

divisional and individual levels.

In 2013 also saw the full implementation and use of the Intranet which was updated regularly

and where staff was encouraged to make use of it on daily basis. Dissemination of information

was further reinforced on through encouragement of internal meetings, whereby section

meetings increased between managers and directors. The introduction of the monthly directors

meeting with the Revenue commissioner also brought another aspect of internal

communication within SRC.

5.2.4.6 Develop an integrity oriented working atmosphere

2013 saw the development of terms of reference for the setting up of SRC’s first Integrity

Advisory Committee. The Committee will meet for the first time in January 2014 to discuss the

way forward with the already updated integrity action plan as the committee’s main plan.

In addition the induction program developed for new recruits also targets integrity related

aspect in terms of shaping employee expectation in reference to their behaviour and attitude.

This is done through familiarisation of already established policies and guidelines by HR Officers

together with new recruits. The code of conduct is reinforced upon and is also a major part of

the induction program.

Recognising the importance of technology in enhancing best practices in non-intrusive Customs

procedures, T&DS also coordinated together with SCAA training in the use of the X – Ray

scanning machine for all Officers at the airport.

57

5.2.5 Promote good corporate governance

5.2.5.1 Develop strategic planning

Two years into the implementation of the 2012-1014 strategic plan a decision was taken for

SRC to move to a rolling strategic plan so that at the end of each year an additional year is

added to the strategic plan hence there is always a 3 year plan – a living strategic plan.

In the last quarter of 2013, the 2014 business plan was reviewed to take into account new

development and constraints and the progress that have been made thus far. In addition the

2015 and 2016 business plans with Key Performance Indicators were drawn up. The rolling

strategic planning covering the period 2014-2016 was launched in December 2013. With input

from the staff, the 3 year Strategic Plan builds on the organizational strengths that have

developed over the last 4 years and figures a course for the future. The strategic plan

represents a blueprint and serves as a roadmap for the way SRC proceeds as an organization to

achieve its mission and strategic objectives. It was developed to encapsulate SRCs challenges.

Very important is that the strategic plan trickles down to the operational level where each

division within SRC has their own annual action plan and operational plan. Together with the

publication of SRC’s annual report these documents provide information, demonstrating both

accountability and transparency, two of the core functions of SRC.

5.2.5.2 Improve decision making

One of the main functions of SRC is to collect the right amount of taxes due in line with the

revenue laws. The most cost effective way to do this is through voluntary compliance by all

those liable to pay taxes. However, this is not always forthcoming and SRC faced with limited

resources has to be diligent in managing its responsibilities. This is why risk management is an

increasingly critical part of the decision-making process in SRC. An integrated approach to risk

management is crucial to enable SRC to improve compliance.

58

As mentioned earlier, three strategies were launched based on risk management principles. The

Audit Strategy, the Customs Control Strategy and the Enforcement Strategy are all based on a

risk management approach.

The Audit Strategy’s focus is e to target the highest risk and the most high risk taxpayers by

using a risk management approach to case selection instead of the traditional method of

screening. This involves cross matching of third party data with SRC data, profiling of taxpayers

and industry analysis.

The Customs Control Strategy aims at differentiating compliant operators and low risk

consignments which should benefit from greater facilitation, from those that require higher

levels of control. It is designed to help concentrate the limited resources on more efficient,

more effective and better targeted controls. It includes practical and operational tools that

allow Customs to assess, profile and target the flows of goods, people and means of

conveyance that cross international borders and to determine what levels of intervention may

or may not be required.

The Collection Enforcement Strategy which is also based on risk management principles is

concerned with the enforcement side of non-compliance, more specifically debt collection in

order to maximize revenue collection and the recovering of debt across all taxes that are due to

the government. SRC adopted a risk management approach when designing the collection

enforcement strategy with the objectives of:

• Increasing revenue collection: Collecting the total tax liabilities that are owed to the

government, these will include outstanding tax liabilities and additional taxes (penalties

and interests);

• Reducing outstanding recovery cases with more timely collections;,

• Reducing cases sent for prosecution;

• Rejuvenating of the stock of arrears: Reducing the age of arrears by reducing the delays

for recovering the arrears.

59

5.2.5.3 Enhance internal control

Internal Audit planned 6 audits for the year 2013. Unfortunately IA only managed to review 3

areas which included Screening and Acquitting of Manifest, Operations of the Government

Warehouse and Verification of Red Channelled Consignments. The reviews aimed at

establishing the strengths and weaknesses of the mentioned areas thus producing management

with tools to improve internal procedures and controls. As a result:

• SRC Management has ensured that processing of manifest became a priority in the new

system i.e. ASYCUDA World;

• Director Seaport Operations is making certain that the Government Warehouse is

refurbished and proper operational procedures restored;

• IA established that within ASYCUDA++ the selectivity criteria in respect of red

channelled consignments were not that effective, however this is of little relevance

considering that a new system was adopted (ASYCUDA World).

The total revenue raised for the year 2013 form internal audits is SR19.9 million. However, the

amount collected thus far s SR13.7 million. The main reason for the discrepancy between

revenue raised and collected is the fact that most payments are being made by instalments.

PLANNED AUDITSAREAS TOTAL TAXES RAISED TOTAL TAXES COLLECTEDManifest - -Government Warehouse - -Red Channeled Verification - -Total - -UNPLANNED AUDITSFAPC - -Levy on PETs and Cans 119,700.00 119,700.00Outstanding Cash & Cheques atAirport Cargo 164,437.00 13,080.00Total 284,137.00 132,780.00FOLLOW UPSDishonoured Cheques - 235,106.22Private Bonded Warehouse 19,613,285.20 13,300,467.70Total 19,613,285.20 13,535,573.92GRAND TOTAL 19,897,422.20 13,668,353.92

Table 26: Total revenue raised and collected from audit reviews and follow- ups

60

5.2.5.4 Enhance Integrity

During , 2013, SRC continued to be committed to eliminate corrupt practices in the work place

by building a strong culture of integrity within the organization. SRC has recorded a drop of

6percent in number of disciplinary cases being dealt with and a notable difference in gravity of

the offence being committed. A total of 7 cases were reported with only one case resulting in

termination of employment, compared to the 16 cases reported in 2012 whereby 6 cases

resulted in termination of employment. This has been highly influenced by the management’s

initiative to introduce appropriate policies and procedures to address the issue of integrity. Due

to a lack of technical expertise in this field technical assistance was sought from the World

Customs Organization (WCO) in order to guide SRC in formulating an integrity action plan. The

action plan was drafted through a workshop facilitated by an integrity expert from the WCO

which took place from 24th to 27th January 2012 at SRC Headquarters.

The year 2013, has seen a majority of development and implementation of activities on the

Integrity Action plan. Since the beginning of 2013, all new recruits are required to attend a

three day induction program and five weeks basic entry training whereby components of

Integrity have been incorporated in several of their modules. This gives SRC the opportunity to

shape employee’s expectation, behaviour and attitude. Furthermore, SRC finalized its very own

Code of Conduct in 2013 which has been developed in line with the Public Service Order,

Arusha Declaration and WCO Integrity Development Guide. The newly introduced Code of

Conduct will be used to guide and Support a desirable organizational culture. To ensure its

success, all SRC employees have been given a copy of the Code of Conduct Booklet.

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ANNEX 1 – SRC’SDIVISIONAL STRUCTURES

Revenue Commissioner’s Office

As SRC continues to modernize, it was deemed necessary to strengthen the legal unit. As a

result approval was granted by the Revenue Commissioner to transfer the Interpretations and

Appeal Unit from Tax Division to the RC’s Office. This unit was then absorbed in the Legal unit.

The Legal Advice is now functioning as a section in the Revenue Commissioner’s Office with a

Director, Manager and a Legal Advice coordinator. This was seen as a strategic move in view

that the duties and the responsibilities of the Interpretation and appeals unit were in line with

that of the legal advisor. Furthermore, added staff in the Legal Advice unit has provided much

needed assistance to the Director with distribution of workload and an increase scope of work.

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Reform Project Office:

Statistical facts can help determine the value of any given business procedures. Organizations

who fail to recognize the importance of statistical analysis could very well doom their business

enterprises to failure. This is because many organizations fail to see the importance of statistics,

which consist of assisting Management in planning, decision-making or other actions and

monitoring or assessment of policies. In line with this trend, a recommendation was made by

the Deputy Commissioner, for the creation of the post of Statistician in the Compliance, Policy

and Program Section with effect from 19th March 2013. An experienced statistician was

recruited in the month of July 2013 with the r main duties being to collect, compile and analyze

data to identify trend for planning and decision making.

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Following a Job evaluation exercise conducted by the Department of Public

Administration in July 2013, it was recommended and approved for the Training and

Development Section to be reclassified as the Human Resources Development Section.

This reclassification was implemented so that the section could benefit from the Scheme

of Service established for Common Cadres under the Human Resources Scheme of

Service.

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Service.

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Service.

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During the year 2013, the Enforcement Section in the Tax Division has seen the introduction

of a new Payroll Unit within their section. This unit was created to undertake duties

transferred from the Pension Fund such as the monitoring and collection of Income tax

based upon the submission of payrolls from all Ministries, departments and private

businesses.

With the introduction of the ASYCUDA world software system the duties of the Customs

Officers at all level was re-evaluated to accommodate for the change. As a result all the

revenue collections duties were reallocated to the Revenue Collection Section within the

Tax Division. Thus Revenue Officers were required to be posted at the different pay points

within the Customs Division in order to undertake the revenue collection duties. This was

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businesses.






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businesses.






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also implemented with the objectives to segregate duties to prevent corrupt practices and

reduce frequent discrepancies.

With the introduction of the ASYCUDA world in June 2013 and to improve efficiency within the

division the following positions and teams were created within the Seaport and Airport

Operations Sections:

Airport Operations Section:

o Manager Examination Unit

Inland Revenue Operations Section:

o Manager for Excise Tax and SITZ Unit

Seaport Operations Section:

o The Manifest and Export teams was introduced within the Enforcement

Unit

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It is to be noted that, as a result of the introduction of ASYCUDA world the duties of the

Customs Officers at all levels was re-evaluated in order to accommodate for the changes. Due

to the restructuring in Airport Operations and Inland Revenue Operations Sections, the duties

of the managers’ portfolio were re-evaluated. Thus the Manager of the Examination unit and

Manager for Excise Tax and SITZ Unit were created to balance the portfolios under each

manager’s responsibilities including adequate monitoring.

Documents

Seychelles Revenue Commission33,346 parcels through postal mail were cleared; 290,563 arriving passengers were processed coming from 2086 schedules flights and 510 unscheduled flights