Tourism - Taxes and Incentives

Tourism - Taxes and Incentives

As one of the key pillars of the economy, the tourism sector continues to make a significant contribution to the country’s GDP. As such, the Seychelles Government ensures enough support is given to the tourism industry through the provision of various incentives. These incentives are in place to maintain a competitive business environment and ensure continuity in tourism-related investments.

 

The following incentives are currently available for specifically mentioned businesses in tourism:

BUSINESS TAX

 

Business Tax: Tourism

 

0%

SCR 0 – SCR 250,000 of taxable income

15%

SCR 250,000+

 

As per the Eighth Schedule of S.I. 66, 2012, the following businesses are eligible for the above business tax rates:

 

  • Domestic ferry services for the transport of freight or passengers
  • Tour operator/travel agent
  • Tour guide
  • Boat/yacht/charter (including liveaboard)
  • Fixed or rotary-wing passenger transport services
  • Hotel, guest house/self-catering establishment
  • Underwater dive operator/dive centre
  • Café/restaurant
  • Car hire operator
  • Equestrian operator
  • Watersports operator

 

Any economic activity within the tourism sector that does not appear in the list above will be subject to normal business tax.  

 

TOURISM MARKETING TAX (TMT)

 

A 0.5% tax rate is imposed on turnover for entities whose:

  • annual turnover equals or exceeds SCR 1,000,000

AND

  • businesses fall within the following categories:
  • hotels, guesthouses and self-catering establishments
  • cafés and restaurants
  • fixed or rotary wing passenger air transport services
  • domestic ferry services for the transport of freight or I passengers; boat or yacht charterers (including liveaboard)
  • car hire operators
  • underwater diver operators or I dive centres
  • water sports operators
  • travel agents
  • tour operators
  • tour and or tourist guides
  • equestrian operators
  • all banks, insurer companies (excluding brokers) and telecommunication service providers
  • casino operators and building contractor class 1
  • destination management companies
  • travel agent

 

Find out more in Tourism Marketing Tax Act, 2013, Tourism Marketing Tax (Amendment of Schedule) Regulations, 2017 and Tourism Marketing Tax (Amendment) Act, 2019.

 

Payment Schedule

 

The deadline for payment is on the 21st of the following applicable month. For example deadline for payment of TMT for the month of August 2020, is due by the 21st September 2020 Find out more.

Example 1: A non-VAT registered entity

In April 2017, a company had a turnover of SCR 100,000. Its TMT liability will be:

 

0.5% x SCR 100,000 = SCR 500.


Example 2: A VAT registered entity

In April 2017, a VAT registered company had a turnover of SCR 100,000.00.

 

The VAT payable is SCR 15,000. Its TMT liability will be calculated as 0.5% of the VAT exclusive turnover (SCR 100,000 – 15,000) which is:

 

0.5% x SR 85,000 = SCR 425

 

TAX INCENTIVES

 

Marketing and Promotion Expenditure

 

A further deduction, in addition to all other allowable deductions, of the expenditure incurred for marketing and promotion to the extent of 5% of the taxable income or the actual expenditure incurred, whichever is lower [S.I. 44 of 2016, Amendment of Part I of S.I. 66 of 2012]

 

This is applicable to:

  • Hotel, guest house / self-catering establishment
  • Café or restaurant
  • Fixed or rotary-wing passenger air transport services in respect of all domestic flights
  • Domestic ferry services for the transport of freight or passengers
  • Boat or yacht charter (including liveaboard)
  • Car hire operator
  • Underwater diver operator of dive centre
  • Watersports operator
  • Travel agent
  • Tour and/or Tourist guide
  • Equestrian operator
  • Gambling/Casino operator

 

Example 1:

 

A business with taxable income of SCR 30 million, claims SCR 1 million for marketing / promotion (actual expenditure).

 

SCR 30 million (taxable income) x 5% = SCR 1.5 million

 

That taxpayer will be allowed a further deduction of SCR 1 million as it is the lower amount between the actual expenditure incurred (SCR 1 million) and the 5% of taxable income (SCR 1.5 million)

 

Example 2:

 

A business with taxable income of SCR 30 million, claims SCR 2 million for marketing / promotion (actual expenditure).

 

SCR 30 million (taxable income) x 5% = SCR 1.5 million

 

That taxpayer will be allowed a further deduction of SCR 1.5 million as it is the lower amount between the actual expenditure incurred (SCR 2 million) and the 5% of taxabe income (SCR 1.5 million).

 

 

**For clarity purposes, in applying the 5% to the taxable business income of the specified person, the interpretation to be given to taxable business income shall be restricted to only the taxable income attributable to the business carried on and giving rise to the special deduction. A specified person who also carries on other business cannot consider the total taxable business income of all businesses aggregated for the purpose of applying the 5% special deduction (SRC Public Ruling 2016-2).

 

 

Training Certified by the Department of Tourism

The total amount of deductions allowable for training certified by the Department of Tourism is 150% of the actual expenditure incurred (under the Eight Schedule in part 2, 3 and 4)

 

Emoluments Paid to Graduates

 

Subject to Income Tax being paid, the total amount of deductions allowed from taxable income for the applicable mentioned businesses** shall be 200% on emoluments paid by an employer to qualified graduate of Seychelles Institute of Technology (SIT), Farmers Training Centers (FTC), Maritime Training Centre (MTC), and Seychelles Tourism Academy (STA) in respect of 12 months full-time employment.

 

  • Hotel, guest house / self-catering establishment
  • Café or restaurant
  • Fixed or rotary-wing passenger air transport services in respect of all domestic flights
  • Domestic ferry services for the transport of freight or passengers
  • Boat or yacht charter (including liveaboard)
  • Car hire operator
  • Underwater diver operator of dive centre
  • Watersports operator
  • Travel agent
  • Tour and/or Tourist guide
  • Equestrian operator
  • Tour Operator
  • Gambling/Casino operator

 

Emoluments Paid to Part–Time Students

 

Subject to Income Tax being paid, the total amount of deductions allowed from taxable income for the applicable businesses shall be 150% on emoluments paid by an employer to a qualified part-time students of Seychelles Institute of Technology (SIT), Farmers Training Center (FTC), Maritime Training Centre (MTC), and Seychelles Tourism Academy (STA) in respect of 12 months full-time employment.

 

  • Hotel, guest house / self-catering establishment
  • Café or restaurant
  • Fixed or rotary-wing passenger air transport services in respect of all domestic flights
  • Domestic ferry services for the transport of freight or passengers
  • Boat or yacht charter (including liveaboard)
  • Car hire operator
  • Underwater diver operator of dive centre
  • Watersports operator
  • Travel agent
  • Tour and/or Tourist guide
  • Equestrian operator
  • Tour Operator
  • Gambling/Casino operator


Special Rates for Accelerated Depreciation
 


Rates of depreciation allowable on capital investments are at the following rates:

Year 145%
Year 420%
Year 240%
Year 510%
Year 330%

These are applicable to:

  • Hotel, guest house / self-catering establishment
  • Café or restaurant
  • Fixed or rotary-wing passenger air transport services in respect of all domestic flights
  • Domestic ferry services for the transport of freight or passengers
  • Boat or yacht charter (including liveaboard)
  • Car hire operator
  • Underwater diver operator of dive centre
  • Watersports operator
  • Travel agent
  • Tour and/or Tourist guide
  • Equestrian operator
  • Tour Operator
  • Gambling/Casino operator

 

Emoluments paid to a Musician by a Licensed Accommodation

 

The total amount of deductions allowed from the taxable income of a licensed accommodation in respect of a musician under a contract of service is 125% of the actual amount paid to the musician.

Excise Tax Concession on Fuel [on refund basis]

Type of Entities and Purpose of Reduction

For the licensed accommodation operator whose electricity cannot be adequately supplied by PUC. The concessionary rate is applied on fuel used for the exclusive purpose of electricity generation for operational purposes of the licensed accommodation.

View the conditions on Schedule 1 Part 1 of S.I 90 of 2018, page 1504.

For licensed ferry services operator (cargo). 

The concessionary rate is applied on fuel for the exclusive purpose of fueling vessels for the transportation of goods by sea between islands in relation to an approved project.

View the conditions on Schedule 1 Part 1 of S.I 104 of 2020.

As of 01st January 2020, tax concessionary rates on fuel are not applicable for the following entities:

 

Licensed dive centre / dive operator

for the exclusive purpose of fueling vessels for ferrying of equipment, staff and clients for diving purposes.

Licensed tour operator (for licensed motorboats)

for the exclusive purpose of fueling vessels for the ferrying of equipment, staff and clients for commercial tour operating purposes.

Licensed cruise ship operator (permanent & temporary)

for the exclusive purpose of fueling vessels for the ferrying of equipment, staff and clients for commercial charters.

Licensed yacht / live-aboard operator (temporary & permanent)

for the exclusive purpose of fueling vessels for the ferrying of equipment, staff and clients for commercial tour operating purposes.

Licensed helicopter service operator

for the exclusive purpose of fueling helicopters for commercial purposes only.

 

Note: Prior to benefiting from the aforementioned incentives, licensed operators in the tourism sector should ensure that they are duly

registered with the Seychelles Licensing Authority (SLA).

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