Income and Non-Monetary Benefits Tax
The Income and Non-Monetary Benefits Tax was introduced in December 2017 and is defined as follows:
- Income Tax – The tax levied on personal emoluments of an individual payable by employees or their employer.
- Non-Monetary Benefits Tax – The tax payable by the employer on any benefit provided to an employed person (an employee) for example accommodation, meals, transport, insurance and others as listed in the Fourth Schedule of the Income and Non-Monetary Benefits Tax Act 2010.
In June 2018, a number of changes were effected to the rates and calculation of income tax on emoluments introducing a progressive regime with an increase in the tax free threshold.
Income Tax Rates
The rates of income tax payable by a citizen and non-citizen employed person in respect of taxable emoluments effective 1 June, 2018 are as follows:
|BRACKET||GROSS MONTHLY INCOME (SCR)||RATES|
|Bracket 1||SCR 0||SCR 8,555.50||0%||0%|
|Bracket 2||SCR 8,555.51||SCR 10,000.00||15% of the amount in excess of SCR 8,555.50||15% of the amount not exceeding SCR 10,000.00|
|Bracket 3||SCR 10,000.01||SCR 83,333.00||SCR 216 plus 20% of the amount in excess of SCR 10,000.00||SCR 1,500 plus 20% of the amount in excess of SCR 10,000.00|
|Bracket 4||> 83,333||SCR 14,883.28 + 30% of the amount in excess of SCR 83,333.00||SCR 16,166.60 plus 30% of the amount in excess of SCR 83,333.00|
Payment of Income Tax
Income tax is usually withheld on the emoluments of employees by the employer and is remitted to the Seychelles Revenue Commission (SRC) on a monthly basis using the Business Activity Statement (BAS).
Payment of Income Tax Under Specific Program
The emolument derived by an employed person working for a specific project is 3% and the emolument is generally found under an agreement between the Government of Seychelles and another Government or International Organization for example an overseas grant.
The employer must:
- Pay the tax withheld to SRC within 21 days of the following applicable month using the BAS.
- Lodge the monthly payroll electronically showcasing total number of employees whether the salaries are taxable or not.
- Provide the employees with a pay slip showing the amount of tax withheld in with employment laws.
- Update and submit the employee status form to the SRC.
The employee must:
- Keep all pay slips provided by the employer and verify if the correct amount of income tax has been deducted.
- Contact SRC in case of any doubt about the income tax remitted by the employer on his or her behalf via email to email@example.com .
- Declare the discrepancy (if any) to SRC to follow up with the employer.
Failure to Pay Tax Withheld
An employer failing to withhold tax as required by Section 5 of the Income and Non-Monetary Benefits Tax Act or failing to pay the tax withheld to SRC will be personally liable to pay to SRC the amount of tax due including any penalties and additional charges.
Income Tax Exemptions – Non Taxable Emoluments
- An emolument derived by a person entitled to privileges under the Privileges and Immunities Act.
An emolument received by someone under the conditions of the Privileges and Immunities Act. For example, expatriates working at embassies.
- An emolument being a reimbursement to cover expenses incurred by employee for use of company vehicle.
An amount of money received as a reimbursement of expenses personally incurred by the employee for the use of a company motor vehicle. For example, Company X rents a car for work purposes and the employee pays for fuel.
- An emolument being a reimbursement by an employer of an employed person for the cost of using the employee’s own motor vehicle for the benefit of the employer.
An amount of money received as a reimbursement for using personal motor vehicle for work purpose. For example, the cost of fuel the employee has used to go to a particular destination for work purposes. Note this emolument is subject to certain conditions.
- Per diem
An allowance given by an employer to an employee when travelling for work purposes to cover the daily and incidental expenses incurred by the employee. Note this emolument is subject to certain conditions.
- Shoe Allowance
An amount of money given to buy a pair of suitable work shoes forming part of the company’s uniform policy. Note this emolument is subject to certain conditions.
An amount of money given to an employee as a reward for their good performance once a year under a bonus scheme and does not exceed the lower of 1/12 of the employed person’s annual base salary. Note this emolument is subject to certain conditions.
An amount of money given by an employer to an employee after he/she ceases employment with the company. Note this emolument is subject to certain conditions.
- Service Charge
An amount added to customer’s bill to pay for the service received. This amount is then shared amongst the employees. This practice is usually common in the tourism sector. Note this emolument is subject to certain conditions.
- Retirement Pension
An amount of money given by the state and the Seychelles Pension Fund to retired individuals and individuals who are diagnosed with certain conditions and cannot work.
- Gratuity Payment
An amount of money received by an employee for their continuous employment.
An amount of money received for working extra hours.
Note this emolument is subject to certain conditions.
- 13th Month Pay
An amount of money equivalent to the basic emolument of an employee that is given after each year (12 month) of continuous employment. Effective 2023, 13th month pay will be based on performance. Note this emolument is subject to certain conditions.
- End of Contract Payment
An amount of money received after completion of a contract period.
Note this emolument is subject to certain conditions.
Non-Monetary Benefits Tax Rates
Effective 1 January 2023, the Non-Monetary Benefits tax rate has been reduced from 20 percent to 15 percent.
An employer shall be liable to pay tax at the rate of 15% of the value of a non-monetary benefit provided to an employed person and such tax shall be computed in accordance with Schedule 4 of the Income and Non-Monetary Benefit Tax Act in respect of each non-monetary benefit provided to the person employed. The schedule also provides for certain exemptions on benefits.
Income Received in Arrears or as Back Payment
From 1 January 2023, any income received by an employee from an employer in a lump sum in arrears or as a back payment, will be treated as if it was received in the month to which the emoluments should be attributed.
For example: If an employee is entitled to an inducement allowance as from January 2023, and the inducement is finally received in July 2023 as a ‘back pay’ covering the prior months, the total sum received will be spread over the 7 months (January to July) with the Progressive Income Tax rates applicable per month.
To view the Income and Non-Monetary Benefits Tax (amendment) Act, 2022 please click here.
Taxation of Non-Monetary Benefits
- Tax shall be computed on the value of the monetary benefits received (value as determined under the Fourth Schedule) in respect of a month or where the employment is for a period less than a month on the total non-monetary benefits provided in respect of that period.
- An employer that provides non-monetary benefits to an employed person is liable to pay tax in respect of that non-monetary benefit at the time of the provision of the non-monetary benefit and the tax due shall be paid to the Seychelles Revenue Commission by the 21st day of the following applicable month in which the liability arose.
- Tax payable by an employer in respect of non-monetary benefits shall be calculated in accordance with the rates set out in the Third Schedule.
- The taxable value of a non-monetary benefit is reduced to the extent that the benefit is used by the employed person in the performance of the employed person’s duties of employment; or by any payment made by the employed person for the benefit.
- The computation of non-monetary benefits are as follows:
|Item||Type of benefits provided to or on behalf of an employed person||Taxable Value||Taxation Treatment Exemption/Exception|
|1.||Accommodation||Type||Per month per employed person (SCR)||
|(a) onsite shelter||300|
|(b) dormitory accommodation||600|
|(c) one bedroom dwelling||2,500|
|(d) two bedroom dwelling||3,000|
|(e) three bedroom dwelling||4,000|
|(f) four bedroom dwelling||5,000|
|2.||Utilities benefit including utility bills such as electricity, water, telephone, cable tv, or home internet access.||Actual cost incurred by the employer.||Utilities benefit provided to an employed person of the tourism sector.|
|3.||Provision of clothing||Identifiable uniforms or safety clothing or protective clothing.|
|4.||In-house benefit (perquisites)||Provided the total benefit in any one month does not exceed 20% of basic salary.|
|5.||Meals||The cost incurred in providing meals to an employed person is exempted from Non-Monetary Benefit tax.|
||An employed persons benefit
to the extent that:
|8.||Life insurance||Actual cost incurred by employer.|
|9.||Health insurance||Applied to all employed persons.|
|10.||Insurance e.g. house and contents, income protection, motor vehicle or fire and burglary insurance.||The cost incurred of the insurance benefit provided to employees so as to encourage employers to insure the house, motor vehicles and other content of their employees in case of burglary or fire disasters.|
|11.||Transport to and from work (excluding motor vehicle).||Transportation cost provided to employed persons for the purpose of home to work travel.|
|12.||Airline and ferry transport.||Actual cost incurred by employer.||Airline/ferry transport both domestic and international provided to employed person.
Any business component airfares can be deducted from the total airfare benefit.
Provision of air fare at the start and conclusion of employment contract.
|Entertainment allowance/reimbursement.||SCR 500 per month where it is accepted by SRC that the employed person will be reasonably expected to undertake entertainment on behalf of his/her employer. Where the allowance exceeds SCR 500, an employed person shall be exempted subject to maintaining documents to support such large sum.|
|13.||Tuition fees and training cost.||Full cost incurred by employer.||Subject to criteria approved by the Minister.|
|14.||Others||Fair market value of the benefit provided.|
|15.||Training cost.||Nil||The employed person should have been in employment one year or more and training is limited to training provided by registered tertiary institutions in Seychelles.|