Seychelles Revenue Commission, Annual Report 2013

Transcription

Seychelles Revenue
Commission
Annual Report 2013
Contents
Table of Tables ...................................................................................................................... 3
Table of Figures ..................................................................................................................... 4
1
Foreword........................................................................................................................ 5
2
The year at a glance........................................................................................................ 8
3
About the Seychelles Revenue Commission .................................................................. 10
4
5
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
SRC resources ............................................................................................................... 13
4.1
Human resources ................................................................................................... 13
4.2
Budget execution and budgetary performance....................................................... 14
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
2
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
3
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
4
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 socioeconomic 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
5
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
6
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
7
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, reimportation, 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.
8
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.
9
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
10
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
11
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 during
2013.
12
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
Commissioner’s Office
Reform Project Office
Support Services
Customs
Tax
Total Amount
2012
2013
11
13
36
131
105
296
11
16
44
149
108
328
Increase In workforce
0
3
8
18
3
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
Resignation
Termination through dismissal
Total Amount
Table 2: 2013 Staff Turnover compared to 2012
13
2012
2013
15
6
7%
29
2
9.45%
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.
14
CUSTOMS040D400
Total
Budget
Total
SCR (thousands)
HRFM040D200
Actual
TAX040D300
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
Service
Agreements
Non-Financial
Assets
Total Expenditure
1,910.26
-
-
1,910.26
1,910.36
-0.10
5,029.32
-
-
5,029.32
4,979.53
49.78
2,983.87
100
129.6
3,213.47
3,022.63
190.84
31,127.69
14,880.34
19,156.30
65,164.32
65,088.11
76.21
Table 3: Administered Budget –Expenditure for the year 2013
29%
48%
HRFM
TAX
23%
CUSTOMS
Figure 2: Expenditure budget consumption per cost centre for the year 2013
15
Variance
(Over)/Under
Wages & Salaries
8%
5%
Office Expenses
3%
2%
Maintenance & Repairs
14%
Transportation & Travel
Costs
69%
Service Agreements
Non-Financial Assets
Figure 3: Expenditure budget consumption per cost category for the year 2013
Actual
SCR (thousands)
SRC Training
Total Expenditure
Budget
HRFM - 040D200
Total
Total
2,415.88
2,415.88
2,415.88
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.
16
5
Performances
5.1
Revenue collection
5.1.1 Actual revenue collected
Other Non
Tax Revenue
1%
Proportion of Actual Revenue Collected for
2013
Goods &
Service Tax
4%
Other Revenue
(license fees)
6%
Business Tax
19%
Value Added Tax
31%
Excise Tax
14%
Goods & Service Tax
Trades Tax
9%
Social Security &
Income Tax
16%
Business Tax
Trades Tax
Social Security & Income Tax
Excise Tax
Value Added Tax
Other Revenue (license fees)
Other Non Tax Revenue
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).
17
Excise Other 2012
7%
Tax
16%
Social
Security &
Income &
Tax
16%
Business
Tax
18%
Value
Added
Tax
31%
Goods &
Service
Tax
33%
Trades
Tax
9%
Other
Revenue
6%
Excise
Tax
14%
2013
Business
Tax
19% Goods &
Service
Tax
4%
Social
Security &
Income
Tax
16%
Trades
Tax
9%
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
1600
1400
1200
1000
800
600
400
200
0
Budget Estimates
Net Collection
Goods
Business
&
Tax
Service
Tax
Trades Social Excise
Tax
Security Tax
&
Income
Tax
Value
Other
Added Revenue
Tax
Figure 6: Actual 2013 revenue per tax type against budget estimates
18
Business Tax
Goods & Service Tax
Trades Tax
Social Security & Income &Non
Monetary benefits Tax
Excise Tax
Value Added Tax
Other Revenue (license fees)
Total
Targets
SR ‘000’
919,013
179,732
415,684
765,644
Actual
SR ‘000’
881,833
177,577
430,744
761,342
Performance
SR ‘000’
-37,180
-2,154
15,060
-4,302
Difference
649,281
1,450,845
249,933
651,913
1,445,882
260,750
26,009
4,636,0511
2,632
-4,963
10,817
0.4%
-0.3%
4.3%
5,920
0.1%
4,630,131
-4.0%
-1.2%
3.6%
-0.6%
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 5,117,822.06
prepayment bill of entry, SR -144,941.82 court cost deposit and SR 1,328,135.61 taxation unidentified item. These
amounts are not included in table 5 because the prepayment bill of entry is a credit account that clearing agents
have with SRC, the court cost deposit is an old account with the balance brought forward from previous years and
the unidentified item account is a suspense account with a balance brought forward from previous years.
19
5.1.3.1
Business Tax Revenue
Withholding tax
7.8%
Trusts
0.0%
CSR
Others 5.0%
0.1%
TMT
2.5%
Residential Dwelling
3.0%
Companies
Sole traders
Partnerships
0.5%
Partnerships
Sole traders
2.0%
Trusts
Withholding tax
Companies
79.2%
Others
CSR
TMT
Residential Dwelling
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.
20
900
800
700
600
2010
500
2011
400
2012
300
2013
200
100
0
Companies
Sole traders
Partnerships
Trusts
Withholding
tax
Figure 8: Business Tax revenue for the year 2010 – 2013
Companies
Sole traders
Partnerships
Trusts
Withholding tax
Total
2010
SR ‘000’
2011
SR ‘000’
2012
SR ‘000’
2013
SR ‘000’
702,957
13,820
8,989
39
58,105
784,063
806,828
14,910
5,250
58
73,358
900,774
712,272
21,688
4,512
93
76,919
815,778
698,747
17,202
4,338
63
68,350
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.
21
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
Local manufacture
Gaming Tax
others
Local
(Casino)
Petroleum
2.02%
manufacture
Rental income
0.97%
0.00%
alcohol
1.33%
1.90%
Tobacco
Imported goods
0.00%
12.60%
Insurance
1.50%
Professional
services
3.62%
Local manufacture -alcohol
Local manufacture others
Petroleum
Tobacco
Telecom 21.52%
Professional services
Tourism 54.53%
Tourism
Telecom
Insurance
Imported goods
Rental income
Gaming Tax (Casino)
Figure 9:GST Arrears contribution per sector for the year 2013
22
Local manufacture -alcohol
Local manufacture others
Petroleum
Tobacco
Professional services
Tourism
Telecom
Insurance
Imported goods
Rental income
Gaming Tax (Casino)
Total
Importation
Domestic
2010
SR ‘000’
2011
SR ‘000’
2012
SR ‘000’
2013*
SR ‘000’
26,969
42,468
10,228
12,107
27,312
411,323
97,458
22,411
376,534
24,026
6,340
1,057,178
376,534
680,643
15,030
42,403
1,806
0
32,107
562,555
95,507
29,260
413,439
23,760
5,864
1,221,732
413,439
808,292
17,921
33,655
0
0
27,809
753,249
118,020
37,119
431,929
34,494
9,273
1,463,469
431,929
1,031,541
3,375
3,595
0
0
6,420
96,835
38,218
2,659
22,380
2,366
1,729
177,577
22,380
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 tourism
sector.
23
5.1.3.3
Trades Tax Revenue
Levy(additional
levies)
7.64%
Documentary
charges
1.34%
Alcohol - beverages
spirits
15.14%
Alcohol - beverages spirits
Others
19.01%
Motor vehicle
aircrafts
11.24%
Tobacco
0.65%
Textiles and textile
Prepared food
artic
4.58%
4.95%
Petroleum - mineral product
Textiles and textile artic
Petroleum - mineral
product
35.45%
Motor vehicle aircrafts
Tobacco
Prepared food
Others
Levy(additional levies)
Documentary charges
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.
200
150
100
2010
50
2011
0
2012
2013
Figure 11: Trades Tax revenue for the year 2010 – 2013
24
Alcohol - beverages spirits
Petroleum - mineral product
Textiles and textile articles
Motor vehicle aircrafts
Tobacco
Prepared food
Others
Levy(additional levies)
Documentary charges
Total
2010
SR ‘000’
2011
SR ‘000’
2012
SR ‘000’
2013
SR ‘000’
29,439
151,223
11,333
63,446
1,527
19,388
34,068
45,117
2,424
357,964
43,694
162,837
13,889
68,668
468
38,748
37,128
50,631
7,678
423,741
38,050
161,569
13,560
63,815
1,130
31,839
47,280
42,955
2,867
403,064
65,225
152,691
21,326
48,405
2,787
19,742
81,891
32,917
5,759
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)
SSF Government
Income Tax
0%
Government
25%
SSF Private
1%
SSF Private
SSF Government
Income Tax
Parastatal
11%
Income Tax Private
63%
Income Tax Government
Income Tax Parastatal
Income Tax Private
Figure 12: SS and INMBT contribution per sector for the year 2013
25
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.
500
450
400
350
300
250
200
150
100
50
0
2010
2011
2012
2013
Private
Parastatal
Government
Figure 13: SS and INMBT revenue for the year 2010 – 2013
Social Security
Private
Government
Income Tax
Government
Parastatal
Private
Total
Private
Parastatal
Government
2010
SR ‘000’
2011
SR ‘000’
2012
SR ‘000’
2013
SR ‘000’
232,543
54,111
10,968
301
910
0
7,393
0
70,738
29,682
153,475
540,548
386,018
29,682
124,848
141,802
67,353
408,182
628,608
419,152
67,353
142,102
166,004
77,935
457,718
702,567
458,628
77,935
166,004
190,728
84,978
478,242
761,342
485,635
84,978
190,728
Table 9: SS and INMBT per category for the years 2010-2013
26
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
MOTOR VEHICLES
6.5%
TOBACCO
0.3%
ALCOHOL - LMG
21.4%
PETROLEUM
44.4%
TOBACCO - LMG
16.6%
ALCOHOL - LMG
TOBACCO - LMG
ALCOHOL
PETROLEUM
ALCOHOL
10.8%
MOTOR VEHICLES
TOBACCO
Figure 14: Excise Tax contribution per sector for the year 2013
27
300
250
200
150
2010
100
2011
2012
50
2013
0
Figure 15: Excise Tax revenue for the year 2010 – 2013
Alcohol - LMG
Tobacco - LMG
Alcohol
Petroleum
Motor vehicles
Tobacco
Total
Excise Import
Excise Local
2010
SR ‘000’
2011
SR ‘000’
2012
SR ‘000’
2013
SR ‘000’
132,725
99,558
46,872
241,548
46,801
2,356
569,861
337,578
232,283
215,520
108,123
60,816
283,336
57,395
2,149
727,340
403,697
323,643
183,220
131,990
60,498
288,472
57,948
3,582
725,711
410,501
315,210
139,524
108,431
70,411
289,171
42,587
1,790
651,913
403,958
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
28
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
1000
800
600
Targets
400
Actual
200
0
VAT LOCAL
VAT IMPORT
Figure 16: Value Added Tax revenue for the year 2013
VAT Local
VAT Import
Total
Targets
SR ‘000’
Actual
SR ‘000’
Performance
SR ‘000’
Difference
870,774
580,070
1,450,845
827,593
618,289
1,445,882
-43,181
38,218
-4,963
-5.0%
6.6%
-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
29
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
LICENSE FEES
Trade/Ind Licences
Licences and other licences
Road tax & other licences
Telecommunications licences
Casino licences
Hotel licences
Liquor and toddy licences
Radio Broadcasting licence
EU fishing licence fees
EU vessel fees
Non-EU fishing licence fees
Total
2010
SR ‘000’
2011
SR ‘000’
2012
SR ‘000’
2013
SR ‘000’
8,256
5,109
41,977
61,826
2,433
877
206
0
81,580
0
0
202,263
8,127
5,088
44,336
61,998
3,100
825
219
0
57,372
0
0
181,065
9,369
4,353
53,524
66,066
3,767
742
266
0
25,315
56,302
70,180
289,882
6,981
3,346
54,156
72,683
4,377
111
287
2,302
14,266
53,429
48,813
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.
30
5.1.3.8
Fishing licence fees
Processing fees-SLA
SLA .insurance fees
Publication
Trades tax div(customs fees
Storage
Original voucher importer
Pet bottles levy
Poultry levy
Levy cans
Total
2010
SR ‘000’
70
1,765
-32
44
997
153
2,516
3,383
13,624
2,842
25,362
2011
SR ‘000’
66
508
18
674
2,957
281
3,295
7,833
20,406
2,401
38,438
2012
SR ‘000’
82
4
67
694
3,458
498
4,590
809
8,230
396
18,830
2013
SR ‘000’
71
1
101
700
3,202
258
4,953
164
16,208
351
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.
31
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:
32
•
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
33
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 epayment 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
34
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
35
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.
36
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 additional
assessments raised.
37
Actual Audits cases by segment against planned for 2013
Actual
85
154
60
299
Small
Medium
Large
Total
Planned
160
240
173
573
Achievement %
53
.64
35
Revenue raised against planned for the year 2013 by segment
Actual
4,133,518
57,319,423
141,659,233
203,112,174
Small
Medium
Large
Total
Planned
10,000,000
48,765,000
52,110,000
110,875,000
Achievement
41%
118%
272%
Audit cases against planned for the year 2013
Total
Actual
186
Planned
165
Achievement
113%
Administrative assessment revenue raised against planned for 2013
Total
Actual
13,181,425
Planned
4,125,000
Achievement
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.
38
Type of Audit
2012All taxes
Comprehensive audits
Number of audits completed
Additional Assessments Value
Total Penalties & Interest
Issue Oriented audits
Number of audits completed
Additional Assessments Value
Total Penalties & Interest
2013All taxes
92
23,502,420
7,983,824
73
64,815,388
26,568,606
250
21,068,726
28,600,897
226
89,448,575
22,279,617
Table 15:Audit performance for 2013 compared to 2012 by type of audit
2013
Type of
Audit
Comprehe
nsive
audits
Number
of audits
completed
Additional
Assessme
nt Value
Total
Penalties
& Interest
Issue
Oriented
Number
of audits
completed
Additional
Assessme
nt Value
Total
Penalties
& Interest
B Tax
Withholdi
ng Tax
18
2
31,485,963
648,139
Value
Added tax
0
GST
SSC
Income
Tax
Excise Tax
2013
2012
All taxes
All taxes
9
21
22
1
73
379,996
21,208,757
5,525,506
4,954,089
1,261,077
64,815,388
115,893
7,941,216
15,984,39
8
1,613,674
265,286
26,568,606
0
226
37
48
-
89,448,575
92
23,502,420
7,983,824
0
73
35
33
0
250
21,068,726
9,256,543
59,264,717
15,312,649
983,939
4,630,727
8,217,523
6,968,185
2,606,256
2,533,127
1,954,526
28,600,897
22,279,617
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
39
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.
VAT CREDIT
VAT Credit Initially Claimed
Credit Denied as per Audit Conducted
Further Credit Allowed per Audit
Conducted
Credit Allowed
VAT DEBIT
VAT Payable As Initially Declared
Further VAT Assessed per Audit
Conducted
Total VAT Payable
VAT POSITION
NET VAT POSITION
Net VAT Payable
Penalties Imposed
Balance Payable inclusive of Penalties
Large
(000)
Medium
(000)
Net all Audit
(000)
71,145,324.39
(40,171,934.14)
15,016.32
30,918,309.23
(9,548,703.06)
137,088.02
102,063,633.62
(49,720,637.20)
152,104.34
(30,988,406.57)
(21,506,694.19)
(52,495,100.76)
47,763,385.58
7,593,538.64
1,524,972.36
1,950,541.47
49,288,357.94
9,544,080.11
55,356,924.22
24,368,517.65
3,475,513.83
(18,031,180.36)
58,832,438.05
6,337,337.29
55,356,924.22
6,791,129.79
62,148,054.01
3,475,513.83
177,054.97
3,652,568.80
58,832,438.05
6,968,184.76
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
40
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.
41
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.
Opening stock as at 01/01/2013
Business Tax objections
Goods & Services Tax objections
Revenue Tribunal
Court cases
New cases received
Value Added Tax objections
Income & Non-Monetary Benefits Tax
objections
No. of Cases
18
9
5
1
3
18
5
7
2
4
Total cases in the unit in 2013
Objection cases closed as at
31/12/2013
Cases Allowed in Full
36
27
Business Tax
Goods & Services Tax
Income & Non-Monetary Benefits
42
2
4
2
Cases Allowed in Part
Business Tax
3
3
2
Business Tax
6
4
1
3
1
Cases Disallowed
Court cases
Closing stock (pending cases)
21/12/13
9
Revenue Tribunal
Court cases
3
1
2
1
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.
Cases Allowed in Full
Business Tax
Cases Allowed in Part
Business Tax
Cases Disallowed
Business Tax
Total
No. of Cases Closed
8
2
4
2
8
3
3
2
11
6
4
1
27
Revenue Collectable
(83,192.30)
(270,430.26)
1,691,409.96
814,057.08
257,445.51
298,774.36
675,022.73
1,500.00
3,384,587.08
Table 19: Revenue raised and collected from closed interpretation and appeal cases in 2013
43
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
90,553
09,261
9,907
6,362
Total
arrears
311,196
10,456
307,214
298,425
293,437
297,876
Amount
collected
21,055
8,110
11,491
6,386
11,049
7,588
3.74%
2.14%
3.77%
2.55%
Collectio
n rate
6.77%
2.61%
Table 20: Collection Rate of debt (Gross/Net Arrears) for the year 2013
44
3.41%
2.06%
Sept
‘000
Oct
‘000
Nov
‘000
Dec
‘000
11,049
300,814
293,314
299,392
8,148
5,965
4,242
5,145
2.62%
1.98%
1.45%
1.72%
Stock
Opening
stock
New
debt
(raised
during
the
month)
Collecte
d during
the
month
Ending
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
311,196
310,456
307,214
298,426
293,437
297,876
290,553
309,261
311,049
300,814
293,314
299,392
20,315
4,868
2,701
1,397
15,489
265,450
29,143
8,962
2,676
2,444
15,808
3,934
21,055
8,110
11,491
6,386
11,049
7,588
10,434
7,173
12,911
9,944
9,730
20,384
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
282,942,772.42
282,942,772.42
282,942,772.42
282,942,772.42
22,185,777.44
8%
1,106,393.04
0%
40,780,266.10
14%
218,870,335.84
77%
Gross arrears
Net arrears
Percentage
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
45
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.
46
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
No. of
cases
Extra
Taxes
collected
No. of
cases
Extra Taxes
collected
No.
of
case
s
Amount
collected
No. of
cases
Penalty
collected
No.
Of
cases
Amount
collected
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
47
Total
collection
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 35percentGreen as from June 2013 compared to the parameters set in ASYCUDA ++ which was 1percentRed, 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 2012
where there was no PCA activity.
48
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.
49
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 annual
plans
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.
80
70
60
50
40
30
2012
20
2013
10
0
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.
50
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;
51
•
5.2.4
Extension of government warehouse.
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.
52
DIVISIONS
RC Office
RPO
Support
Services
Customs
Domestic Tax
Total Amount
NEW
APPOINTMENTS
PROMOTIONS
TRANSFERS
IN OUT
TERMINATION
OF
EMPLOYMENT
(Through Resignation or dismissal)
1
4
5
1
1
0
0
1
0
0
1
0
0
1
2
32
19
61
50
3
55
16
6
23
0
0
1
14
14
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.
53
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 Training
Institutions)
Division
Overseas Training
Number of
Participation
% of Total Participation
in the division
Number of
Participation
% of Total SRC
Participation
Secretariat
04
07
09
13
Reform
Project
Office
Domestic Taxation
01
02
20
29
24
42
10
15
Customs
23
40
27
40
Support Services
05
09
02
03
57
100
68
100
Totals
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
54
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.
55
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.
56
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.
57
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.
58
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 AUDITS
AREAS
Manifest
Government Warehouse
Red Channeled Verification
Total
UNPLANNED AUDITS
FAPC
Levy on PETs and Cans
Outstanding Cash & Cheques at
Airport Cargo
Total
FOLLOW UPS
Dishonoured Cheques
Private Bonded Warehouse
Total
GRAND TOTAL
TOTAL TAXES RAISED
-
TOTAL TAXES COLLECTED
-
119,700.00
119,700.00
164,437.00
284,137.00
13,080.00
132,780.00
19,613,285.20
19,613,285.20
19,897,422.20
235,106.22
13,300,467.70
13,535,573.92
13,668,353.92
Table 26: Total revenue raised and collected from audit reviews and follow- ups
59
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.
60
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.
61
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 19 th 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.
62
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.
63
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
64
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
65
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.
66

Seychelles Revenue Commission, Annual Report 2013

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