Amendments brought to VAT Act & MRA Act by the Finance Act 2015

1. 05 June 2015 Amendments brought to VAT Act & MRA Act by the Finance Act 2015 Presented By Mario Hannelas Large Taxpayer Department

2. Electronic Fiscal Devices • New Section 19 A inserted to provide for implementation of EFD • Project expected to be implemented in the course of FY 2015-2016 • VAT Registered persons in specified trade activity will be requested to install EFD to record all supplies made • The EFD shall be of such type, description and usage as may be prescribed

3. VAT INVOICES • Amendment to Section 20 provides for VAT invoice to state: • Whether or not supply is subject to VAT • Where the supply is subject to VAT: • The value of the supply • The amount of VAT chargeable and • The rate applied • Effective as from 01 July 2015

4. Time Limit to Claim Credit for input tax against output tax • Amendment to Section 21 (6) provides for an extension of the delay for claiming input tax by 12 months i.e from 24 months to 36 months • Effective as from 14 May 2015

5. Time limit for repayment • Amendment to Section 24 provides for statutory delay of 45 days for effecting repayment to run as from the date of submission of documentary evidence, where such request is made • Effective as from 14 May 2015

6. Amendment to Penalty Provisions Section 26 (non-submission of return by due date) and Section 27 (late payment of tax) • Distinction between small enterprise and other VAT registered persons • Small enterprise defined as a person whose annual turnover does not exceed Rs 10M • Maximum penalty to be charged to a small enterprise is for non submission of return by due date Rs 5000 instead of Rs 20,000 and for late payment of tax 2% of unpaid tax instead of 5% • Effective as from 14 May 2015

7. DEDUCTION FROM VAT BY PSA Amendment to introduce New Part VI A to provide for Public Sector Agency (PSA) to deduct an amount from VAT • PSA defined as including a Ministry, Government department, a local authority, a statutory body and the Rodrigues Regional Assembly • PSA must deduct/retain and remit to MRA 30% (for construction contracts)/50% (for other contracts e.g cleaning, security) of VAT charged on invoice received on contracts exceeding Rs 300,000

8. DEDUCTION FROM VAT BY PSA (CONTD) • Amount retained/deducted by PSA • Considered to have been paid by the VAT registered person as VAT in the month of deduction • May be set off against VAT payable for the taxable period in which the VAT is deducted • Where VAT deducted exceeds VAT payable, VAT refund to be effected

9. DEDUCTION FROM VAT PSA (CONTD) • Remittance of amount deducted • PSA to remit the amount so deducted within 20 days from the end of month in which deduction effected • Late payment penalty of 5% applies in case of late • Interest rate of a 0.5% applies remittance • Effective date to be fixed by Proclamation

10. Amendment to introduce new Part VI B VAT relating to small Business • Small business may operate the VAT Annual Accounting System (VAAS) • Appropriate for small businesses not mainly engaged in zero-rated supplies • Effective as from 01 July 2015

11. Amendments for VDIA Provisions • Section 73 amended by insertion of new provision 10A • Applicable where:- • Taxpayer has made a VDIA declaration and made agreement for payment of tax declared on VDIA • Director-General is debarred in respect of the VDIA period from: • Asking information, documents, return, or • Making an assessment or claim

12. Amendments for VDIA Provisions • Where taxpayer has been assessed and assessment or claim is under objection or before ARC, assessment or claim is deemed to have lapsed. • Provisions do not apply where • Director-General applies expart to Independent Tax Panel • Proves to the satisfaction of Panel that there is prima facie evidence of fraud; and • Obtains authorisation of I.T.P to proceed • Effective date to be fixed by Proclamation

13. Extension of zero-rating • Fifth Schedule amended to include: • Chilled deep sea water used for provision of air conditioning services • Effective from – 14 May 2015

14. Threshold for compulsory Registration • Annual Turnover of Taxable supplies • Threshold increased from 4M to 6M • Effective from 01 June 2015

15. Amendment to Sevnth Schedule • Remove from Part II of following items • Mineral waters, aerated waters and soft drinks • Alcoholic drinks • Effective from 01 January 2014 (Provision was in fact suspended administratively)

16. Amendment to Ninth Schedule • Clarification in respect of item 13 • Exemption available only to private hospital under the Private Health Institution Act • Not available to Nursing Homes & Residential Care Homes • Addition of New Items: • 15 – Person engaged in bio-farming project exempted on materials for exclusive use or in furtherance of boi-farming • 16 – Company engaged in exploration of petroleum products exempted on plant machinery & equipment for exclusive in the exploration and production of petroleum products

17. Amendment to Tenth Schedule • Removal from compulsory registration of “Dealers registered with the Assay Office under the Jewellery Act” • Addition of “Agent in the importation of second hand cars and other motor vehicles” • Effectively Date 01 June 2015 • List of agents to be obtained from Customs? Or Ministry of Commerce? Communique to be issued

18. Amendment to Twelfth Schedule • Refund of VAT on residential buildings/apartment • Construction period extended to 30 June 2018

19. Amendments brought to MRA Act Assessments or claims All assessments or claims issued by MRA to specify: • The amount of deduction disallowed, the reasons thereof; • The basis for the computation of the amount and its justification • The reasons for making the assessments or claim

20. Amendments brought to MRA Act Discretionary Powers MRA to issue statement of Practice specifying the circumstances in which the discretionary powers are exercised. Independent Tax Panel New Part IV A inserted to provide for the setting up of an Independent Tax Panel