IMF conducted a comprehensive review of the current VAT regime at the government’s request to determine whether the VAT regime is the most efficient tax regime in place for a small economy such as Seychelles. IMF concluded that the current VAT regime has performed as well as it could from a revenue perspective. However, there are risks that this could be eroded if there is continued broadening of the exemptions beyond the strict necessity, given the economic structure of the country. Furthermore, a return to the GST is unlikely to solve the current discontent with VAT. The Ministry would need to work on a strategy where the shortfalls in the current VAT regime could be reformed.
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