Presented ByPresented ByMario Hannelas

Large Taxpayer DepartmentLarge Taxpayer Department

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

05 June 2015

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

VAT INVOICESAmendment 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

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

Time Limit to Claim

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

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 personsSmall enterprise defined as a person whose annual turnover does not exceed Rs 10MMaximum 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

DEDUCTION FROM VAT BY PSA

Amendment to introduce New Part VI A to provide for Public Sector Agency (PSA) to deduct an amount from VATPSA defined as including a Ministry, Government department, a local authority, a statutory body and the Rodrigues Regional AssemblyPSA 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

DEDUCTION FROM VAT BY PSA (CONTD)

Amount retained/deducted by PSAConsidered 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

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

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

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

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

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

Threshold for compulsory Registration

Annual Turnover of Taxable supplies

Threshold increased from 4M to 6M

Effective from 01 June 2015

Amendment to Sevnth Schedule

Remove from Part II of following items

Mineral waters, aerated waters and soft drinksAlcoholic drinks

Effective from 01 January 2014 (Provision was in fact suspended administratively)

Amendment to Ninth Schedule

Clarification in respect of item 13Exemption available only to private hospital under

the Private Health Institution ActNot 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

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

Amendment to Twelfth Schedule

Refund of VAT on residential buildings/apartment

Construction period extended to 30 June 2018

Amendments brought to MRA Act

Assessments or claimsAll 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

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