2019 comes with changes in many jurisdictions! Some of the changes are not fully clear, as the amendments were rushed through… however, I would like to share with you the main changes.
Seychelles is one of the jurisdictions that had to implement some amendments, just like Belize did, in order to remain complaint with the OECD (Organization for Economic Cooperation and Development), more specifically BEPS (base erosion and profit-shifting project) requirements. You can read about Belize changes and BEPS background here.
So, the key changes:
The Government of Seychelles has passed amendments to several important Acts amending the International Business Company (IBC) Regime to territorial taxation as of 1st of January 2019.
- The Business Tax (Amendment) Act, 2018;
- The International Business Companies (Amendment) Act, 2018;
- The Companies (Special Licences) (Amendment) Act, 2018;
Seychelles International Business Companies (Amendment) Act, 2018 removes restrictions for Seychelles IBC to carry on business in Seychelles:
- carry on business in Seychelles;
- own an interest in immovable property situated in Seychelles;
- lease immovable property situated in Seychelles.
Tax exemption clause under the IBC Act has been removed.
Section 361 of the International Business Companies Act 2016, specifying that IBC is not subject to any tax or duty on income or profits is repealed, and substituted with a new section that provides guidelines to notification of Registrar about assessable income derived in Seychelles.
The Business Tax (Amendment) Act, 2018 will move Seychelles to a Territorial Tax System as of 1st January 2019.
Definition of “non-taxable income” - income not sourced in Seychelles and not included in the assessable income of a business is not taxable.
Business tax Act 2009 (as amended) clarifies that assessable income constitutes of:
- Gross receipts form carrying business, including the consideration received from the disposal of trading stock and the gross fees for the provision of services;
- The gross receipts from the employment of the capital of the business, including dividends, interests, royalties, rent, and natural resource amounts;
- The amount of any bounty or subsidy derived in relation to the carrying on of the business;
- The amount of an expense, loss, or bad debt previously allowed as a deduction that has been reimbursed or recovered by the business, including by way of insurance, compensation, damages or an indemnity;
- An amount derived by way of an indemnity, compensation, or damages for the non-performance by the lessee of an obligation to carry our repairs to property of a business;
- An amount included in assessable income under another provision of this Act.
The amount that is exempt income or income that has been subject to withholding tax is not included in assessable income.
IBCs deriving "Assessable Income" in Seychelles will be required to submit Annual Returns and Audited Accounts
Amendments in section 361, states, that is a company derives assessable income in Seychelles, it shall:
- Notify the Registrar within one month of deriving the first assessable income. Notification has to be in writing, and it has to confirm that it is deriving assessable income and also explain the nature of the activities giving rise to this assessable income;
- Within one year, of deriving the first assessable income, company has to file with the Registrar an Annual Return, accompanied with documents as required under the Companies Ordinance Act (Cap 40).
Thereafter the Registrar sends a copy of the notice to the Seychelles Revenue Commission
Company which fails to comply with the above is liable to a penalty of USD 100, and additional USD 25 per each day.
Documents that have to be annexed to annual return (Companies Ordinance 1972):
- a written copy, certified both by a director and by the secretary of the company to be a true copy, of all balance sheets, profit and loss accounts and group accounts laid before the company in general meeting or circulated to members and registered debenture holders during the period to which the return relates; and
- a copy, certified as aforesaid, of the reports of the auditors on, and of the reports of the directors accompanying, all such accounts.
Business tax rates in Seychelles:
The rates of business tax payable by the owner of a business in respect of the taxable income are:
In the case of an entity (Company), government body or a trustee
- 25% on the first SR 1,000,000 of taxable income;
- 33% on the reminder.
In the case of any other person, other than an entity or government body (sole trader and individual partners in a partnership)
- 0% on the first SR 1,500,00 of taxable income;
- 15% between SR150 001 and SR 1,000,000;
- 33% on the remainder.
1.5% business tax concession and withholding tax exemptions have been removed for Special License Companies (CSL)
Section 21 and Schedule 2 of the Companies (Special Licenses) Act 2003 have been repealed, removing tax concessions and exemptions. However, CSL companies incorporated on or before the 16th of October 2017 can still enjoy these tax concessions and exemptions until 30th of June 2021. With an exemption to the assets of company that are introduced in the company on or after the 17th of October 2017.
Please do not hesitate to contact our Seychelles office or your usual representative, should You require more information!
Suite 9, Ansuya Estate
Revolution Ave, Victoria
Republic of Seychelles
Tel. + 248 4610770
Fax: + 248 4610771
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