Seychelles: Offshore Legal and Tax Regime

The main forms useful for offshore operations in the Seychelles are the International Business Company, the various types of Companies Act company, the Trust, and two new forms introduced in 2003: Special Licence Companies and Limited Partnerships.

The International Corporate Service Providers Act, 2003, provides for the licensing of trust management and company formation agents.

Seychelles Forms of Offshore Operation

Click on Forms of Company for a description of the legal basis of these entities. Companies formed under the Companies Act 1972 are used by banks, insurance companies and mutual funds, none of which are permitted to use the International Business Company.

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Seychelles Tax Treatment of Offshore Operations

See Domestic Corporate Taxes for the general principles of Seychelles corporate taxation, which also apply to offshore entities except as indicated below.

Offshore Seychelles entities are subject to the following fee and tax structures:

International Business Companies pay a registration fee of USD100.

The continuing annual renewal fee for IBC status is the same amount. There is a scale of fees in the International Business Companies Act covering inspection of documents in the Registry, copies of entries, increase of capital etc. etc. The fee levels are fixed for the life of an IBC, whatever subsequent changes may take place to fee levels.

IBCs are exempt from the Business Tax, from withholding taxes and from Stamp Duty; however they must pay tax on the non-monetary benefits of employees unless the IBC is in the International Trade Zone (see below) or the employees are crew members of a ship in international waters.

Offshore (Non-Domestic) Banks pay a license application processing fee of USD2,000 and an annual license fee of between SR250,000 and SR1m, depending on the value of total assets. See Offshore Business Sectors for details of the licensing regime. Banks are exempt from the Business Tax and withholding taxes, from customs duties and from Stamp Duty. They can if they wish elect to pay Business Tax at a rate which is agreed with the Commissioner of Taxes. Banks pay social security contributions in respect of their employees (see Personal Taxation).

Offshore (Non-Domestic) Insurance Companies pay license application processing fees and annual license fees as follows:

See Offshore Business Sectors for details of the licensing regime.

Offshore insurance companies are exempt from the Business Tax, from withholding taxes, from customs duties and from Stamp Duty. They can if they wish elect to pay Business Tax at a rate which is agreed with the Commissioner of Taxes. There is a guarantee of exemption from future taxes for 20 years from the time of registration. Insurance companies pay social security contributions in respect of their employees (see Personal Taxation).

International Free Zone (SITZ) Companies pay annual license fees and application processing fees as follows:

These license fees are fixed for the life of a licensed company. See Law of Offshore for details of the regulatory regime and licensing process for SITZ companies.

SITZ companies are exempt from the Business Tax, from withholding taxes, from customs duties and from Stamp Duty.

International (Offshore) Trusts pay an initial registration fee of USD100. Offshore Trusts are exempt from the Business Tax, from withholding taxes and from Stamp Duty. See Law of Offshore for a details of Seychelles Trust legislation.

Limited Partnerships pay a registration fee of USD200. They may receive income from sources outside of Seychelles and distribute such income to foreign partners without incurring a Seychelles tax liability. In addition:

• An LP is exempt from all Seychelles tax or duty on income or profits of the LP;
• An LP is exempt from stamp duty on property transfers, share transfers and other business transactions;
• An LP is exempt from trades tax on all furniture and equipment imported into Seychelles for office use;
• An LP has exemptions under the Social Security Act.

These exemptions granted under the LP Act are guaranteed for twenty years and continue in force thereafter unless otherwise provided for by written law.

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Seychelles Taxation of Foreign Employees of Offshore Operations

There are no special rules applying to the foreign or Seychelles employees of offshore operations, other than the exemption from social security contributions applying to the crew of ships and aircraft. The various exemptions from Business Tax and social security contributions described above do not apply to employees. See Domestic Personal Taxes for the general principles of individual taxation in the Seychelles, which also apply to the resident employees of nonresident entities.

Employers must withhold 18.75% of income from Seychellois employees and 10% from non-Seychellois employees. They must also pay 20% tax on the value of non-monetary benefits (such as subsidised housing, company car etc.) and for foreign employees they also have to pay the 'Gainful Occupation Permit' fee of SR18,000 per employee per year unless they are a SITZ company.

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Seychelles Exchange Control

N.B. All restrictions on the trading of the Seychelles rupee were removed in November 2008 under an IMF-sponsored economic stabilization programme.

In the Seychelles there is no restriction placed on payment of imports or invisibles, although import permits are required for certain products. Under the Exchange Control (Exemption) (Amendment) Order, 1995, it is illegal to deal in foreign currency other than through an authorised dealer. Since the government has recently maintained a highly over-priced currency rate against the US dollar for the Seychelles rupee, the currency became far from free and 'official' rupees were hard to come by leading to a thriving black market.

As a result of the global financial crisis in 2007/8, all restrictions on the trading of the Seychelles rupee were removed and the currency was allowed to float freely.

In September 2009, the Central Bank of the Seychelles announced the introduction of a new foreign exchange regime under the Foreign Exchange Act 2009.

According to an explanatory note accompanying the new legislation, the 2009 Act repeals and replaces the Exchange Control Act (Cap 76) which enforced a highly regulated and restrictive foreign exchange regime. The Act, unlike its predecessor is more regulatory as opposed to restricting activities of persons. The presence of provisions that may be perceived as impeding on the right of individuals to deal with their moneys is actually an effort to regulate the market and prevent illegal activities which flourished in the past under the Exchange Control Act.

The primary focus of the Act is that the local currency, the Seychelles rupee, is never refused when offered as means of payment. Payments may however be made in foreign currency where stipulated in a written law, or in instances where there is a contractual (written or oral) agreement.

See Import of Foreign Capital for a details of the Seychelles' foreign exchange regime.

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Seychelles Offshore Activities

International Business Companies are permitted various activities within the Seychelles without compromising their offshore status under the Act; these include:

Companies operating within the Seychelles International Trade Zone may apply to the Seychelles International Business Authority, which governs its operations, to conduct trade with Seychelles partners or customers outside the Zone. Income from such activity must be accounted for separately, and will be subject to the Business Tax.

Banks and insurance companies operating offshore under license are prohibited from domestic trading, for which a separate license would be required; however they can undertake local activities broadly similar to those sketched out above for IBCs.

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Seychelles Employment and Residence

In order to work in the Seychelles, a 'Gainful Occupation Permit' is needed, which must be applied for by the employer, and costs SR8,400 per person per year plus a processing fee of SR1,000. In addition there are restrictions on the percentage of foreign employees permitted in a company. Only in the SITZ can 100% of the workforce be foreign, and Permits are not required; normally the percentage is quite low, although there are exceptions for some types of offshore entity, and reduced rates of USD120 per year apply to permits issued to approved investors under the Investment Promotion Act, who can employ up to 25% foreign staff on that basis, and another 25% at normal rates.

Foreigners cannot own land in the Seychelles without Government approval.

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