Switzerland has launched a consultation on the introduction of the automatic exchange of information in tax matters with a series of countries including Seychelles.
The consultation will run until March 15, 2017. The Swiss Federal Department of Finance (FDF) is planning that the AEOI with a number of jurisdictions enters into force on January 1, 2018, with the first exchanges to take place in 2019.
The introduction of the AEOI with the countries confirms Switzerland’s international commitment to implement the AEOI standard. It is expected to enhance the competitiveness and credibility as well as the integrity of Switzerland’s financial center.
Besides Seychelles, the list of countries includes: Andorra, Argentina, Barbados, Bermuda, Brazil, the British Virgin Islands, the Cayman Islands, Chile, the Faroe Islands, Greenland, India, Israel, Mauritius, Mexico, Monaco, New Zealand, San Marino, the Seychelles, South Africa, Turks and Caicos, and Uruguay.
Reviewing tourism in Seychelles for the year 2016, Alain St Ange, the outgoing Minister for Tourism, Civil Aviation, Ports and Marine said: “We started 2016 on a high and today we know that we will finish the year with a 10% increase over last year. So it is a real success story for Seychelles. A success story because we are going against the trend in many other countries where they are either stagnant or even decreasing. The other major success in 2016 was the arrival of extra flights, airlines or planes serving Seychelles. It is a success because a couple of years ago Seychelles suffered when airlines departed.”
Also, Minister St Ange acknowledged the challenges facing the trade where he also outlined certain measures to be taken to counter these challenges. When there is an increase in tourism arrival numbers, it is necessary to manage the expectations of visitors. So, he said that one of the several projects to be undertaken is the upgrading of hotels so that clients can be informed on the level they are and what type of service is expected of them and of what quality they are before the clients come here. Also, tourists must be able to feel they live in security when in Seychelles.
He noted that 2016 started off after a good, successful 2015 where the country finished the year with a Plus 19 increase in visitor arrivals.
As an industry, tourism remained a key driver of growth in consideration of the sector’s contribution to Seychelles’ GDP, foreign exchange earnings and employment generation.
According to the jurisdiction’s newly released Budget, Seychelles will finalize significant reforms to its main taxes in 2017.
Seychelles will complete the introduction of a progressive personal income tax regime from July 1, 2017, rather than January 1, 2017. A SCR 8,555.5 (which is USD 660) tax-exempt threshold will be introduced, but it will not be available to expatriates. Income tax above that threshold will be subject to progressive rates of either 15%, 20%, or 30%.
From July 1, 2017, a new property tax will be introduced on land ownership in Seychelles, to be levied only on foreigners, and purchases of private land by foreigners will also attract a high stamp duty.
The Government of Seychelles is also planning to change the Business Tax Act. The tax-free threshold for individual businesses, such as sole traders or partners, will remain at SCR 150,000. However to align personal income tax (PIT) and individual business tax rates, the tax rate on profits of between SCR 150,000 to SCR1m will be increased from 15% to 20%. Profits above SCR1m will continue to be taxed at 33%.
In addition, it is proposed that the presumptive tax rate will be realigned. The tax rate on businesses with a turnover of up to SCR 0.5 million is to remain at 1.5%, but a 3% tax will be imposed on businesses with a turnover from SCR 0.5 million. The new cap for the presumptive tax is proposed to rise to SCR 2 million, up from SCR 1 million. Professional taxpayers, such as accountants and engineers, will pay a 5% rate.
Included in a substantial series of measures to help small and medium-sized enterprises (SMEs), the Government will exempt businesses with an annual gross revenue of up to SCR 1 m from paying tax in their first year of operation. Larose said that the medium- to long-term target is “to turn Seychelles into the SME capital of the Indian Ocean.”
Also, an additional cost for foreign visitors disembarking at the Seychelles International Airport was announced. As from July 1, 2017, the Seychelles Civil Aviation Authority will impose an additional USD 10 passenger service fee.
The Seychelles Revenue Commission (SRC) has issued its final Public Ruling 2016-2 aimed to provide clarity as regards the methodology of calculating the additional special business tax deduction allowed for marketing and promotion expenditure.
The SRC confirmed that, in addition to their normal business tax deduction, certain businesses in the Seychelles are allowed a special deduction equal to 5% of their taxable business income or their actual expenditure on marketing and promotion, whichever is the lower.
The special deduction is allowed for the following list:
- farming entities;
- agriculture processors and exporters;
- boat owners;
- fishery processors;
- hotels, guest houses and self-catering establishments;
- cafes and restaurants;
- domestic air transport service providers;
- domestic ferry service providers;
- boat or yacht charter companies;
- car hire companies;
- underwater dive and water sports operators;
- travel agents, tour and/or tourist guides;
- and gambling/casino operators.
In accordance with the Seychelles’ first financial literacy survey, the majority of people in Seychelles know about financial products and services and have access to them, but do not know about how to use and evaluate these services.
The findings of the baseline survey were presented by Abel Motsomi of FinMark Trust, an independent organisation based in South Africa, which carried out the survey along with the Central Bank of Seychelles (CBS) and the local Financial Services Authority.
The objective of the study which was recommended as part of the Financial Sector Development Implementation Plan was to measure and provide credible benchmarks on financial literacy and capability.
Beggita Vital, the Payment Systems officer at CBS, said 562 interviews were conducted on Mahe, Praslin and La Digue, the three most populated islands in Seychelles.
The study showed that 94% of the participants have transacted with a bank and most knew about financial products and services available and had access to them. However, they were not necessarily knowledgeable about how to evaluate and use these services.
“Another common complaint that we receive at CBS by customers is that they were not aware that as guarantor of a loan, they are responsible to repay the loan in the event of a default by the borrower and this also came out of the study,” Vital said.
Other findings show that 94% of the people interviewed had transacted with a bank, and 87% wanted to improve their financial situation while 46% did not have a plan of what to do.
On the need for financial information, 38% felt they wanted to know more including how to save, invest and budget. While 83% of the people interviewed knew how much they earned or received, only 14% kept track of how much they lend.
The results of the study will be used to develop a national strategy for financial education in Seychelles.
According to an International Monetary Fund (IMF) official said, Economic growth for 2016 in Seychelles is projected to reach around 4.5% as a reflection of “vibrant tourist arrivals” and expanding credit to the private sector.
Wendell Samuel led an IMF team that came to conduct the 4th and 5th reviews under the Extended Fund Facility arrangement with Seychelles.
Samuel said that “macroeconomic performance has been robust in 2016” and that inflation has been negative since the beginning of 2016 largely due to the low prices of commodities and stable exchange rates.
Separately, the Bretton Woods institution has predicted the jurisdiction’s primary fiscal surplus to reach 3% of gross domestic product (GDP) this year due to the good economic performance of Seychelles. This is in spite of the impact of the various financial initiatives announced in the State of the Nation Address in February, including income tax cuts and increases in pensions and the minimum wage.
Looking on to 2017, Samuel said the growth outlook remains positive, largely due to foreign direct investment (FDI) in the tourism sector.
However, he cautioned that there might be downside risks to the outlook largely due to the external factors. According to him, “weaker than expected global growth can dampen tourism performance”.
Tourism is one of the 2 main sectors that the Seychelles’ economy relies on for foreign exchange earnings. So far, over 240,000 visitors have visited Seychelles in 2016, which is a 9% increase compared to 2015.
Poverty reduction was another topic discussed during the meetings. In a report made public in late 2015, the Seychelles National Bureau of Statistics said a poverty and equality survey carried out in 2013 placed the poverty line estimate at SCR 3,945 (around USD 300) per adult per month. The proportion of the population below the poverty line was then estimated at 39%. More progress on poverty reduction is needed to ensure that benefits of economic growth are shared by all.
Signed last year, the tax information exchange agreement (TIEA) between India and Seychelles has entered into force.
The TIEA entered into force on June 28, 2016, following the completion of domestic ratification procedures by both countries.
The agreement will enable the Competent Authorities of Seychelles and India to provide assistance through exchange of information relevant to the administration and enforcement of the domestic laws of the countries concerning taxes.
The information will be provided by each jurisdiction’s competent authority on request.
“India and Seychelles will ensure that its Competent Authority has the authority to obtain and provide “information held by banks, other financial institutions, and any persons acting in an agency or fiduciary capacity, including nominees and trustees; information regarding the legal and beneficial ownership of companies, partnerships, collective investment funds or schemes, trusts, foundations, ‘Anstalten,’ and other persons.”
The TIEA also provides for a Mutual Agreement Procedure for resolving differences as regards its implementation or interpretation.
Seychelles was ranked 36th out of 159 countries and territories in the Institute’s annual Economic Freedom of the World report.
Top position was occupied by Hong Kong which became the world’s freest economy for the 22nd consecutive year. It was followed by Singapore. The other nations in the top 10 are New Zealand, Switzerland, Canada, Georgia, Ireland, Mauritius, the UAE, and Australia and the UK.
The rankings of some other major countries are as follows: the United States was 16th, Germany was 30th; Japan was 40th; South Korea was 42nd; France was 57th; and Italy – 69th.
To deal with maritime crimes, Seychelles will soon activate a Regional Operation Coordination Centre, local authorities said.
The chief of staff of the Seychelles People’s Defence Forces (SPDF), Michael Rosette, said with the operation of the new centre should enhance the jurisdiction’s capacity to deal with the increasing threats of maritime crimes.
The announcement came after a 1-week trans-regional seminar hosted by the Seychelles Coast Guard in which 30 participants from several countries met to discuss ways to combat terrorism and violent extremism using non-violent methods. The event was organised by the American Joint Special Operations University (JSOU), the Defense Combating Terrorism Fellowship Program (CTFP) and the United States Embassy.
Rosette said that it is important for all to collaborate and have a concerted approach to deal with terrorism.
The course coordinator, retired US army officer Carlos Burgos, said it was important to take a strategic approach to deal with the issue of terrorism as this would allow participants to look at larger issues across their whole country. “It’s not about combating terrorism with arms but rather combating it through social and political programmes,” he said.
To remind, Seychelles has suffered economic fallout from past attacks from Somali pirates in the region.
According to the Seychelles Finance, Trade and Blue Economy Minister, Jean Paul Adam, a credit rating of BB- for the 2nd straight year for the Seychelles’ government signals the jurisdiction’s economic stability and increased resilience amid global economic uncertainty.
Fitch Ratings gave Seychelles the same grade in 2015.
The finance minister said that the rating and the archipelago’s ‘stable outlook’ affirmed by Fitch is a show of confidence in Seychelles economy. He said: “Quite a number of countries including both highly developed countries and developing African countries have been downgraded due to global uncertainties, so for us this shows that we are on the right track”.
“Fitch Ratings has affirmed Seychelles’ Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at ‘BB-‘ with a Stable Outlook. The issue rating on Seychelles’ unsecured foreign-currency bond has also been affirmed at ‘BB-‘. The Short-Term Foreign- and Local-Currency IDRs have been affirmed at ‘B’ and the Country Ceiling at ‘BB’”.
In 2008, Seychelles had a total public debt that stood at 151% of GDP, with the external public debt representing almost 95% of GDP (USD 808 million). A default in debt payments prompted Seychelles to embark on a 5-year IMF-backed economic reform programme in October 2008, ending in October 2013. This has been followed by a new generation of reforms approved by the IMF in June 2014.
In its latest assessment, Fitch noted that the jurisdiction’s public debt remains on a downward path, while highlighting the fact that the government’s target to reduce the debt to GDP ratio to below 50% by 2018 has now been moved to 2020.
The authorities have also decided to reduce the country’s primary surplus to 3% of GDP for the years 2017 to 2020 compared to above 4% the past 2 years.
« Previous entries Next Page » Next Page »