12.19.14

Seychelles Budget Increases Taxes

Posted in Business and Economy, Seychelles offshore jurisdiction, Tourism industry at 7:18 pm by Robert Klien

In his 2015 Budget Speech on December 15, Seychelles Minister for Finance, Trade, and Investment Pierre Laporte has had to announce further tax-raising measures, in order to ensure future fiscal sustainability.

The Government’s medium-term fiscal strategy, first put in place in 2008 following a default in debt payments and including an International Monetary Fund-agreed target to cut its debt-to-gross domestic product (GDP) to below 50% by 2018, has been thrown off course by global economic uncertainties.

As a result of those external pressures, both of Seychelles’ 2 major industries – tourism and manufacturing (canned tuna and brewing) – suffered slowdowns and provided lower business tax revenues. However, eventual tax collections have been rescued in 2014 by higher value-added tax (VAT) and import duty receipts held up by increased retail sales and domestic construction activity.

The Government’s revised projection for total revenue, excluding grants, in 2014 is USD 414.5 million, which is 7.6% higher than in 2013. Given the global economic situation, this is much more favorable fiscal outcome than could have been expected, Laporte said.

To bolster tax revenue, while also reducing excessive alcohol and tobacco consumption, Laporte is to hike excise duties by 20% on all drinks with an alcohol content in excess of 16%, and by 50% on all tobacco products. This is applied on both imported and local products.

Also, the Minister increased the levy on privately registered motor vehicles by 50% and doubled vehicle testing fees, while also raising road tax.

Furthermore, to facilitate payment of taxes, online tax services will be expanded in 2015 to include the submission of business tax and presumptive tax returns. Taxpayers will be able to register their businesses and update their business status and contact details online.

The Government will allow small businesses to choose either the presumptive tax system (based on 1.5% of their turnover), which was introduced in 2014, or follow the normal business tax system.

Laporte also announced changes to VAT for 2015.

Finally, the Government considers the international financial services sector as having significant potential. Laporte’s Ministry has recently initiated consultations with key stakeholders to develop a Financial Strategy for Seychelles. Progress has also been made in assessing the feasibility of introducing a framework for Islamic finance in Seychelles, with recommendations due in early 2015.

Laporte noted that the tougher stance of the OECD on offshore financial centers does not appear to have had a significant negative impact on Seychelles in 2014. The Government’s most immediate priority for the financial sector, however, is to restore Seychelles’ compliance with OECD standards on tax information exchange by mid-2015.

The Government has strengthened cooperation with the country’s international partners, and, apart from signing the agreed Foreign Account Tax Compliant Act intergovernmental agreement with the United States, Seychelles also expects to sign the OECD’s Multilateral Convention on Mutual Administrative Assistance in Tax Matters early next year, following parliamentary approval of an amendment to the Seychelles Revenue Commission Act.

12.15.14

Seychelles’ Membership approved by WTO

Posted in International Organisations, Seychelles offshore jurisdiction at 6:59 pm by Robert Klien

Following the adoption of its terms of entry at the General Council meeting on December 10, Seychelles’ Accession Protocol was officially signed. The document was signed by World Trade Organization (WTO) Director-General Roberto Azevêdo and Seychelles’ Minister of Finance, Trade, and Investment Pierre Laporte.

In his speech, Azevêdo expressed his gratitude to the Government of Seychelles for this “historic achievement” and for sending “a clear signal to all its trading partners that it is ready to engage fully in the multilateral trading system and in the global economy”. He said that “Seychelles’ accession is another sign of the continued importance of the multilateral trading system.”

To reply, Laporte declared that “WTO membership will bring immense benefits to our economy, from businesses to consumers. The Seychelles’ Government and its people have been looking forward for so long to be part of this international family.”

Seychelles originally applied for WTO membership in 1995. The jurisdiction completed its accession negotiations on 17 October 2014, when the Working Party adopted the accession package, ad referendum.

Seychelles has until June 1, 2015, to ratify the deal, and will become a WTO member 30 days after it notifies the WTO Director-General that it has completed its domestic ratification procedures.