03.01.16

Personal Income Tax Reform announced in Seychelles

Posted in Business and Economy, International Organisations, Seychelles government, Seychelles legislation at 2:10 pm by Robert Klien

The President of the Seychelles, James Alix Michel, has confirmed the changes that will be applied to the personal income tax system. These are designed to make taxation fairer and more equitable.

In his recent State of the Nation address, the President foreshadowed reforms aimed at reducing the tax burden on low-income earners and making the personal income tax system more progressive.

Under the changes, from July 2016, individuals earning up to SCR8,555.50 (USD 553.74) per month will not pay any income tax. Then, from January 2017, the first SCR8,555.50 in earnings will be subject to tax at 0%.

Also, Michel announced that the Ministry of Finance will undertake a review of the tax system in order to determine how the Government can “maximize its revenue” and reduce tax evasion in certain economic sectors.

The measures form part of the Government’s medium-term fiscal framework agreed with the International Monetary Fund (IMF), which is designed to stabilize the Government’s finances and reduce public debt. The medium-term fiscal strategy was first put in place in 2008 following a default in debt payments. The plan includes an IMF-agreed target to cut its debt-to-gross domestic product to below 50% by 2018.

According to the IMF, following the completion of its 3rd review of the Seychelles’ Extended Fund Facility (EFF), good progress is being made by the Government towards reducing the public debt burden, with the 2015 budget surplus expected to be around four percent of GDP.

Approximately USD 9.1 million has been received by the Seychelles in monetary assistance from the International Monetary Fund under the EFF arrangement approved in July 2014.

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