08.04.06
Posted in Double Taxation Agreements at 4:51 pm by Robert Klien
In order to encourage and promote investment, the Seychelles held the first round of negotiations with a delegation from Belgium in November 2005. The talks were aimed at concluding an agreement for the double-taxation avoidance agreement (DTA).
Belgium was the first EU member to take part in negotiations of a Double Taxation Agreement with the Seychelles. The agreement will apply to taxes on income imposed on behalf of both countries. It will provide an opportunity to facilitate trade and investment between the Seychelles and the EU.
This is an example of negotiation phase.
The example of withdrawal phase could be a situation with Seychelles – Indonesia tax treaty described on 07.04.06 in blog “Seychelles Double Taxation Agreement with Indonesiaâ€.
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08.01.06
Posted in Double Taxation Agreements at 9:06 pm by Robert Klien
In May 2006, the ambassador of the Netherlands to the Seychelles, H.E. Tanya Van Gool said that the Netherlands is considering the possibility of drawing up a double-taxation avoidance agreement (DTA) with the Seychelles.
Mrs Van Gool talked about this agreement with the press after having completed her 3-year mandate. Meeting with the press was after ambassador’s farewell call on President James Michel at State House.
Mrs Van Gool obviously had mandate to provide this information representing her state. As we know, the Seychelles very actively supports concluding double taxation treaties and is very successful at this, we could expect to hear some news on this subject soon.
If completed, this would help to increase commercial investment from the Netherlands private sector into the Seychelles and probably would make the Seychelles an attractive potential investment destination for investors.
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07.28.06
Posted in Double Taxation Agreements at 7:47 am by Robert Klien
The Seychelles-Thailand tax treaty was signed on April 26, 2001 (signature), brought into force on March 13, 2006 (ratification) and will be applied from January 1, 2007 (application).
In accordance with the treaty, dividends, interest and royalties paid by a company residing in one country to a company residing in another country may be taxed in either country. However, if the beneficial owner of the company is a resident of another state, the tax charged may not exceed 10% of the gross amount in the case of dividends, 15% in the case of interest or royalties (exception – interest received by a financial institution is taxed at 10%). The Seychelles-Thailand tax treaty has provisions for mutual agreement procedures, non-discrimination and exchange of tax information.
This example also illustrates how long it can take between signing the treaty and ratification. Almost 5 years were spent to get the treaty ratified and during all this period the treaty had no real effect notwithstanding many web sites informed us that the Seychelles had signed double tax treaty with Thailand. And only from January 1 next year it will be possible to benefit from this treaty.
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07.25.06
Posted in Double Taxation Agreements at 2:20 pm by Robert Klien
It is a usual question on double taxation treaties and most other treaties and international agreements as well. It is really important to understand whether a double taxation treaty is still negotiated or it has been signed or ratified or it has already been applied.
A double taxation treaty usually is a bilateral treaty, and it means that it is negotiated between a limited number of states, as a rule, just two, and it establishes legal rights and obligations between just those two states.
A treaty usually consists of these phases:
1) Consideration. Before starting negotiations an authoritative representative of each country informs each other on the intention to start negotiations. It usually happens when the first representatives of one country meet each other or ambassador of another country.
2) Negotiation. It is a formal process by which the terms of a treaty are agreed between countries and which should result in the signing of a treaty. Negotiators should be authorized and have a mandate of the party they represent. It could take up to several years to reach the consent.
3) Signature. It is the act by which a state expresses its consent to the text of the treaty, however, not its consent to be bound by it, unless the treaty states that it comes into force on signature. A country which has signed a treaty which is a subject to ratification is not obliged to ratify, therefore signed treaty does not mean that it will actually enter into force. Each country should obtain a parliamentary approval for ratification and sometimes it could be a never-ending process.
4) Ratification. Each country should ratify a treaty before it enters into force. Usually, before the ratification, each country also should check whether some changes in legislation should be made to avoid any obstacles in fulfilling the ratified treaty.
5) Application. Usually there is some date other than the date of ratification when the treaty is applied. The provisions of the treaty usually determine the date when the treaty comes into force.
6) Withdrawal. If some events that change a country’s interest in a treaty occur, the country can remove its consent to be bound by the treaty. The treaty usually specifies the terms of withdrawal and typically a party to a treaty remains bound by the treaty for an indicated period of time following notification of intention to withdraw before the withdrawal happens.
General guidelines on international treaty principles can be obtained at http://untreaty.un.org/English/guide.asp
In the next blog, we will look at double taxation treaty lifecycle on the examples of Seychelles double tax treaties.
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07.09.06
Posted in Double Taxation Agreements at 3:55 pm by Robert Klien
Qatar became the latest country that signed a Double Taxation Avoidance Agreement (DTAA) with the Seychelles. The DTAA was signed by the Seychelles Minister for Employment and Economic Planning and the Qatar Minister for Finance on July 8, 2006.
The DTAA allows investments made in one country from the other to qualify for tax breaks on royalty payments and dividends. Dividends paid on Qatari investments in the Seychelles are now qualified as tax credits, and they reduce the investing company’s tax burden in Qatar. The same measures work also in the opposite direction and this is expected to attract foreign companies ready to invest in Qatar to set up in the offshore world of the Seychelles.
At present, the only Qatari company trading in the Seychelles Qatar Airways, a national airline.
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07.04.06
Posted in Double Taxation Agreements at 3:23 pm by Robert Klien
In March, 2006, Indonesia threatened to abrogate its Double Tax Avoidance Agreement (DTAA) with the Seychelles because of round-tripping * Indonesian companies do. In response, the Seychelles Association of Offshore Practitioners and Registered Agents (SAOPRA) claimed Indonesia had no legal grounds to act in such a way at least until 2010 as far as Article 29 of the Indonesia/ Seychelles DTA is legally valid and cannot be ended until at least 2010. Accordingly, DTA is still in force.
If persons using Seychelles tax resident companies hold shares in Indonesian companies , conduct no activities in Indonesia and have a permanent establishment in Seychelles, these Seychelles companies can lawfully access and rely on the DTA benefits.
* round-tripping - a phenomenon of moving funds to & from – funds are brought out of the country and then brought back from offshore in the form of FDI.
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06.30.06
Posted in Double Taxation Agreements at 12:52 pm by Robert Klien
An initial agreement on starting the negotiations about double tax was signed by the principal secretary of the Seychelles Department of Finance and by the Commissioner and Director of the Cypriot Inland Revenue.
In January, 2006, a delegation from Cyprus came to the Seychelles for the negotiations leading to a Double Taxation Avoidance Agreement between the Seychelles and Cyprus. The two governments have agreed to a new bilateral pact aiming at the prevention of the double taxation of income as well as boosting investment flows between the Seychelles and Cyprus. New investments are likely to originate initially from Cyprus, however it is quite possible that also investors in the Seychelles could capitalise on the agreement.
The agreement was signed on June 28, 2006 by the Seychelles’ Minister for Economic Planning and Employment and the Cypriot Minister for Finance.
Cyprus appeared to be also enthusiastic towards starting negotiations on a Bilateral Investment Promotion and Protection Agreement.
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06.24.06
Posted in Double Taxation Agreements, Seychelles CSL, Seychelles offshore jurisdiction at 7:50 am by Robert Klien
Creating a CSL in the Seychelles gives the possibility to benefit of low taxation and to profit Special Licence CSL of no double taxation treaties.
The Seychelles has several double taxation treaties signed with:
- South Africa;
- Malaisia;
- Thailand;
- China;
- Mauritius;
- Oman;
- Botswana;
- Zimbabwe;
- Indonesia;
- Belgium;
- Namibia
As a result of some negotiations, Russia, United Arab Emirates, Egypt and Vietnam are waiting to sign treaties as well.
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