09.30.17

Seychelles’ situation getting better, IMF says

Posted in Business and Economy, International Organisations, Seychelles government at 4:31 pm by Robert Klien

According to the International Monetary Fund (IMF), Seychelles has made “remarkable progress” on strengthening its economy and finances.

Since the 2008 financial crisis, the jurisdiction has been working with the IMF to improve its economy and reform its fiscal policies. According to the IMF,  these actions have driven “strong economic growth as well as noticeable improvement in fiscal and external position as well as a reduction in debt.”

The IMF said that Seychelles’ economic performance has been robust in 2017, adding that the primary fiscal surplus for the year is expected to reach 2.5% of GDP in line with the authorities’ target. So, it noted that “Growth outlook for 2018 remains positive, buoyed by the tourism sector”.

However, the IMF warned that “Seychelles still faces vulnerabilities and pressures, as a small island economy in a challenging global economic environment.” In order to manage these issues, the jurisdiction has entered into a 3-year arrangement with the IMF to receive intensive support on developing and implementing pro-growth economic policies.

The IMF discussed a number of potential measures with the authorities of Seychelles aimed to ensure continued fiscal discipline and progress towards the debt reduction goals.

07.24.17

Seychelles urged to hike Taxes on Tourism Services Firms

Posted in Business and Economy, International Organisations, Seychelles government at 7:08 pm by Robert Klien

According to the International Monetary Fund (IMF), Seychelles has scope to further increase its tax revenue despite already having a relatively high tax-to-GDP ratio.

The IMF said that while Seychelles collects more in tax than other tourism-dependent island countries, its business tax-to-GDP ratio has been hovering around 4.25-5.5%, down from a peak at 7.1% in 2011. It noted that the jurisdiction should limit tax incentives for tourism-related companies, saying that the policies including taxing businesses in the sector at a rate of 15%, compared with 30% to 33% for other companies, had reduced tax collections by 0.5% of GDP.

Elsewhere the IMF welcomed the country’s plans for a property tax but said that it should be “non-discriminatory and should minimize distortions.” Seychelles is also considering the introduction of a sugar tax in its November budget and has delayed the introduction of a progressive personal income tax until January 1, 2018.

Significant reforms were announced in Seychelles in December 2016 Budget. They included the introduction of 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. Also, there were comprehensive changes proposed covering the personal and corporate income tax regimes.

04.06.17

Transparency Initiative Seychelles to fight corruption

Posted in Business and Economy, International Organisations, Seychelles offshore jurisdiction at 6:04 pm by Robert Klien

Transparency Initiative Seychelles was officially launched in the beginning of April. This is a new non-governmental organisation, a part of the global entity Transparency International (TI).

Chrystold Chetty, the chair of Transparency Initiative Seychelles, said that the group joined the international organisation as people in Seychelles are asking for more transparency.

The launch of Transparency Initiative Seychelles was done at the end of a 2-day workshop hosted earlier this week on illicit financial cash flows from Africa. Participants were from TI members from the region such as Nigeria, South Africa and Mauritius. The workshop countries explored ways to resolve the issue of money that comes illegally from African countries and how as members of TI they can lobby their respective governments to put in place measures and structures to stop the illicit financial flows.

Transparency International (TI) is working in 35 countries in Africa. Transparency Initiative Seychelles was set up in October 2016 as the newest member of the organisation.

At the opening of the workshop, the founder of TI Peter Eigen, said that the “TI was set up about 25 years ago with the idea to help stop international corruption.” He noted: “We have seen that many countries, in particular in Africa, suffer from systemic bribery by companies from Europe and the United States. We have to stop these companies from bribing the decision makers in Africa, in Asia and in Latin America.”

01.13.17

IMF says Seychelles Needs to Boost Revenue

Posted in International Organisations, International relations at 6:22 pm by Robert Klien

On January 11, the International Monetary Fund (IMF) indicated that Seychelles will need to take further measures aimed to increase tax revenue over the medium term.

With strong economic activity continuing in Seychelles, the IMF it expects the country’s primary surplus – the surplus before accounting for the cost of interest on debt – is to reach 3% of gross domestic product (GDP) in 2016, despite the expansionary impact of the fiscal initiatives announced in the State of the Nation Address in early 2016. Those measures included personal income tax (PIT) cuts and increases in pensions and the minimum wage.

The IMF confirmed that “the State of the Nation Address initiatives entailed substantial fiscal costs, around 3% of GDP on a full-year basis.” The PIT reforms were designed by the Government of Seychelles to reduce the tax burden on low-income earners and, on a phased basis, make the tax system more progressive.

The IMF noted that the proposed 2017 Budget includes some measures to moderate the impact of the initiatives, including a new property tax on foreigners’ land ownership in Seychelles, and realignments to the presumptive tax rate and to the tax rate on profits made by individual businesses. However, its opinion was that “additional and permanent measures to boost revenue and contain expenditure will be needed to ensure a steady debt reduction over the medium term.”

11.02.16

IMF evaluates Seychelles’ 2017 financial outlook as strong

Posted in Business and Economy, International Organisations at 5:56 pm by Robert Klien

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.

09.05.16

Seychelles to set up Regional Coordination Centre to fight Maritime Crime

Posted in International Organisations, International relations at 10:41 am by Robert Klien

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.

08.16.16

Seychelles maintains credit rating, which signals economic stability

Posted in International Organisations, Seychelles government, Seychelles' statistics at 10:20 am by Robert Klien

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.

08.05.16

Seychelles commits to BEPS Minimum Standards

Posted in International Organisations, International relations at 5:52 pm by Robert Klien

The Seychelles has committed to implementing the minimum standards put forward by the OECD on base erosion and profit shifting (BEPS).

The commitment comes as part of the jurisdiction becoming an associate member of the OECD’s new inclusive framework for BEPS implementation.

These minimum standards are applied on:
– harmful tax practices,
– tax treaty abuse,
– country-by-country reporting,
– dispute resolution mechanisms.

As an associate member, the Seychelles has committed to engage in future negotiations on measures and pay an annual fee.

Members of the framework will work on an equal footing to fight tax avoidance, to improve the coherence of international tax rules, as well as to ensure a more transparent tax environment.

In particular, the framework will:
– develop standards in respect of remaining BEPS issues;
– review the implementation of agreed minimum standards through an effective monitoring system;
– monitor BEPS issues, including tax challenges raised by the digital economy;
– facilitate the implementation processes of the members by providing further guidance and by supporting development of toolkits and guidance to support low-capacity developing countries.

The Seychelles recently met with more than 80 countries and jurisdictions, in the first meeting of G20 members and associate members, held in Japan. At the event, participants started work to undertake the standard-setting on remaining issues including transfer pricing and interest deductability, and the development of practical guidance to support consistent, global implementation of their commitments to the BEPS package.

05.01.16

http://www.src.gov.sc/

Posted in Business and Economy, International Organisations, Seychelles government at 1:59 pm by Robert Klien

OECD confirms that Seychelles has appropriate Tax Data Safeguards

The confidentiality safeguards implemented within the Seychelles Revenue Commission (SRC) have been approved by an expert assessment carried out by the OECD’s Global Forum on Transparency and the Exchange of Information for Tax Purposes.

Seychelles has obtained a largely compliant rating from the Global Forum. Also, the jurisdiction has signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters in 2015. To add, Seychelles opted for early adoption in 2017 of the Common Reporting Standards, the new standards in the automatic exchange of tax information (AEOI) between countries developed by the OECD.

In view of the upcoming implementation of AEOI by Seychelles, whereby it will also be able to request information from other tax authorities, the Seychelles Revenue Commission has recognized that an important aspect of the AEOI standard is that data and information it receives should be kept confidential and appropriately safeguarded from improper use and disclosure. So, other jurisdictions that provide tax data can be assured as to its future use.

The Government of Seychelles said that Global Forum experts conducted a confidentiality assessment in November 2015 and have now confirmed their endorsement of the data safeguards put in place by Seychelles.

03.30.16

IMF says Seychelles needs to offset Income Tax Cuts

Posted in Business and Economy, International Organisations, Seychelles banking, Seychelles government, Seychelles' statistics at 2:11 pm by Robert Klien

According to the statement following an International Monetary Fund (IMF) staff mission to the Seychelles from March 9-22, the anti-poverty initiatives mentioned in last month’s State of the Nation Address need to be counteracted by other measures.

In his State of the Nation Address, the President Michel disclosed that, as well as minimum wage and pension increases, changes will be made from July 2016 to the personal income tax system, aimed to make it more progressive and reduce the tax burden on low-income earners.

At the conclusion of the IMF’s visit to conduct discussions on the 4th review under the Extended Fund Facility (EFF) arrangement with the Seychelles, the mission noted that, while the economy performed positively in 2015, “slowing growth or recession in a number of key tourism markets could weigh on economic developments in 2016.”

At the end of the IMF’s third EFF review, in January 2016, the International Monetary Fund had concluded that “continued fiscal discipline will be a critical anchor for macroeconomic stability.” It was confirmed that fiscal policy in 2016 continued to target a primary surplus of 3.8% of GDP (gross domestic product). However, the Fund’s latest mission estimated that the newly announced measures “would entail substantial fiscal costs – around three percent of GDP on a full-year basis.” It concluded that “it is important that policies to ensure that the economic benefits from years of strong fiscal consolidation are shared more widely do not undermine macroeconomic stability. The mission therefore recommends that [the new measures] be accompanied by offsetting measures to avoid putting pressure on the balance of payments, inflation, and public debt.”

In that respect, immediately following the IMF mission, the Central Bank of Seychelles (CBS) took steps to reduce the excess liquidity within the monetary system. After analyzing the recent measures announced by the Government of the Seychelles, CBS was counteracting an expected increase in liquidity and demand for foreign currency in the coming months.

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