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.


Seychelles Confirms Tax Amnesty

Posted in Business and Economy, Financial Services, Seychelles legislation, Seychelles offshore jurisdiction at 2:49 pm by Robert Klien

The availability of an amnesty on penalties and interest for businesses that have outstanding tax debts and returns has been confirmed by the Seychelles Revenue Commission (SRC).

Further to measures to boost tax compliance announced in the 2015 Budget, the Commission has implemented a debt recovery plan. This plan will apply to business tax arrears for tax years up to 2013 (for amounts payable in 2014), and for withholding tax, duties, and all other taxes, for payments due for tax years up to 2014.

To settle their outstanding tax as at December 31, 2014, or to submit outstanding returns, taxpayers have 3 options. The program offers:
a) a 100% waiver of penalties and interest on arrears cleared by May 31, 2015;
b) a 50% waiver of penalties and interest on arrears cleared by August 31, 2015;
c) a 25% waiver of penalties and interest on arrears cleared by October 31, 2015.

The Seychelles Revenue Commission is urging taxpayers to take advantage of the amnesty and settle their tax liabilities.

In order to complement the arrangements, there will also be a more aggressive stance on debt collection.


Multilateral Tax Cooperation Treaty signed by Seychelles

Posted in Double Taxation Agreements, International Organisations, International relations, Seychelles government, Seychelles legislation, Seychelles offshore jurisdiction at 7:28 pm by Robert Klien

On February 24, Seychelles became the 85th signatory of the Organisation for Economic Co-operation and Development’s (OECD’s) Multilateral Convention on Mutual Administrative Assistance in Tax Matters.

The Convention is a comprehensive multilateral instrument to tackle tax evasion and increase transparency. According to a statement made by the OECD, the signing therefore represents another important step in Seychelles’ efforts to improve its legal framework and practices as regards the exchange of information for tax purposes.

The Convention provides for all forms of administrative assistance, in tax matters, including the exchange of information on request and automatically; in tax examinations abroad and in plurilateral investigations; and in tax collection.

The OECD added that it has repeatedly called on all jurisdictions to sign the Convention and has asked the Global Forum on Transparency and Exchange of Information for Tax Purposes to report on progress made by its members in that respect.


Seychelles Seeks OECD Tax Transparency Endorsement

Posted in Business and Economy, International Organisations, Seychelles legislation, Seychelles offshore jurisdiction at 3:54 pm by Robert Klien

With a view to communicate measures aimed to enhance how the jurisdiction exchanges tax information with other territories in practice, Seychelles is preparing to submit a supplementary report to the Organisation for Economic Co-operation and Development (OECD) Global Forum.

In 2013, during Phase Two of the Peer Review Group rating process, the OECD rated Seychelles as non-compliant in certain areas, raising concerns regarding Seychelles’s tax transparency rules.

The Seychelles Minister of Finance, Trade and Investment, Pierre Laporte, met OECD representatives on the sidelines of the 7th Global Forum in Berlin from October 28-29 in order to update them on the new measures put in place to address the areas of non-compliance, and prepare for the submission of a supplementary report to the Peer Review Group for re-assessment.

At the same time, the Organisation for Economic Co-operation and Development has stated that Seychelles became one of the “early adopters” (by end-September 2017) of the Multilateral Competent Authority Agreement on the implementation of a new automatic exchange of information standard.

In accordance with the new standard, jurisdictions are obliged to obtain information from their financial institutions and automatically exchange it with other jurisdictions annually.


Heads of public enterprises learn legislation governing their firms

Posted in Business and Economy, Seychelles legislation at 10:53 am by Robert Klien

Chief executives, board chairpersons and finance officers of public enterprises met for a half-day forum to learn more about the laws and regulations govern their operations. Also, they learned more about their functions and discussed issues on the monitoring commission.

The forum was launched by Finance, Trade and Investment Minister Pierre Laporte. He said: “The forum is a very important one as government takes the management of public enterprises very seriously be it from the financial, strategic and governance aspects. We all need to work together to ensure public enterprises are run in an efficient and transparent manner because it is in fact the assets and funds belonging to our people that we are managing and we are accountable to them. This is the most important thing we have to bear in mind”.

The Public Enterprise Monitoring Act came into force in 2009 in order to improve transparency and governance which was at that time administered through a unit in the Ministry of Finance. Earlier this year the National Assembly approved new amendments to the Act which brought the monitoring of public enterprises under a new commission to further ensure a better level of management and good practices.


Seychelles signs historic visa waiver agreement with China

Posted in International relations, Seychelles legislation at 2:43 pm by Robert Klien

Seychelles has become only the 2nd country in the world and the 1st in Africa to sign a visa waiver agreement with China after years of diplomatic talks.

This was revealed on May 6 when Chinese vice-minister for Foreign Affairs Xie Hangsheng paid a courtesy visit to State House yesterday, calling on President James Michel, Vice-President Danny Faure and Foreign Affairs Minister Jean-Paul Adam.

President Michel expressed his gratitude to the People’s Republic of China for the signing of the agreement which he said is a “milestone in relations between Seychelles and China’ and will develop their people-to-people relations”.

“We value the special relationship that exists between China and Seychelles…China has helped us immensely in our development and is continuing to support us in various fields… We both believe in peace and in fairness and we support each other’s development…

“The mutual visa waiver agreement will further develop our relations and will become a showcase to the world, of how two countries with a common vision can achieve greater levels of confidence and cooperation,” said Mr Michel.


Seychelles Important Law being reviewed

Posted in Seychelles legislation at 2:41 pm by Robert Klien

The country’s most important law after the Constitution is being reviewed with a view to make it more relevant to Seychelles.

The chairperson of its review committee Judge Mathilda Twomey said when the president of the Court of Appeal Francis MacGregor launched the process to update it that Chapter 33 of the Laws of Seychelles, or the current Civil Code regulates everything.

The ceremony was attended by ministers, members of the National Assembly, judges, magistrates, lawyers and professors of law from abroad at the Seychelles Marketing Board’s conference room.

Mr MacGregor said the code touches every aspect of our lives, governing everything from the day we are born to when we die … “and after because it also governs succession issues”. He said it is the largest source of laws of Seychelles with 2,280 articles covering over 290 pages yet it was legislated for and approved in 1975 in parliament with just one sitting without a committee stage, in an assembly where most members were new and public information was mainly through radio broadcasts which were limited to just eight hours a day with little local content.


Seychelles to change oil legislation to invite exploration bids

Posted in Business and Economy, Foreign investments, Seychelles legislation at 12:56 pm by Robert Klien

According to an energy official, Seychelles plans to revamp its model petroleum production sharing agreements. After that, oil and gas companies will be invited to bid for exploration licences from May 2013.

East Africa has become a hotbed of exploration after oil discoveries in Uganda and Kenya, as well as natural gas finds in Tanzania and Mozambique. Currently, Seychelles is attracting much interest.

Eddy Belle, chief executive of upstream regulator PetroSeychelles, said that many firms have approached him but they will have to wait until after April to submit their proposals. “By then we will have put in place the few pieces of legislation required to modernise our model petroleum agreement and the new fiscal regime,” he told Reuters in an interview. He also added, “We will not have a licensing round per se. The way we will do it is: after April 2013, oil companies can come in at any time and provide a proposal for an area”.

So far, Afren Plc and Australia’s WHL Energy are the only companies holding exploration licences in Seychelles.

Belle said that after April, once a company had approached the government for an exploration area, other interested ones would have up to 90 days to submit bids for the same block. After the 90 days expired, the government would evaluate and award the exploration area to the company that showed it had the financial capability to conduct exploration and then go into production if it struck commercial quantities of oil.


VAT comes into effect

Posted in Business and Economy, Seychelles legislation at 2:11 pm by Robert Klien

Value Added Tax (VAT) became operational in Seychelles on January 1, 2013.

While Value Added Tax is applicable on most goods and services imported and purchased locally and consumed in Seychelles, there are some goods and services which are exempt from this tax.

VAT is not applicable on the construction of a residential dwelling. Any construction that is for residential purposes, which include the construction of private houses, block of flats and condominium, is exempt from it.

However, it is applicable on construction materials for residential dwellings. It is 15% on all construction materials imported at the point of entry at the time of import and on those purchased locally from a VAT-registered business, whatever their final use. This includes construction materials incorporated in the construction of the residential dwellings.

Thetax is not applicable on residential rent. Prior to January 2013 GST was being paid monthly at 15% on all residential income/rent. Although VAT has replaced GST effective January 1, 2013, it will not be applicable on residential rent. However, as from January 2013 residential income/rent is liable to Business Tax, at the rate of 15% just as it was the case with GST.

The Value Added Tax Act, 2010 is available on the Seychelles Revenue Commission website.


Seychelles’ loaning banks must now consult CIS

Posted in Seychelles banking, Seychelles legislation at 12:45 pm by Robert Klien

Seychelles’ financial institutions must consult the Credit Information System (CIS) maintained by the Central Bank of Seychelles (SBS) with effect from July 1, 2012 before giving loans.

Regulations on the CIS were issued in March 2012 but became obligatory only in July this year and require institutions which give loans to consult the system before they approve loans or renew any credit facility. Loan-giving institutions include commercial banks, the Housing Finance Company, the Development Bank of Seychelles and the Seychelles Credit Union.

CBS governor Caroline Abel said that the purpose of the CIS is to enable the institutions to assess prospective clients by giving them information on the repayment history and the level of debt of clients across the financial system.

It should be noted that previously banks could not share information as they were prevented from doing so by law. Now they may consult the system but maintain all the information they get about clients confidential.

Ms Abel said: “Having access to a customer’s credit history may allow the process of switching banks for customers, thus promoting competition in the banking sector”. She added that clients are free to shop around and settle for the bank that offers the lowest interest on loans.

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